Where Do Rental Properties Still Cash-Flow in 2026?
Published June 19, 2026 · DSCRRadar
Here’s the honest headline from the Investor Yield Index. At a 30-year rate near 6.8%, only 4 of the 18 metros we track clear the 1.2 DSCR that lenders want: Cleveland, Memphis, Birmingham, and Chicago. That’s not a failure of analysis, it’s the reality the analysis reveals.
One caveat up front. The Index runs on live Zillow home-value and rent feeds, and the 6.8% rate is a current market estimate rather than a live feed. Treat the scores as a relative ranking of cash-flow strength, not as quotes on a specific house.
Why it’s hard
For a rental to clear a 1.2 DSCR at a rate near 6.8% with 25% down and a 40% operating-expense load, you generally need a cap rate in the high single digits. Cap rates that high only exist where prices are low relative to rents, typically cheaper Midwest and Southern metros. Across the 18 tracked metros, cap rates run from about 3.8% on the low end to roughly 8.5% in Birmingham, and only the high end clears the lender’s bar.
Where it still works
The markets that score highest on the Index share traits. Lower median prices, stable rents, and rent-to-price ratios that survive financing. Cleveland leads the Index at 100, with a 1.22 DSCR and a positive 4.6% cash-on-cash return. Memphis (1.42 DSCR) and Birmingham (1.45 DSCR) clear the bar with more room to spare, and Chicago (1.23) makes the cut too. Six metros run a positive cash-on-cash return: those four plus Tampa and Indianapolis. They trade cash flow for slower appreciation.
Where it doesn’t (but appreciation might)
Expensive Sun Belt and coastal markets such as Austin, Phoenix, and much of Florida and California score poorly on cash flow. Investors there are betting on appreciation and loan paydown, not monthly income. That can work, but it’s a different bet than cash-flow investing.
How to use this
Don’t chase the highest Index score blindly. The score weights cap rate and DSCR most heavily at 30% each, then gross yield and cash-on-cash at 20% each, so it rewards markets that pencil out after the mortgage, not just high headline yields. Use it to narrow the list, then run your specific deal through the calculator. The Index is a starting point, not a verdict. Your actual property, financing, and management decide the real return.
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