Texas Rental Property ROI Calculator
Free Texas rental property ROI calculator. Analyze cash flow, cap rate, and cash-on-cash return using Texas's 1.8% property tax rate.
How This Calculator Works
Calculation methodology and assumptions
This calculator uses standard real estate investment analysis to determine the return on a rental property in Texas. It factors in the mortgage payment (using a standard amortization formula), property taxes at Texas's effective rate of 1.8%, insurance, vacancy loss, maintenance reserves, and property management fees. The cap rate is calculated as Net Operating Income divided by purchase price. Cash-on-cash return measures annual cash flow relative to total cash invested (down payment + estimated closing costs). The 10-year projection assumes 3% annual appreciation and 2% annual rent increases.
Key State Information
Texas has an effective property tax rate of 1.8%, which is above the national average of 1.10%. Texas has no state income tax, which can improve your net rental income. Texas offers a homestead exemption of up to $100,000 (applies to primary residence, not investment properties).
Frequently Asked Questions
What is the average property tax rate in Texas?
Texas's effective property tax rate is 1.8%, which means on a $310,000 home, you'd pay approximately $5,580 per year in property taxes.
Is Texas a good state for rental property investment?
Texas offers a median home price of $310,000 with 2BR rents averaging $1275/month. The higher property tax rate reduces net cash flow but may be offset by strong rental demand. Use this calculator with your specific numbers to determine the actual ROI.
What is a good cap rate for rental property in Texas?
A cap rate of 5-8% is generally considered good for rental properties. In Texas, cap rates vary significantly by market. Urban areas tend to have lower cap rates (3-5%) but more consistent appreciation, while rural areas may offer higher cap rates (7-10%) with less growth potential.
How much do I need to invest in a rental property in Texas?
For a median-priced home in Texas ($310,000), a 20% down payment would be $62,000. Including estimated closing costs of $9,300, you'd need approximately $71,300 in cash.
Does Texas have landlord-friendly laws?
Texas is generally considered landlord-friendly with relatively streamlined eviction processes.
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