What Is a Good Cap Rate in 2026? (By City & Property Type)
The "right" cap rate depends entirely on where you buy and what you want. A 4% cap rate is excellent in Manhattan. A 4% cap rate in Cleveland would be a disaster for a cash-flow investor. This guide shows you exactly what cap rates to expect in 2026 by US city, property type, and investment strategy.
Quick Answer: A good cap rate for US rental property in 2026 is generally 5%–10%. The national average is ~6.71%. Anything above 8% is strong cash flow; below 4% is appreciation-play territory. Use our cap rate calculator to aAnalyze any property.
Cap Rate Scale: What Each Range Means
| Cap Rate Range | Rating | Typical Market / Property |
|---|---|---|
| Below 3% | Very Low | NYC luxury condos, SF prime, ultra-trophy assets |
| 3%–4.9% | Low | Coastal tier-1 cities — appreciation play |
| 5%–6.9% | Average | Balanced markets: Atlanta, Dallas, Denver |
| 7%–8.9% | Good | Strong cash-flow markets: Indianapolis, Columbus, Memphis |
| 9%–11% | Excellent | High-yield markets: Cleveland, Detroit, some Ohio cities |
| Above 12% | Warning | Distressed areas — high risk, verify NOI carefully |
2026 Cap Rate Benchmarks by US City
| City | Avg Cap Rate (Residential) | Market Type |
|---|---|---|
| Cleveland, OH | 7%–11% | High cash flow |
| Detroit, MI | 7%–10% | High cash flow / value-add |
| Memphis, TN | 7%–10% | Strong landlord market |
| Indianapolis, IN | 6%–9% | Balanced cash flow |
| Columbus, OH | 6%–8% | Growing market |
| Birmingham, AL | 7%–9% | Emerging cash flow |
| Kansas City, MO | 6%–8% | Stable landlord market |
| Dallas-Fort Worth, TX | 5%–7% | Appreciation + cash flow |
| Atlanta, GA | 5%–7% | Appreciation + cash flow |
| Charlotte, NC | 5%–7% | Growing secondary market |
| Phoenix, AZ | 4%–6% | Appreciation-focused |
| Austin, TX | 4%–5.5% | Tech-driven appreciation |
| Miami, FL | 4%–6% | Tourism + appreciation |
| Chicago, IL | 5%–7% | Mixed — varies by neighborhood |
| Los Angeles, CA | 3%–5% | Long-term appreciation play |
| Seattle, WA | 3%–4.5% | Tech sector appreciation |
| New York City, NY | 3%–4.5% | Preservation of capital + appreciation |
| San Francisco, CA | 2.5%–4% | Pure appreciation play |
Good Cap Rate by Property Type
| Property Type | Good Cap Rate (2026) | Notes |
|---|---|---|
| Single-Family Rental (SFR) | 5%–9% | Widest range depending on market |
| Small Multifamily (2–4 units) | 6%–10% | Better cash flow than SFR generally |
| Apartment Complex (5+ units) | 5%–8% | Lower rates due to institutional demand |
| Industrial / Warehouse | 5%–7% | Compressed by e-commerce demand |
| Retail Strip Mall | 6%–8% | Higher risk reflects retail headwinds |
| Office Building | 6%–9% | Elevated post-COVID due to WFH |
| Net Lease (NNN) | 4%–6% | Low risk, passive income |
| Self-Storage | 5%–7% | Recession-resistant, low capex |
| Mobile Home Parks | 6%–9% | Affordable housing demand drives growth |
Calculate the Cap Rate on Any Property
Enter the property price and NOI to instantly see your cap rate, gauge rating, and 2026 market context.
Use the Free Cap Rate Calculator →Frequently Asked Questions
What is a good cap rate for a rental property?
In 2026, a good cap rate for residential rental property is 5%–10%. A 5%–7% cap rate is solid for stable primary markets. An 8%–10% cap rate is strong and typically found in Midwest cash-flow markets. Cap rates below 4% are common in high-appreciation coastal cities where investors bet on price growth over income.
Is a 7% cap rate good?
Yes — 7% is considered good to very good for most US markets in 2026. It's above the national average (~6.71%) and is achievable in Midwest and Sun Belt secondary markets like Indianapolis, Columbus, and Memphis. At a 7% cap rate with $21,000 NOI, the implied property value is $300,000.
What is the national average cap rate in 2026?
The national average gross rental yield for US single-family rentals in 2026 is approximately 6.71%. For multifamily apartments nationally, cap rates average 5.5%–6.5%. Commercial cap rates vary: industrial 5–7%, retail 6–8%, office 6–9%.
Does a higher cap rate always mean a better investment?
No. A high cap rate (above 12%) often signals high risk — distressed neighborhood, problem tenants, significant deferred maintenance, or high vacancy. Cap rate reflects risk as much as it reflects return. Always investigate why a cap rate is unusually high before buying. Verify the NOI with 12 months of actual income and expense documentation.
How do I find the cap rate of a property for sale?
Ask the seller or listing agent for the trailing 12-month (T12) income statement and rent roll. Calculate NOI = gross income minus operating expenses (no mortgage). Divide NOI by asking price. Verify all numbers independently — sellers sometimes inflate income or exclude expenses to make the property look more profitable.