Florence, SC Cap Rate 6.60%
Florence is the regional anchor for the Pee Dee region of South Carolina — strategically positioned at the I-95 / I-20 intersection, with deep logistics and healthcare bases. The 6.60% cap rate at a $185,000 median price keeps the 0.70% rent-to-price ratio close to functional. Population growth at 1.9%/yr is essentially flat.
Employment is anchored by McLeod Health (the dominant regional medical system serving the Pee Dee region — McLeod Regional Medical Center is one of the larger US rural-anchor hospitals, with continuing capacity expansion), MUSC Health Florence Medical Center (the Medical University of South Carolina's regional affiliate), the broader I-95 logistics economy (Florence sits at the I-95/I-20 intersection — a major US distribution junction, with Amazon, FedEx, plus the broader e-commerce and Southeast-distribution cluster), Honda's power-equipment manufacturing operations, the broader Florence County government, Francis Marion University, Florence-Darlington Technical College, and a meaningful agricultural-processing base tied to the Pee Dee farming economy. Submarkets stratify cleanly: the historic downtown area is walkable urban with appreciation; the broader West Florence and South Florence neighborhoods draw professional family rentals at premium pricing; the broader Florence County extends rural-edge with newer construction; the central and parts of east Florence offer deeper-value workforce inventory.
South Carolina property tax at 0.57% is moderate at the metro level, but the 4% (owner-occupied) vs 6% (non-owner-occupied) assessment-ratio gap is meaningful — non-occupant investors pay materially more than the headline rate suggests. SC state income tax is graduated with a top rate near 6.5%, with a phase-down underway. Insurance is reasonable (Florence sits inland — no Gulf or Atlantic coastal exposure though Hurricane Florence in 2018 was a notable inland-impact reference event). The structural advantages: I-95 logistics employment is structurally growing as Southeast e-commerce volumes expand; McLeod Health provides durable rural-anchor healthcare employment; cost basis is materially below the coastal SC markets or Columbia. The structural risks: population trajectory has been weaker than the Charlotte/Charleston/Greenville triangle; logistics employment is sensitive to e-commerce cycles; per-block variance in some Florence proper neighborhoods. For investors who want a defensible Pee Dee SC market with cash-flow math closer to functional, Florence is the most defensible inland SC option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Florence
Florence's 0.7% rent-to-price ratio is well below the 1% rule. At median prices of $185,000, the $1,300/mo rent produces only $1,017/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
On a conventional loan with 20% down ($37K) at 7%, estimated monthly cash flow is $33 — a thin 1.1% cash-on-cash return. Investors should negotiate below asking price or target properties with above-median rents to build a meaningful cash flow buffer.
With 1.9% annual population growth paired with 3.4% home appreciation, Florence offers a rare combination of current cash flow and future equity upside. The 11.9x gross rent multiplier suggests the market hasn't fully priced in this growth trajectory.
Deal Modeling & Scenarios for Florence
All figures below are computed from Florence's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.57% effective rate on the $185,000 median price, the annual tax bill is $1,054 — that's very low (bottom 15% of US markets) (-46% 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 Florence continues appreciating at 3.4%/yr while rents grow at a conservative 3%/yr, cap rate compresses as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $185K | $1,300 | 6.6% |
| Year 1 | $191K | $1,339 | 6.6% |
| Year 2 | $198K | $1,379 | 6.5% |
| Year 3 | $205K | $1,421 | 6.5% |
| Year 4 | $211K | $1,463 | 6.5% |
| Year 5 | $219K | $1,507 | 6.5% |
Three Financing Scenarios
Same median-priced Florence 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 | $185K | $1,017 | $12,208 | 6.6% |
| 20% down conventional @ 7% | $43K | $33 | $397 | 0.9% |
| 25% down DSCR @ 8.5% | $54K | $-50 | $-596 | -1.1% |
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) | $139K | $1,105 | $9,063 | 6.5% | $755 |
| At median | $185K | $1,300 | $10,452 | 5.6% | $871 |
| Above median (~125% price) | $231K | $1,495 | $11,840 | 5.1% | $987 |
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 Florence's historical appreciation rate of 3.4%:
On a $37K down payment, that's a 126.3% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Florence
Automated checks against the underlying data — surface only the risks that actually apply to Florence, not generic boilerplate:
Cap Rate Calculator — Florence
Pre-filled with Florence medians. Adjust to match a specific property.
Cash-on-Cash Return — Florence
Factor in financing to see your actual return on invested capital in Florence.
Is Florence a Good Place to Invest in Rental Property?
Florence, SC has a population of 50,000 and has been growing at 1.9% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $185,000 paired with median rents of $1,300/mo produces an estimated cap rate of 6.60%.
Property taxes at 0.57% 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 3.7x, homes cost about 3.7 times the local median income of $49,486. 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 3.4% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Florence offers attractive fundamentals for rental investors. Strong population growth, low taxes, and cap rates above 6% put it in the upper tier of investable markets.