Starkville, MS Cap Rate 5.39%
Starkville is a budget-friendly market in the South with a small but investable metro of 50,000. At a 5.39% estimated cap rate, this is a moderate market where rents of $1,510/mo lag behind home prices. With a median home price of $245,000 and population is roughly stable, Starkville offers opportunities for investors who source deals carefully.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Starkville
Starkville's 0.6% rent-to-price ratio is well below the 1% rule. At median prices of $245,000, the $1,510/mo rent produces only $1,100/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 ($49K at 7%) would result in approximately $-203/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 13.5x gross rent multiplier and 7.4% vacancy rate position Starkville as a value-oriented market. With annual appreciation at 1.8%, total returns (cash flow + equity growth) run approximately 7.2% before financing leverage.
Deal Modeling & Scenarios for Starkville
All figures below are computed from Starkville'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 $245,000 median price, the annual tax bill is $1,617 — 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 Starkville 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 | $245K | $1,510 | 5.4% |
| Year 1 | $249K | $1,555 | 5.5% |
| Year 2 | $254K | $1,602 | 5.5% |
| Year 3 | $258K | $1,650 | 5.6% |
| Year 4 | $263K | $1,700 | 5.6% |
| Year 5 | $268K | $1,751 | 5.7% |
Three Financing Scenarios
Same median-priced Starkville 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 | $245K | $1,100 | $13,202 | 5.4% |
| 20% down conventional @ 7% | $56K | $-203 | $-2,439 | -4.3% |
| 25% down DSCR @ 8.5% | $71K | $-313 | $-3,754 | -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) | $184K | $1,284 | $9,855 | 5.4% | $821 |
| At median | $245K | $1,510 | $11,283 | 4.6% | $940 |
| Above median (~125% price) | $306K | $1,736 | $12,711 | 4.2% | $1,059 |
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 Starkville's historical appreciation rate of 1.8%:
On a $49K down payment, that's a 51.8% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Starkville
Automated checks against the underlying data — surface only the risks that actually apply to Starkville, not generic boilerplate:
Cap Rate Calculator — Starkville
Pre-filled with Starkville medians. Adjust to match a specific property.
Cash-on-Cash Return — Starkville
Factor in financing to see your actual return on invested capital in Starkville.
Is Starkville a Good Place to Invest in Rental Property?
Starkville, 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 $245,000 paired with median rents of $1,510/mo produces an estimated cap rate of 5.39%.
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 6.2x, homes cost about 6.2 times the local median income of $39,333. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. 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: Starkville presents moderate opportunities. Cap rates near 5.39% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.