Killeen is a military rental market — Fort Cavazos (the Army base renamed from Fort Hood in 2023) is one of the largest active-duty Army installations in the world, and the entire Killeen metro economy rotates around it. The 3.43% cap rate at a $250,000 median price keeps the 0.53% rent-to-price ratio well above the 1% rule — Killeen is one of the few US metros where the headline cash-flow math actually pencils at the median. Population growth at 1.2%/yr is steady but tracks force-strength decisions made in Washington, not local demographic trends.
Employment is anchored almost entirely by Fort Cavazos and its surrounding ecosystem — III Corps headquarters, the 1st Cavalry Division, multiple aviation brigades, the broader Department of Defense civilian workforce, contracting and services firms, and the post commissaries / exchanges / medical services. Outside the base, Bell County government, Baylor Scott & White Medical Center, Central Texas College, Texas A&M University-Central Texas, and the broader retail and services base supporting ~150K active-duty + civilian personnel. Submarkets stratify by proximity to base and school district: areas closer to base gates (parts of north and east Killeen) have the highest military-tenant turnover; Harker Heights and Nolanville are the premium suburban-school options drawing officer and senior NCO family rentals; Copperas Cove on the west side has its own school district and military character; the south Killeen / Belton corridor offers some workforce alternatives.
BAH (Basic Allowance for Housing) effectively sets a rent ceiling and floor — DoD publishes per-zip BAH rates by rank, and rents converge toward those numbers. Pull the current Killeen BAH table per rank before underwriting any rent assumption. Texas has no state income tax (a structural cash-flow advantage). Property tax at 1.68% is on the higher end nationally — Texas property tax compensates for the absence of state income tax, and Bell County's appraisal cycle is annual; new buyers don't inherit the seller's lower assessment. Insurance is reasonable (no coastal exposure) but verify tornado/hail deductible structure. The structural risks: BRAC (Base Realignment and Closure) or force-strength reductions would directly affect Killeen rental demand, and the tenant base turns over annually with PCS rotations — vacancy is more cyclical than the headline number suggests. For investors who want genuine cash-flow math and are comfortable with military-tenant operational characteristics, Killeen is one of the most defensible Texas options.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Killeen's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $250,000, the $1,320/mo rent produces only $714/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 ($50K at 7%) would result in approximately $-616/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 27% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Killeen a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
All figures below are computed from Killeen's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
At 1.68% effective rate on the $250,000 median price, the annual tax bill is $4,200 — that's very high (top 15% of US markets) (+58% 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.
If Killeen continues appreciating at 2.4%/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 | $250K | $1,320 | 3.4% |
| Year 1 | $256K | $1,360 | 3.4% |
| Year 2 | $262K | $1,400 | 3.5% |
| Year 3 | $268K | $1,442 | 3.5% |
| Year 4 | $275K | $1,486 | 3.5% |
| Year 5 | $281K | $1,530 | 3.5% |
Same median-priced Killeen 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 | $250K | $714 | $8,563 | 3.4% |
| 20% down conventional @ 7% | $58K | $-616 | $-7,397 | -12.9% |
| 25% down DSCR @ 8.5% | $73K | $-728 | $-8,740 | -12.1% |
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) | $188K | $1,122 | $6,494 | 3.5% | $541 |
| At median | $250K | $1,320 | $7,028 | 2.8% | $586 |
| Above median (~125% price) | $313K | $1,518 | $7,563 | 2.4% | $630 |
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 Killeen's historical appreciation rate of 2.4%:
On a $50K down payment, that's a 19.0% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Automated checks against the underlying data — surface only the risks that actually apply to Killeen, not generic boilerplate:
Pre-filled with Killeen medians. Adjust to match a specific property.
Factor in financing to see your actual return on invested capital in Killeen.
Killeen, TX has a population of 160,200 and has been growing at 1.2% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $250,000 paired with median rents of $1,320/mo produces an estimated cap rate of 3.43%.
Property taxes at 1.68% 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 6.8% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 5.1x, homes cost about 5.1 times the local median income of $48,600. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.4% 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, Killeen 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.