St. Louis, MO Cap Rate: 3.87% — Rental Property Analysis
St. Louis is a mid-range market in the Midwest with a mid-sized city of 293,310. At a 3.87% estimated cap rate, this is a appreciation-focused market where rents of $1,400/mo lag behind home prices. With a median home price of $265,000 and population is roughly stable, St. Louis is primarily an appreciation play that requires creative strategies to generate positive cash flow.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
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Challenging for pure cash flow
Based on $265,000 median price and $1,400/mo median rent
Est. Cap Rate
3.87%
1% Rule
0.53%
Fails
GRM
15.8x
Price / Income
5.5x
Market Data
Median Home Price$265,000
Median Monthly Rent$1,400
Property Tax Rate1.24%
Population293,310
Population Growth0.1% / yr
Median Household Income$47,800
Vacancy Rate6.8%
Annual Appreciation2.2%
2026 Market Update: St. Louis
St. Louis's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $265,000, the $1,400/mo rent produces only $854/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 ($53K at 7%) would result in approximately $-556/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 20% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes St. Louis a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Cap Rate Calculator — St. Louis
Pre-filled with St. Louis medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
1.24% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.13%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$8,290
net operating income
Gross Rent Multiplier
15.8x
High (>15)
1% Rule
0.53%
✗ Fails
Monthly Cash Flow
$691
before debt service
Annual Breakdown
Gross Rental Income$16,800
Less Vacancy−$1,142
Effective Income$15,658
Less Operating Expenses−$7,368
Net Operating Income$8,290
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Factor in financing to see your actual return on invested capital in St. Louis.
$
$66,250
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-7.82%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$74,200
$66,250 down + $7,950 closing
Monthly Mortgage
$1,296
on $199K loan
Monthly Cash Flow
$-484
after all expenses
Annual Cash Flow
$-5,804
before taxes
Cash Flow Breakdown
Monthly Rent$1,400
Less Expenses−$588
Less Mortgage−$1,296
Monthly Cash Flow$-484
Is St. Louis a Good Place to Invest in Rental Property?
St. Louis, MO has a population of 293,310 and has been growing at 0.1% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $265,000 paired with median rents of $1,400/mo produces an estimated cap rate of 3.87%.
Property taxes at 1.24% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 6.8% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 5.5x, homes cost about 5.5 times the local median income of $47,800. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.2% 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, St. Louis 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.
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