Hot Springs, AR Cap Rate: 4.51% — Rental Property Analysis
Hot Springs is a budget-friendly market in the South with a small but investable metro of 50,000. At a 4.51% estimated cap rate, this is a moderate market where rents of $1,260/mo lag behind home prices. With a median home price of $240,000 and steady population growth supports long-term rental demand, Hot Springs 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 $240,000 median price and $1,260/mo median rent
Est. Cap Rate
4.51%
1% Rule
0.53%
Fails
GRM
15.9x
Price / Income
5.2x
Market Data
Median Home Price$240,000
Median Monthly Rent$1,260
Property Tax Rate0.61%
Population50,000
Population Growth0.9% / yr
Median Household Income$46,400
Vacancy Rate6%
Annual Appreciation2.5%
2026 Market Update: Hot Springs
Hot Springs's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $240,000, the $1,260/mo rent produces only $902/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 ($48K at 7%) would result in approximately $-375/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 15.9x gross rent multiplier and 6% vacancy rate position Hot Springs as a balanced market. With annual appreciation at 2.5%, total returns (cash flow + equity growth) run approximately 7.0% before financing leverage.
Cap Rate Calculator — Hot Springs
Pre-filled with Hot Springs medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
0.61% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.78%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$9,065
net operating income
Gross Rent Multiplier
15.9x
High (>15)
1% Rule
0.53%
✗ Fails
Monthly Cash Flow
$755
before debt service
Annual Breakdown
Gross Rental Income$15,120
Less Vacancy−$907
Effective Income$14,213
Less Operating Expenses−$5,148
Net Operating Income$9,065
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Factor in financing to see your actual return on invested capital in Hot Springs.
$
$60,000
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-7.90%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$67,200
$60,000 down + $7,200 closing
Monthly Mortgage
$1,173
on $180K loan
Monthly Cash Flow
$-442
after all expenses
Annual Cash Flow
$-5,310
before taxes
Cash Flow Breakdown
Monthly Rent$1,260
Less Expenses−$529
Less Mortgage−$1,173
Monthly Cash Flow$-442
Is Hot Springs a Good Place to Invest in Rental Property?
Hot Springs, AR has a population of 50,000 and has been growing at 0.9% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $240,000 paired with median rents of $1,260/mo produces an estimated cap rate of 4.51%.
Property taxes at 0.61% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 6% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 5.2x, homes cost about 5.2 times the local median income of $46,400. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.5% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Hot Springs presents moderate opportunities. Cap rates near 4.51% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
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