Meridian, MS Cap Rate 8.45%
Meridian is one of the most affordable markets in the country in the South with a small but investable metro of 50,000. At a 8.45% estimated cap rate, this is a high-yield market where rents of $1,070/mo lag behind home prices. With a median home price of $120,000 and population is roughly stable, Meridian stands out as a market worth serious analysis for rental investors.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Meridian
At a 0.9% rent-to-price ratio, Meridian falls just below the 1% rule threshold. A median-priced property at $120,000 with $1,070/mo rent yields approximately $845/mo in NOI — workable with favorable financing but not a slam-dunk cash flow market.
With 20% down ($24K) on a 7% conventional loan, estimated monthly cash flow is $207 — a 10.3% cash-on-cash return. That's strong enough to weather vacancies and unexpected repairs without dipping into reserves.
The 9.3x gross rent multiplier and 7.4% vacancy rate position Meridian as a value-oriented market. With annual appreciation at 1.8%, total returns (cash flow + equity growth) run approximately 10.2% before financing leverage.
Deal Modeling & Scenarios for Meridian
All figures below are computed from Meridian's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.66% effective rate on the $120,000 median price, the annual tax bill is $792 — that's below national average (-38% 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 Meridian continues appreciating at 1.8%/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 | $120K | $1,070 | 8.4% |
| Year 1 | $122K | $1,102 | 8.5% |
| Year 2 | $124K | $1,135 | 8.6% |
| Year 3 | $127K | $1,169 | 8.7% |
| Year 4 | $129K | $1,204 | 8.9% |
| Year 5 | $131K | $1,240 | 9.0% |
Three Financing Scenarios
Same median-priced Meridian 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 | $120K | $845 | $10,138 | 8.4% |
| 20% down conventional @ 7% | $28K | $206 | $2,477 | 9.0% |
| 25% down DSCR @ 8.5% | $35K | $153 | $1,833 | 5.3% |
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) | $90K | $910 | $7,411 | 8.2% | $618 |
| At median | $120K | $1,070 | $8,563 | 7.1% | $714 |
| Above median (~125% price) | $150K | $1,231 | $9,725 | 6.5% | $810 |
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 Meridian's historical appreciation rate of 1.8%:
On a $24K down payment, that's a 128.3% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Meridian
Automated checks against the underlying data — surface only the risks that actually apply to Meridian, not generic boilerplate:
Cap Rate Calculator — Meridian
Pre-filled with Meridian medians. Adjust to match a specific property.
Cash-on-Cash Return — Meridian
Factor in financing to see your actual return on invested capital in Meridian.
Is Meridian a Good Place to Invest in Rental Property?
Meridian, MS has a population of 50,000 and has been growing at 0.2% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $120,000 paired with median rents of $1,070/mo produces an estimated cap rate of 8.45%.
Property taxes at 0.66% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 7.4% runs above average, which increases cash flow volatility and warrants conservative underwriting.
At a price-to-income ratio of 3.1x, homes cost about 3.1 times the local median income of $39,333. This relatively affordable ratio suggests a deep pool of renters who find buying out of reach, supporting rental demand. Home values have appreciated at roughly 1.8% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Meridian offers attractive fundamentals for rental investors. low taxes, and cap rates above 6% put it in the upper tier of investable markets.