Frisco, TX Cap Rate 2.61%
Frisco is the rare US city that's been one of the fastest-growing for over a decade — anchored by the Dallas Cowboys' corporate headquarters and practice facility (The Star), a continued wave of corporate-HQ relocations, and what's become one of the most-recognized US suburban-school districts. The 2.61% cap rate at a $360,000 median price reflects sustained premium positioning. The 0.45% rent-to-price ratio sits well below the 1% rule. Population growth at 4.2%/yr is among the strongest in the country.
Employment is anchored by The Star (Dallas Cowboys' world headquarters, practice facility, and the broader mixed-use entertainment complex — collectively a meaningful Frisco-area employer plus the broader event-driven STR overlay), the Toyota / Liberty Mutual / FedEx / JPMorgan Chase major operations along the broader Legacy West / Frisco corporate corridor (the broader DFW corporate-HQ relocation wave has heavily concentrated in Frisco and adjacent Plano), Baylor Scott & White Medical Center - Frisco and Texas Health Frisco, the broader Frisco Independent School District (one of the highest-rated US public school districts — among the primary structural draws for relocating families), the broader Collin County and Denton County governments, the PGA of America HQ (relocated to Frisco from Florida), Universal Studios' Universal Kids Resort under construction. Submarkets stratify cleanly: the broader Stonebrook and Phillips Creek Ranch areas are premium master-planned suburban-school zones; the broader West Frisco and Frisco-Plano boundary draw professional family rentals; the broader Frisco extends with continuing new construction.
Texas has no state income tax (a structural cash-flow advantage). Property tax at 1.8% is on the higher end nationally (Texas property tax compensates for no state income tax — and Frisco/Collin County effective rates can exceed 2.5% on non-homesteaded properties). Collin County's appraisal cycle is annual; new buyers don't inherit seller's lower assessment. Insurance is reasonable but verify hail / tornado deductible structure. The structural advantages: corporate-HQ concentration is genuinely durable (Toyota NA, Liberty Mutual, FedEx, JPMorgan have all chosen North DFW over the past decade); Frisco ISD is genuinely one of the most-recognized US public school districts; sustained population growth has been continuous for 15+ years; PGA HQ relocation + Universal Kids Resort are net-new employers; TX tax structure favors landlords. The structural risks: pricing has compressed cap rates dramatically below national averages; high effective property tax structure is a real drag on cash flow; the entire premium-pricing thesis depends on continued corporate-employer relocation activity. For investors who want premium North DFW exposure with corporate-HQ + school-district stability, Frisco is the most defensible high-growth premium suburb.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Frisco
Frisco's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $360,000, the $1,630/mo rent produces only $782/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 ($72K at 7%) would result in approximately $-1,133/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.
Property taxes consume 33% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Frisco a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Deal Modeling & Scenarios for Frisco
All figures below are computed from Frisco's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 1.8% effective rate on the $360,000 median price, the annual tax bill is $6,480 — that's very high (top 15% of US markets) (+70% 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 Frisco continues appreciating at 3.5%/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 | $360K | $1,630 | 2.6% |
| Year 1 | $373K | $1,679 | 2.6% |
| Year 2 | $386K | $1,729 | 2.6% |
| Year 3 | $399K | $1,781 | 2.6% |
| Year 4 | $413K | $1,835 | 2.6% |
| Year 5 | $428K | $1,890 | 2.5% |
Three Financing Scenarios
Same median-priced Frisco 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 | $360K | $782 | $9,378 | 2.6% |
| 20% down conventional @ 7% | $83K | $-1,134 | $-13,604 | -16.4% |
| 25% down DSCR @ 8.5% | $104K | $-1,295 | $-15,537 | -14.9% |
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) | $270K | $1,386 | $7,332 | 2.7% | $611 |
| At median | $360K | $1,630 | $7,689 | 2.1% | $641 |
| Above median (~125% price) | $450K | $1,874 | $8,045 | 1.8% | $670 |
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 Frisco's historical appreciation rate of 3.5%:
On a $72K down payment, that's a 29.4% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Frisco
Automated checks against the underlying data — surface only the risks that actually apply to Frisco, not generic boilerplate:
Cap Rate Calculator — Frisco
Pre-filled with Frisco medians. Adjust to match a specific property.
Cash-on-Cash Return — Frisco
Factor in financing to see your actual return on invested capital in Frisco.
Is Frisco a Good Place to Invest in Rental Property?
Frisco, TX has a population of 225,000 and has been growing at 4.2% annually — well above the national average, signaling strong housing demand from population inflows. The median home price of $360,000 paired with median rents of $1,630/mo produces an estimated cap rate of 2.61%.
Property taxes at 1.8% are notably high and represent a significant drag on cash flow — model this expense carefully, as it can make or break a deal. The vacancy rate of 4.2% is impressively low, indicating tight rental supply and strong tenant demand — favorable for landlords.
At a price-to-income ratio of 3.1x, homes cost about 3.1 times the local median income of $118,000. 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 3.5% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: At current median prices, Frisco is challenging for pure cash flow investing. Consider BRRRR strategies with below-market purchases, or look at neighboring metros with stronger price-to-rent ratios.