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Cap Rate Analysis: Hilton Head Island, SC

Investment metrics, interactive calculators, and data-driven analysis for Hilton Head Island rental properties.

Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026

Challenging for pure cash flow
Based on $515,000 median price and $2,020/mo median rent
Est. Cap Rate
3.08%
1% Rule
0.39%
Fails
GRM
21.2x
Price / Income
10.4x

Market Data

Median Home Price$515,000
Median Monthly Rent$2,020
Property Tax Rate0.57%
Population50,000
Population Growth1.9% / yr
Median Household Income$49,486
Vacancy Rate5.5%
Annual Appreciation3.4%

Cap Rate Calculator — Hilton Head Island

Pre-filled with Hilton Head Island medians. Adjust to match a specific property.

Property Details
$
$
3–8% typical
%
Monthly Expenses
0.57% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
2.63%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$13,535
net operating income
Gross Rent Multiplier
21.2x
High (>15)
1% Rule
0.39%
✗ Fails
Monthly Cash Flow
$1,128
before debt service
Annual Breakdown
Gross Rental Income$24,240
Less Vacancy−$1,333
Effective Income$22,907
Less Operating Expenses−$9,372
Net Operating Income$13,535
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Cash-on-Cash Return — Hilton Head Island

Factor in financing to see your actual return on invested capital in Hilton Head Island.

$
$128,750
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-11.20%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$144,200
$128,750 down + $15,450 closing
Monthly Mortgage
$2,518
on $386K loan
Monthly Cash Flow
$-1,346
after all expenses
Annual Cash Flow
$-16,153
before taxes
Cash Flow Breakdown
Monthly Rent$2,020
Less Expenses−$848
Less Mortgage−$2,518
Monthly Cash Flow$-1,346

Is Hilton Head Island a Good Place to Invest in Rental Property?

Hilton Head Island, 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 $515,000 paired with median rents of $2,020/mo produces an estimated cap rate of 3.08%.

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 10.4x, homes cost about 10.4 times the local median income of $49,486. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. 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: At current median prices, Hilton Head Island 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.

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