Wichita Falls, TX Cap Rate 5.86%
Wichita Falls is a North Texas military market — anchored almost entirely by Sheppard Air Force Base, which hosts the Air Force's primary technical training mission plus the Euro-NATO Joint Jet Pilot Training program (the only NATO-sponsored pilot training program in the world). The 5.86% cap rate at a $170,000 median price keeps the 0.74% rent-to-price ratio at or above the 1% rule in many submarkets — Wichita Falls remains a genuine cash-flow market. Population growth at 1.8%/yr is essentially flat.
Employment is anchored by Sheppard Air Force Base (the 82nd Training Wing — the Air Force's primary technical training installation, training thousands of new airmen annually; the Euro-NATO Joint Jet Pilot Training program brings international military students; collectively one of the larger US military training installations by population, with the broader Department of Defense civilian and contractor workforce), United Regional Health Care System (the dominant regional medical system serving North Texas), Midwestern State University - now MSU Texas (the regional public university), Sheppard Operations Center contractors, the broader Wichita County government, and a meaningful agricultural and oil-services base tied to the broader North Texas economy. Submarkets stratify cleanly: the historic West End / Bridwell Park area is walkable urban with strong appreciation; the broader Burkburnett north (closer to Sheppard) and the western Wichita Falls draw military officer family rentals at BAH-supported pricing; the eastside and parts of central Wichita Falls offer deeper-value workforce inventory with the operational complexity that comes with older housing stock and the military-tenant turnover dynamics.
Texas has no state income tax (a structural cash-flow advantage). Property tax at 1.72% is on the higher end nationally (Texas property tax compensates for no state income tax). Wichita County's appraisal cycle is annual. Insurance is reasonable but verify tornado / hail deductible structure (the North Texas / Red River area has meaningful severe-weather exposure). BAH (Basic Allowance for Housing) sets a predictable rent ceiling and floor in Sheppard-adjacent submarkets — pull the current Wichita Falls BAH table per rank before underwriting. The structural advantages: training-mission concentration makes Sheppard one of the less BRAC-consolidable Air Force bases; BAH provides a predictable rent floor; genuine cash-flow math at the median; cost basis is materially below the major Texas metros. The structural risks: any major force-structure or training-mission decision would directly affect rental demand; the military tenant base turns over rapidly with the technical-training cycles (students typically rotate every 3-12 months); Wichita Falls proper has had historical population trajectory weakness. For investors who want military-anchored Texas tax structure with genuine cash-flow math, Wichita Falls is one of the most defensible smaller Air Force base options.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Wichita Falls
Wichita Falls's 0.7% rent-to-price ratio is well below the 1% rule. At median prices of $170,000, the $1,260/mo rent produces only $830/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 ($34K at 7%) would result in approximately $-74/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 19% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Wichita Falls a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Deal Modeling & Scenarios for Wichita Falls
All figures below are computed from Wichita Falls'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 $170,000 median price, the annual tax bill is $2,924 — 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 Wichita Falls 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 | $170K | $1,260 | 5.9% |
| Year 1 | $175K | $1,298 | 5.9% |
| Year 2 | $179K | $1,337 | 5.9% |
| Year 3 | $184K | $1,377 | 5.9% |
| Year 4 | $189K | $1,418 | 5.9% |
| Year 5 | $194K | $1,461 | 5.9% |
Three Financing Scenarios
Same median-priced Wichita Falls 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 | $170K | $830 | $9,959 | 5.9% |
| 20% down conventional @ 7% | $39K | $-74 | $-894 | -2.3% |
| 25% down DSCR @ 8.5% | $49K | $-151 | $-1,807 | -3.7% |
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) | $128K | $1,071 | $7,347 | 5.8% | $612 |
| At median | $170K | $1,260 | $8,220 | 4.8% | $685 |
| Above median (~125% price) | $213K | $1,449 | $9,092 | 4.3% | $758 |
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 Wichita Falls's historical appreciation rate of 2.7%:
On a $34K down payment, that's a 88.1% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Wichita Falls
Automated checks against the underlying data — surface only the risks that actually apply to Wichita Falls, not generic boilerplate:
Cap Rate Calculator — Wichita Falls
Pre-filled with Wichita Falls medians. Adjust to match a specific property.
Cash-on-Cash Return — Wichita Falls
Factor in financing to see your actual return on invested capital in Wichita Falls.
Is Wichita Falls a Good Place to Invest in Rental Property?
Wichita Falls, 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 $170,000 paired with median rents of $1,260/mo produces an estimated cap rate of 5.86%.
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: Wichita Falls presents moderate opportunities. Cap rates near 5.86% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.