Fort Smith, AR Cap Rate: 4.25% — Rental Property Analysis
Fort Smith is a budget-friendly market in the South with a smaller market with 89,000 residents. At a 4.25% estimated cap rate, this is a moderate market where rents of $1,010/mo lag behind home prices. With a median home price of $200,000 and population is roughly stable, Fort Smith 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 $200,000 median price and $1,010/mo median rent
Est. Cap Rate
4.25%
1% Rule
0.51%
Fails
GRM
16.5x
Price / Income
4.9x
Market Data
Median Home Price$200,000
Median Monthly Rent$1,010
Property Tax Rate0.6%
Population89,000
Population Growth0.3% / yr
Median Household Income$40,800
Vacancy Rate6.8%
Annual Appreciation2%
2026 Market Update: Fort Smith
Fort Smith's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $200,000, the $1,010/mo rent produces only $708/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 ($40K at 7%) would result in approximately $-356/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 16.5x gross rent multiplier and 6.8% vacancy rate position Fort Smith as a balanced market. With annual appreciation at 2%, total returns (cash flow + equity growth) run approximately 6.2% before financing leverage.
Cap Rate Calculator — Fort Smith
Pre-filled with Fort Smith medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
0.6% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.55%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$7,108
net operating income
Gross Rent Multiplier
16.5x
High (>15)
1% Rule
0.51%
✗ Fails
Monthly Cash Flow
$592
before debt service
Annual Breakdown
Gross Rental Income$12,120
Less Vacancy−$824
Effective Income$11,296
Less Operating Expenses−$4,188
Net Operating Income$7,108
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Factor in financing to see your actual return on invested capital in Fort Smith.
$
$50,000
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-8.40%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$56,000
$50,000 down + $6,000 closing
Monthly Mortgage
$978
on $150K loan
Monthly Cash Flow
$-392
after all expenses
Annual Cash Flow
$-4,703
before taxes
Cash Flow Breakdown
Monthly Rent$1,010
Less Expenses−$424
Less Mortgage−$978
Monthly Cash Flow$-392
Is Fort Smith a Good Place to Invest in Rental Property?
Fort Smith, AR has a population of 89,000 and has been growing at 0.3% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $200,000 paired with median rents of $1,010/mo produces an estimated cap rate of 4.25%.
Property taxes at 0.6% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 6.8% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 4.9x, homes cost about 4.9 times the local median income of $40,800. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Fort Smith presents moderate opportunities. Cap rates near 4.25% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
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