Florence, AL Cap Rate: 5.04% — Rental Property Analysis
Florence is a budget-friendly market in the South with a small but investable metro of 50,000. At a 5.04% estimated cap rate, this is a moderate market where rents of $1,170/mo lag behind home prices. With a median home price of $210,000 and steady population growth supports long-term rental demand, Florence 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
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Moderate — source deals carefully
Based on $210,000 median price and $1,170/mo median rent
Est. Cap Rate
5.04%
1% Rule
0.56%
Fails
GRM
15.0x
Price / Income
4.2x
Market Data
Median Home Price$210,000
Median Monthly Rent$1,170
Property Tax Rate0.42%
Population50,000
Population Growth0.8% / yr
Median Household Income$49,614
Vacancy Rate6.4%
Annual Appreciation2.3%
2026 Market Update: Florence
Florence's 0.6% rent-to-price ratio is well below the 1% rule. At median prices of $210,000, the $1,170/mo rent produces only $882/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 ($42K at 7%) would result in approximately $-235/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 15.0x gross rent multiplier and 6.4% vacancy rate position Florence as a balanced market. With annual appreciation at 2.3%, total returns (cash flow + equity growth) run approximately 7.3% before financing leverage.
Cap Rate Calculator — Florence
Pre-filled with Florence medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
0.42% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
4.23%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$8,881
net operating income
Gross Rent Multiplier
15.0x
Good (<15)
1% Rule
0.56%
✗ Fails
Monthly Cash Flow
$740
before debt service
Annual Breakdown
Gross Rental Income$14,040
Less Vacancy−$899
Effective Income$13,141
Less Operating Expenses−$4,260
Net Operating Income$8,881
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Factor in financing to see your actual return on invested capital in Florence.
$
$52,500
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-7.10%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$58,800
$52,500 down + $6,300 closing
Monthly Mortgage
$1,027
on $158K loan
Monthly Cash Flow
$-348
after all expenses
Annual Cash Flow
$-4,173
before taxes
Cash Flow Breakdown
Monthly Rent$1,170
Less Expenses−$491
Less Mortgage−$1,027
Monthly Cash Flow$-348
Is Florence a Good Place to Invest in Rental Property?
Florence, 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 $210,000 paired with median rents of $1,170/mo produces an estimated cap rate of 5.04%.
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 4.2x, homes cost about 4.2 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: Florence presents moderate opportunities. Cap rates near 5.04% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
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