Enterprise, AL Cap Rate 7.89%
Enterprise is one of the most affordable markets in the country in the South with a small but investable metro of 50,000. At a 7.89% estimated cap rate, this is a high-yield market where rents of $1,420/mo lag behind home prices. With a median home price of $175,000 and steady population growth supports long-term rental demand, Enterprise stands out as a market worth serious analysis for rental investors.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Enterprise
At a 0.8% rent-to-price ratio, Enterprise falls just below the 1% rule threshold. A median-priced property at $175,000 with $1,420/mo rent yields approximately $1,151/mo in NOI — workable with favorable financing but not a slam-dunk cash flow market.
With 20% down ($35K) on a 7% conventional loan, estimated monthly cash flow is $220 — a 7.5% cash-on-cash return. That's strong enough to weather vacancies and unexpected repairs without dipping into reserves.
The 10.3x gross rent multiplier and 6.4% vacancy rate position Enterprise as a value-oriented market. With annual appreciation at 2.3%, total returns (cash flow + equity growth) run approximately 10.2% before financing leverage.
Deal Modeling & Scenarios for Enterprise
All figures below are computed from Enterprise's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.42% effective rate on the $175,000 median price, the annual tax bill is $735 — that's very low (bottom 15% of US markets) (-60% vs the national average of ~1.06%). Verify the actual assessed value before purchase; sale-triggered reassessments can push the bill higher than the seller's current statement.
5-Year Cap Rate Trajectory
If Enterprise continues appreciating at 2.3%/yr while rents grow at a conservative 3%/yr, cap rate holds roughly steady as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $175K | $1,420 | 7.9% |
| Year 1 | $179K | $1,463 | 8.0% |
| Year 2 | $183K | $1,506 | 8.0% |
| Year 3 | $187K | $1,552 | 8.1% |
| Year 4 | $192K | $1,598 | 8.1% |
| Year 5 | $196K | $1,646 | 8.2% |
Three Financing Scenarios
Same median-priced Enterprise property — different capital structures. All-cash maximizes cap rate. Leverage trades cash flow for higher cash-on-cash return when the spread between cap rate and borrowing cost is positive.
| Scenario | Cash Invested | Monthly Cash Flow | Annual CF | Cash-on-Cash |
|---|---|---|---|---|
| All cash | $175K | $1,151 | $13,814 | 7.9% |
| 20% down conventional @ 7% | $40K | $220 | $2,642 | 6.6% |
| 25% down DSCR @ 8.5% | $51K | $142 | $1,703 | 3.4% |
Three Price Tiers: Below, At, and Above the Median
Properties don't always trade at the median. Lower-priced units typically offer higher cap rates but harder operations; higher-priced properties tend to compress cap rates while attracting better tenants. All-cash assumptions below:
| Tier | Price | Rent/Mo | NOI/Yr | Cap Rate | Monthly CF |
|---|---|---|---|---|---|
| Below median (~75% price) | $131K | $1,207 | $10,163 | 7.7% | $847 |
| At median | $175K | $1,420 | $11,788 | 6.7% | $982 |
| Above median (~125% price) | $219K | $1,633 | $13,413 | 6.1% | $1,118 |
Total Return Over a 5-Year Hold
Cap rate is just one piece. Real estate returns come from four sources: cash flow, appreciation, principal paydown, and tax benefits. Assuming 20% down conventional financing at 7% and a 5-year hold at Enterprise's historical appreciation rate of 2.3%:
On a $35K down payment, that's a 128.0% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Enterprise
Automated checks against the underlying data — surface only the risks that actually apply to Enterprise, not generic boilerplate:
Cap Rate Calculator — Enterprise
Pre-filled with Enterprise medians. Adjust to match a specific property.
Cash-on-Cash Return — Enterprise
Factor in financing to see your actual return on invested capital in Enterprise.
Is Enterprise a Good Place to Invest in Rental Property?
Enterprise, AL has a population of 50,000 and has been growing at 0.8% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $175,000 paired with median rents of $1,420/mo produces an estimated cap rate of 7.89%.
Property taxes at 0.42% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 6.4% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 3.5x, homes cost about 3.5 times the local median income of $49,614. This relatively affordable ratio suggests a deep pool of renters who find buying out of reach, supporting rental demand. Home values have appreciated at roughly 2.3% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Enterprise offers attractive fundamentals for rental investors. low taxes, and cap rates above 6% put it in the upper tier of investable markets.