Harrisonburg, VA Cap Rate 4.03%
Harrisonburg is a mid-range market in the South with a small but investable metro of 50,000. At a 4.03% estimated cap rate, this is a moderate market where rents of $1,700/mo lag behind home prices. With a median home price of $340,000 and steady population growth supports long-term rental demand, Harrisonburg 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
Market Data
2026 Market Update: Harrisonburg
Harrisonburg's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $340,000, the $1,700/mo rent produces only $1,141/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 ($68K at 7%) would result in approximately $-668/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 16.7x gross rent multiplier and 5.2% vacancy rate position Harrisonburg as a balanced market. With annual appreciation at 2.9%, total returns (cash flow + equity growth) run approximately 6.9% before financing leverage.
Deal Modeling & Scenarios for Harrisonburg
All figures below are computed from Harrisonburg's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.86% effective rate on the $340,000 median price, the annual tax bill is $2,924 — that's near national average (-19% 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 Harrisonburg continues appreciating at 2.9%/yr while rents grow at a conservative 3%/yr, cap rate holds roughly steady as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $340K | $1,700 | 4.0% |
| Year 1 | $350K | $1,751 | 4.0% |
| Year 2 | $360K | $1,804 | 4.0% |
| Year 3 | $370K | $1,858 | 4.0% |
| Year 4 | $381K | $1,913 | 4.0% |
| Year 5 | $392K | $1,971 | 4.0% |
Three Financing Scenarios
Same median-priced Harrisonburg 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 | $340K | $1,141 | $13,695 | 4.0% |
| 20% down conventional @ 7% | $78K | $-668 | $-8,010 | -10.2% |
| 25% down DSCR @ 8.5% | $99K | $-820 | $-9,836 | -10.0% |
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) | $255K | $1,445 | $10,451 | 4.1% | $871 |
| At median | $340K | $1,700 | $11,791 | 3.5% | $983 |
| Above median (~125% price) | $425K | $1,955 | $13,131 | 3.1% | $1,094 |
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 Harrisonburg's historical appreciation rate of 2.9%:
On a $68K down payment, that's a 47.9% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Harrisonburg
Automated checks against the underlying data — surface only the risks that actually apply to Harrisonburg, not generic boilerplate:
Cap Rate Calculator — Harrisonburg
Pre-filled with Harrisonburg medians. Adjust to match a specific property.
Cash-on-Cash Return — Harrisonburg
Factor in financing to see your actual return on invested capital in Harrisonburg.
Is Harrisonburg a Good Place to Invest in Rental Property?
Harrisonburg, VA has a population of 50,000 and has been growing at 0.7% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $340,000 paired with median rents of $1,700/mo produces an estimated cap rate of 4.03%.
Property taxes at 0.86% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 5.2% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 5.9x, homes cost about 5.9 times the local median income of $57,250. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.9% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Harrisonburg presents moderate opportunities. Cap rates near 4.03% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.