Texarkana, TX Cap Rate 4.84%
Texarkana is structurally unique — a single metropolitan area straddling the Texas-Arkansas state line, with the state border literally running down State Line Avenue through downtown. The 4.84% cap rate at a $175,000 median price keeps the 0.65% rent-to-price ratio close to functional. Population growth at 1.8%/yr is essentially flat.
Employment is anchored by Red River Army Depot just west of Texarkana (the Army's major Bradley Fighting Vehicle and HMMWV maintenance, overhaul, and life-extension depot; a meaningful federal-contractor employer for the metro), CHRISTUS St. Michael Health System and Wadley Regional Medical Center (the dominant regional medical systems), Texas A&M University-Texarkana, Texarkana College, the broader Bowie County (TX) and Miller County (AR) governments, Cooper Tire & Rubber Company operations (now Goodyear after the 2021 acquisition), International Paper, and a meaningful logistics base tied to the I-30 / I-49 corridor. The bi-state structure creates unusual investor dynamics — the Texas side has Texas tax structure (no state income tax) while the Arkansas side has Arkansas tax structure (income tax but lower property tax); landlords can choose their state based on operational preference. Submarkets stratify cleanly: the historic Highland Park area is walkable urban with strong appreciation; the broader Wake Village west and the south Texarkana suburbs draw professional family rentals; the AR-side Texarkana extends with cheaper basis; central Texarkana offers deeper-value workforce inventory.
Texas has no state income tax (the central structural advantage for TX-side investors). TX property tax at 1.72% is on the higher end nationally. AR side has graduated state income tax (top rate near 4.4%) but lower property tax than TX. Bowie County's appraisal cycle is annual. Insurance is reasonable but verify tornado / severe-weather deductible structure. The structural advantages: Red River Army Depot is durable federal-contractor employment; the bi-state structure offers landlords tax-structure choice; cost basis is among the lowest in either Texas or Arkansas; regional-hub role concentrates retail and services. The structural risks: any major Army restructuring affecting Red River Depot would ripple to the metro; population trajectory has been weak; per-block variance is significant. For investors who want bi-state optionality with a federal-employment anchor at very low cost basis, Texarkana is the most distinctive small-metro border option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Texarkana
Texarkana's 0.7% rent-to-price ratio is well below the 1% rule. At median prices of $175,000, the $1,140/mo rent produces only $706/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 ($35K at 7%) would result in approximately $-225/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 22% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Texarkana a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Deal Modeling & Scenarios for Texarkana
All figures below are computed from Texarkana's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 1.72% effective rate on the $175,000 median price, the annual tax bill is $3,010 — that's very high (top 15% of US markets) (+62% 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 Texarkana continues appreciating at 2.7%/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 | $175K | $1,140 | 4.8% |
| Year 1 | $180K | $1,174 | 4.9% |
| Year 2 | $185K | $1,209 | 4.9% |
| Year 3 | $190K | $1,246 | 4.9% |
| Year 4 | $195K | $1,283 | 4.9% |
| Year 5 | $200K | $1,322 | 4.9% |
Three Financing Scenarios
Same median-priced Texarkana 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 | $175K | $706 | $8,477 | 4.8% |
| 20% down conventional @ 7% | $40K | $-225 | $-2,695 | -6.7% |
| 25% down DSCR @ 8.5% | $51K | $-303 | $-3,635 | -7.2% |
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) | $131K | $969 | $6,311 | 4.8% | $526 |
| At median | $175K | $1,140 | $6,988 | 4.0% | $582 |
| Above median (~125% price) | $219K | $1,311 | $7,665 | 3.5% | $639 |
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 Texarkana's historical appreciation rate of 2.7%:
On a $35K down payment, that's a 62.7% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Texarkana
Automated checks against the underlying data — surface only the risks that actually apply to Texarkana, not generic boilerplate:
Cap Rate Calculator — Texarkana
Pre-filled with Texarkana medians. Adjust to match a specific property.
Cash-on-Cash Return — Texarkana
Factor in financing to see your actual return on invested capital in Texarkana.
Is Texarkana a Good Place to Invest in Rental Property?
Texarkana, TX has a population of 50,000 and has been growing at 1.8% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $175,000 paired with median rents of $1,140/mo produces an estimated cap rate of 4.84%.
Property taxes at 1.72% 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 5.8% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 2.7x, homes cost about 2.7 times the local median income of $63,735. 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 2.7% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Texarkana presents moderate opportunities. Cap rates near 4.84% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.