Farmington, NM Cap Rate: 4.38% — Rental Property Analysis
Farmington is a mid-range market in the West with a small but investable metro of 50,000. At a 4.38% estimated cap rate, this is a moderate market where rents of $1,390/mo lag behind home prices. With a median home price of $265,000 and steady population growth supports long-term rental demand, Farmington offers opportunities for investors who source deals carefully.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
◈
Moderate — source deals carefully
Based on $265,000 median price and $1,390/mo median rent
Est. Cap Rate
4.38%
1% Rule
0.52%
Fails
GRM
15.9x
Price / Income
5.1x
Market Data
Median Home Price$265,000
Median Monthly Rent$1,390
Property Tax Rate0.77%
Population50,000
Population Growth0.8% / yr
Median Household Income$51,750
Vacancy Rate5.5%
Annual Appreciation2.7%
2026 Market Update: Farmington
Farmington's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $265,000, the $1,390/mo rent produces only $967/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
At current rates, a 20% down conventional loan ($53K at 7%) would result in approximately $-443/mo cash flow — negative at median prices. Larger down payments, seller financing, or buying 15–25% below median are strategies to turn the numbers positive.
The 15.9x gross rent multiplier and 5.5% vacancy rate position Farmington as a balanced market. With annual appreciation at 2.7%, total returns (cash flow + equity growth) run approximately 7.1% before financing leverage.
Cap Rate Calculator — Farmington
Pre-filled with Farmington medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
0.77% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.65%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$9,667
net operating income
Gross Rent Multiplier
15.9x
High (>15)
1% Rule
0.52%
✗ Fails
Monthly Cash Flow
$806
before debt service
Annual Breakdown
Gross Rental Income$16,680
Less Vacancy−$917
Effective Income$15,763
Less Operating Expenses−$6,096
Net Operating Income$9,667
Sponsored
Analyze Deals Faster with DealCheck
Import any property, get instant investment analysis — cap rates, cash flow, rehab estimates, and offer calculations. Used by 350,000+ investors.
Factor in financing to see your actual return on invested capital in Farmington.
$
$66,250
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-7.92%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$74,200
$66,250 down + $7,950 closing
Monthly Mortgage
$1,296
on $199K loan
Monthly Cash Flow
$-490
after all expenses
Annual Cash Flow
$-5,876
before taxes
Cash Flow Breakdown
Monthly Rent$1,390
Less Expenses−$584
Less Mortgage−$1,296
Monthly Cash Flow$-490
Is Farmington a Good Place to Invest in Rental Property?
Farmington, NM 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 $265,000 paired with median rents of $1,390/mo produces an estimated cap rate of 4.38%.
Property taxes at 0.77% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 5.5% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 5.1x, homes cost about 5.1 times the local median income of $51,750. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.7% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Farmington presents moderate opportunities. Cap rates near 4.38% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
Sponsored
Get AI-Powered Property Insights
Homesage.ai analyzes 140 million properties with AI — spot hidden deals, assess property condition, and find investment opportunities. Free to try.