Updated 2026 · Based on median market data for Waco, TX
Waco's price-to-income ratio is 5.8x — homes cost 5.8 times the local median household income of $42,800. Housing is stretched relative to local incomes. At 5.8x income, a household earning $42,800 can only comfortably afford a home around $149,800 — well below the $250,000 median. This gap locks a large portion of the population into renting, creating deep and persistent rental demand. The national average price-to-income ratio is approximately 4.5x, putting Waco above the national norm.
A typical mortgage payment on a median-priced home in Waco (20% down at 7%) is approximately $1,330/mo for principal and interest alone — add taxes and insurance and the all-in payment reaches roughly $1,768/mo. The median rent of $1,420/mo is less than the cost of buying, supporting healthy rental demand from cost-conscious households who recognize that renting is the more affordable option in the near term. When renting is this much cheaper than buying, landlords benefit from a deep and sticky tenant pool that has strong economic reasons to keep renting. The gap between $1,420 in rent and $1,768 in ownership costs is a structural driver of your occupancy rates.
The median household income in Waco is $42,800, with a population of 143,006 growing at 0.9% per year. Waco is a mid-sized city with enough economic diversity to weather most downturns, though it may be more dependent on a few key employers or industries. Research the top 3-5 employers to understand concentration risk. Moderate incomes support a working-class to middle-class tenant base.
In Waco, renters spend approximately 40% of median income on rent — above the 30% affordability threshold. This means your tenant base skews toward cost-burdened households who have no realistic path to homeownership at current prices. While this creates reliable demand, it also means tenants are more sensitive to rent increases and may have thinner financial cushions. The affordable rent ceiling based on 30% of median income is $1,070/mo. Current rents are near this ceiling, meaning further increases must be matched by income growth. With homeownership out of reach for most, expect a deep renter pool that includes professionals, families, and retirees.
Waco offers moderate stability with a mid-sized population base of 143,006. Positive growth of 0.9% supports ongoing demand, though the market could be more sensitive to economic shocks than a major metro. The 6.2% vacancy rate indicates balanced supply and demand. Diversify across 2-3 neighborhoods within Waco to reduce sub-market concentration risk.
Entry into Waco's rental market requires approximately $57,500 in total capital per property — $50,000 for the 20% down payment plus roughly $7,500 in closing costs, inspections, and initial repairs. This is an exceptionally low barrier to entry. An investor with $150,000 in deployable capital could acquire 2-3 properties, diversifying across neighborhoods and reducing per-unit risk. The low price point makes Waco one of the most accessible markets for first-time investors. Maintain reserves of at least 6 months of expenses (approximately $10,608 per property) before acquiring. The optimal portfolio size in Waco depends on your capital and management capacity, but 3-5 properties provides meaningful diversification while remaining manageable for a hands-on investor.
The stretched affordability means strong rental demand, but tight margins require precision. Target below-median prices where rents are still strong, or use value-add strategies to force equity and improve cash flow. Every dollar of expense reduction matters in this market. The bottom line: Waco's cost of living profile supports rental investment with disciplined deal selection.
Waco vs Texas state average and national average across key investment metrics. Waco outperforms both benchmarks on cap rate.