Kissimmee, FL Cap Rate 3.99%
Kissimmee is structurally unlike any other US rental market — it's the most concentrated short-term-rental (STR) economy in the country, with Disney-adjacent vacation-home communities forming the dominant rental market. The 3.99% cap rate at a $385,000 median price reflects this — much of the rental inventory is purpose-built for STR rather than long-term leasing, which distorts the headline metrics. The 0.50% rent-to-price ratio (which assumes long-term rental income) sits below the 1% rule, but STR-mode income can run 2-3× higher with proportionally higher operational costs.
Employment is anchored almost entirely by the Disney World tourism ecosystem (Walt Disney World is in adjacent Lake Buena Vista — collectively the largest single-site employer in the US; the broader supporting tourism, hospitality, retail, and services economy extends throughout the Kissimmee metro), Universal Orlando's expansion just north (Epic Universe opened 2025), the broader Osceola County government, AdventHealth Kissimmee and Osceola Regional Medical Center, the broader vacation-home services economy (property management, cleaning, repair, supply — a meaningful Osceola County employment cluster supporting the STR market), Valencia College, and a meaningful Disney-employee residential base (Disney workforce housing is a recurring local development topic). Submarkets stratify dramatically by STR positioning: the Reunion / ChampionsGate / Storey Lake / Solara Resort areas are purpose-built vacation-home communities with HOA-approved STR overlay (these are the dominant Kissimmee investment products — single-family homes specifically designed for nightly rental); the Celebration area (Disney-built planned community) is residential-only without STR rights; the broader Osceola County has standard suburban residential inventory; the older Kissimmee proper has more workforce-rental inventory.
Florida has no state income tax (a structural cash-flow advantage). Osceola County's property tax at 0.88% is moderate by Florida standards, with sale-triggered reassessment. Insurance is reasonable for inland Kissimmee (no Gulf storm-surge exposure though wind/hurricane coverage applies — meaningfully cheaper than coastal Florida). STR regulation is the central operational variable — Osceola County is one of the more STR-permissive counties in Florida, but specific HOA communities have varying rules (some allow daily rental, some 7-day minimum, some 30-day minimum). Verify HOA rules and county zoning per parcel — this is the most important pre-purchase diligence step in Kissimmee. The structural advantages: Disney's sustained capital investment is genuinely durable; Universal Orlando's expansion adds demand; STR economics can produce 2-3× long-term rental yield in the right inventory. The structural risks: heavy STR concentration means sensitivity to discretionary-travel cycles, regulatory changes, and HOA-level rule changes; STR operations are materially more complex than long-term rentals and have higher operational cost structure.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Kissimmee
Kissimmee's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $385,000, the $1,920/mo rent produces only $1,281/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 ($77K at 7%) would result in approximately $-767/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 Kissimmee as a balanced market. With annual appreciation at 3.8%, total returns (cash flow + equity growth) run approximately 7.8% before financing leverage.
Deal Modeling & Scenarios for Kissimmee
All figures below are computed from Kissimmee's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.88% effective rate on the $385,000 median price, the annual tax bill is $3,388 — that's near national average (-17% 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 Kissimmee continues appreciating at 3.8%/yr while rents grow at a conservative 3%/yr, cap rate compresses as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $385K | $1,920 | 4.0% |
| Year 1 | $400K | $1,978 | 4.0% |
| Year 2 | $415K | $2,037 | 3.9% |
| Year 3 | $431K | $2,098 | 3.9% |
| Year 4 | $447K | $2,161 | 3.9% |
| Year 5 | $464K | $2,226 | 3.8% |
Three Financing Scenarios
Same median-priced Kissimmee 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 | $385K | $1,281 | $15,374 | 4.0% |
| 20% down conventional @ 7% | $89K | $-767 | $-9,204 | -10.4% |
| 25% down DSCR @ 8.5% | $112K | $-939 | $-11,272 | -10.1% |
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) | $289K | $1,632 | $11,736 | 4.1% | $978 |
| At median | $385K | $1,920 | $13,228 | 3.4% | $1,102 |
| Above median (~125% price) | $481K | $2,208 | $14,719 | 3.1% | $1,227 |
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 Kissimmee's historical appreciation rate of 3.8%:
On a $77K down payment, that's a 72.7% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Kissimmee
Automated checks against the underlying data — surface only the risks that actually apply to Kissimmee, not generic boilerplate:
Cap Rate Calculator — Kissimmee
Pre-filled with Kissimmee medians. Adjust to match a specific property.
Cash-on-Cash Return — Kissimmee
Factor in financing to see your actual return on invested capital in Kissimmee.
Is Kissimmee a Good Place to Invest in Rental Property?
Kissimmee, FL has a population of 82,600 and has been growing at 2.8% annually — well above the national average, signaling strong housing demand from population inflows. The median home price of $385,000 paired with median rents of $1,920/mo produces an estimated cap rate of 3.99%.
Property taxes at 0.88% 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 8.3x, homes cost about 8.3 times the local median income of $46,200. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. Home values have appreciated at roughly 3.8% annually. Above-average appreciation adds an equity component to total returns, though deals should still pencil on cash flow alone.
Bottom line: At current median prices, Kissimmee 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.