Kennewick, WA Cap Rate 2.70%
Kennewick is the largest of the Tri-Cities metro (Kennewick-Pasco-Richland) in southeastern Washington — uniquely anchored by the multi-decade Hanford Nuclear Site cleanup operation, plus the broader Pacific Northwest National Laboratory and Columbia River agriculture. The 2.70% cap rate at a $435,000 median price keeps the 0.39% rent-to-price ratio close to functional. Population growth at 1.5%/yr is steady, helped by sustained Hanford cleanup employment.
Employment is anchored by the Hanford Site cleanup operation (the former WWII / Cold War nuclear weapons production complex 10 miles north of the Tri-Cities is now the largest US environmental cleanup project — operated by multiple Department of Energy contractors, with continuing multi-decade investment as the broader Hanford waste-treatment plant comes online; collectively one of the larger US federal-contractor employment concentrations and producing a uniquely high-credit engineering and security-cleared tenant base), the Pacific Northwest National Laboratory in Richland (the DOE's major Pacific Northwest research lab), the broader Kadlec Regional Medical Center and Trios Health, the broader Benton County government, Lamb Weston (potato-products manufacturer with major Tri-Cities operations), the broader Columbia River agriculture (wine, potatoes, apples), and a meaningful logistics base. Submarkets stratify cleanly: the historic Olde Towne / South Kennewick area is walkable urban with strong appreciation; the broader Southridge and West Pasco areas are premium suburban-school zones; Richland north has a distinct DOE-employee character with higher home prices; the broader Tri-Cities extends with newer construction.
Washington has no state income tax (a structural cash-flow advantage). Benton County's property tax at 0.9% is moderate. Insurance is reasonable. Washington landlord-tenant law has shifted toward tenant-protective regulations (just-cause eviction statewide, longer notice periods) — operating in WA requires comfort with the regulatory framework. The structural advantages: Hanford cleanup is genuinely multi-decade federal infrastructure — the cleanup is expected to continue through the 2050s with sustained employment; PNNL provides additional research employment; no state income tax; unusual high-credit tenant base from federal-contractor workforce; cost basis is materially below Seattle/Tacoma. The structural risks: any major DOE budget decision affecting Hanford cleanup would ripple to the metro; WA regulatory environment requires operator comfort; the broader Eastern Washington wildfire seasons are real. For investors who want WA tax structure with genuinely durable federal-cleanup employment, Kennewick is the most defensible Eastern Washington option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Kennewick
Kennewick's 0.4% rent-to-price ratio is well below the 1% rule. At median prices of $435,000, the $1,680/mo rent produces only $980/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 ($87K at 7%) would result in approximately $-1,334/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 19% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Kennewick a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Deal Modeling & Scenarios for Kennewick
All figures below are computed from Kennewick's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.9% effective rate on the $435,000 median price, the annual tax bill is $3,915 — that's near national average (-15% 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 Kennewick continues appreciating at 2.8%/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 | $435K | $1,680 | 2.7% |
| Year 1 | $447K | $1,730 | 2.7% |
| Year 2 | $460K | $1,782 | 2.7% |
| Year 3 | $473K | $1,836 | 2.7% |
| Year 4 | $486K | $1,891 | 2.7% |
| Year 5 | $499K | $1,948 | 2.7% |
Three Financing Scenarios
Same median-priced Kennewick 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 | $435K | $980 | $11,757 | 2.7% |
| 20% down conventional @ 7% | $100K | $-1,334 | $-16,013 | -16.0% |
| 25% down DSCR @ 8.5% | $126K | $-1,529 | $-18,349 | -14.5% |
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) | $326K | $1,428 | $9,296 | 2.8% | $775 |
| At median | $435K | $1,680 | $10,271 | 2.4% | $856 |
| Above median (~125% price) | $544K | $1,932 | $11,247 | 2.1% | $937 |
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 Kennewick's historical appreciation rate of 2.8%:
On a $87K down payment, that's a 12.0% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Kennewick
Automated checks against the underlying data — surface only the risks that actually apply to Kennewick, not generic boilerplate:
Cap Rate Calculator — Kennewick
Pre-filled with Kennewick medians. Adjust to match a specific property.
Cash-on-Cash Return — Kennewick
Factor in financing to see your actual return on invested capital in Kennewick.
Is Kennewick a Good Place to Invest in Rental Property?
Kennewick, WA has a population of 88,000 and has been growing at 1.5% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $435,000 paired with median rents of $1,680/mo produces an estimated cap rate of 2.70%.
Property taxes at 0.9% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 5% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 7.5x, homes cost about 7.5 times the local median income of $58,200. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. Home values have appreciated at roughly 2.8% 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, Kennewick 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.