Cap Rate in Birmingham, AL

2026 Market Overview for Real Estate Investors

Avg Cap Rate

8.5%

#7 of 50 markets

Median Home Price

$125,000

Purchase price

Median Monthly Rent

$1,100

$13,200/yr gross

Rent-to-Price Ratio

0.88%

Strong (1% rule range)

Cap Rate Rating

Very Good

Above average. Make sure the higher return is not masking higher risk or deferred maintenance.

Market Snapshot

Population	196,353
5-Year Population Growth	-1.0%
Median Household Income	$38,000
Vacancy Rate	9.0%
Property Tax Rate	0.43%($538/yr)

Investor Takeaway

Birmingham combines high cap rates with the lowest property taxes in the country. The UAB medical district anchors job growth and provides reliable tenant demand in surrounding neighborhoods.

Quick Math

Estimated annual numbers for a median-priced property in Birmingham, AL before financing:

Annual Gross Rent$13,200

Less Vacancy (9.0%)($1,188)

Less Property Tax (0.43%)($538)

Less Est. Insurance + Maintenance($2,500)

Estimated NOI$8,975

Implied Cap Rate7.2%

Estimates based on median values. Insurance + maintenance estimated at 2% of home value. Actual results vary by property condition, neighborhood, and management.