Top Markets for DSCR Loan Investors in 2026

Where the rent-to-price math actually works—and how to find deals that qualify.

Here’s a dirty secret about most “best markets for real estate investors” articles: they’re written by people who have never actually underwritten a deal.

They’ll tell you Austin is hot. Phoenix is growing. Tampa has great fundamentals. All true—but utterly useless if you’re trying to figure out whether a specific property will qualify for a DSCR loan at terms that make sense.

Because here’s what actually matters when you’re financing rental properties: can the rent service the debt? And at today’s rates, that math is harder than it was in 2021. A lot harder.

This guide is different. We’re going to show you exactly how to evaluate markets through the lens of DSCR viability, share our analysis of where the numbers work best in 2026, and give you the tools to do your own research. You can model any market using our DSCR Calculator to see how specific scenarios pencil out.

Let’s get into it.

The 2026 Supply Context: Why This Year Is Different

Before we dive into specific markets, here’s the macro backdrop that matters: the multifamily construction pipeline has collapsed—and that’s actually good news for DSCR investors.

According to CBRE’s 2025 Real Estate Market Outlook, multifamily construction starts are expected to be 74% below their 2021 peak and 30% below their pre-pandemic average by mid-2025. CoStar projects that 2026 completions will drop to just 250,000 units—down from a 40-year high of 588,000 in 2023.

What does this mean for DSCR investors? Markets that weathered the supply wave without major rent compression are positioned for accelerating rent growth as the pipeline clears. Meanwhile, markets that got hammered by oversupply—Austin, Phoenix, parts of Dallas—are still working through elevated vacancy. The divergence between supply-constrained and oversupplied markets has become the defining feature of 2026.

CBRE projects average multifamily rents to grow by 3.1% annually over the next five years—above the pre-pandemic average of 2.7%. But that’s a national average. CoStar notes that Midwest and Northeast markets posted the strongest rent gains, while Sun Belt markets including Dallas-Fort Worth and Phoenix struggled with oversupply and declining rents.

Translation: market selection matters more than ever.

The DSCR Math at Current Rates

Before we talk markets, let’s establish the baseline. Understanding how lenders calculate DSCR is essential to evaluating any deal.

At a 7.5% interest rate on a 30-year loan, here’s approximately what you need in gross rent relative to purchase price to hit various DSCR thresholds (assuming 25% down, typical taxes/insurance):

• 1.25x DSCR: ~0.85-0.90% monthly rent-to-price ratio (gross rent ÷ purchase price)
• 1.00x DSCR: ~0.70-0.75% monthly rent-to-price ratio
• 0.75x DSCR: ~0.55-0.60% monthly rent-to-price ratio

In dollar terms: a $300,000 property needs roughly $2,550-$2,700/month in rent to hit 1.25x DSCR, or $2,100-$2,250/month to hit 1.00x.

If that sounds like a lot of rent for a $300K property—you’re right. That’s why market selection matters so much. In some metros, those numbers are completely normal. In others, you’d be laughed out of the room. Check our DSCR loan requirements for program specifics.

Methodology: How We Evaluated Markets

We looked at the top 100 metros and evaluated them across five criteria that matter for DSCR investors:

1. Rent-to-Price Ratio: The fundamental DSCR math. Higher is better.
2. Rent Growth Trajectory: Markets where rents are growing position you for improving DSCR over time.
3. Vacancy Rates: Low vacancy means reliable income; high vacancy means DSCR calculations are theoretical.
4. Job and Population Growth: The underlying demand drivers that sustain rent growth.
5. Regulatory Environment: Landlord-friendly laws, reasonable permitting, and stable tax regimes.

We weighted rent-to-price ratio most heavily because it’s the make-or-break factor for DSCR qualification. A market can have amazing growth prospects, but if current rents don’t cover current debt service, you’re starting from a position of weakness.

Top 10 Markets for DSCR 1.25x+ Deals

These markets offer the best shot at hitting 1.25x DSCR or higher—the sweet spot where you qualify for the best rates, have comfortable cash flow, and build in a cushion for surprises. At AHL, 1.25x+ qualifies for both our Invest Star and Invest Star Plus programs with the most favorable terms.

1. Cleveland, OH

The poster child for Midwest cash flow—and the numbers prove it. According to RentCafe’s November 2025 data, the average rent in Cleveland is $1,555, while Zillow reports median rent at $1,150 (reflecting the mix of apartment types). Meanwhile, the median home price sits around $139,900 per Norada Real Estate—giving Cleveland some of the best rent-to-price ratios in the country.

RentCafe ranked Cleveland #4 on the list of cities to watch for rental activity in 2025, citing a 26% increase in rental page views and a 7% rise in favorited listings year-over-year. The city’s 59% renter-occupied household rate creates deep tenant demand.

The Cleveland Clinic and University Hospitals anchor the economy, providing stable healthcare employment. Case Western Reserve University adds an educated workforce and consistent rental demand. According to Steadily’s market analysis, Cleveland’s cost of living remains 37.82% below the national average, while home values continue appreciating—the Jefferson neighborhood saw an 18.1% year-over-year increase in sales prices.

Average cap rates in Ohio multifamily hover around 6% according to Colliers, though single-family investors report gross rental yields of 6.3%+ in Cleveland proper.

Watch for: Neighborhood selection is critical. Some areas are cash flow machines; others are war zones. Do your due diligence street by street. Top investment neighborhoods include Ohio City, Tremont (average rent $2,064/month), and University Circle.

2. Detroit, MI

Similar story to Cleveland but with arguably better trajectory. The city is genuinely rebounding—population decline has stabilized, and major employers are investing. Rent-to-price ratios of 0.85-1.0% are achievable in solid working-class neighborhoods. Our Michigan DSCR lending guide covers the local market in detail.

Watch for: Insurance costs can be elevated. Property taxes vary dramatically by municipality. Factor both into your analysis.

3. Indianapolis, IN

A larger, more institutional market than Cleveland or Detroit—and the data shows why investors love it. Per Realtor.com and Redfin data from early 2025, the median Indianapolis rent sits around $1,395, up roughly 3% year-over-year. The median home price is approximately $270,000, up just 2% from 2024—keeping cash flow margins viable.

The vacancy rate remains tight at just 5.1%—well below the national average of 6.4%. This combination of modest rent growth with stable prices creates the kind of long-term consistency most investors crave. RentCafe data shows average gross yields around 7.2%, higher than national averages for similar metro markets.

Zillow recently named Indianapolis the second hottest market in the U.S., driving increased investor interest. Per The Luxury Playbook’s analysis, vacancy rates are projected to stay low at 4% to 4.3% near job centers and universities, with rent growth forecast at 3.5% to 4.2% through 2026.

About 47% of Indianapolis residents rent as of 2025, creating sustained demand. Indiana remains one of the more landlord-friendly states in the Midwest, with straightforward eviction laws and no rent control measures. Average cap rates run 6-8% in the current environment.

Target neighborhoods: For cash flow: Speedway, Mars Hill, and Eagledale. For appreciation + rent growth: Fountain Square, Bates-Hendricks, and Broad Ripple.

Watch for: Competition from institutional buyers has increased. You may need to move fast on good deals. Fishers is considering a proposal to cap single-family rentals at 10%.

4. Memphis, TN

Memphis offers some of the nation’s highest rental yields—often above 12% according to RiverTown Realty—with a median home price of just $144,131. Per RentCafe data, the average apartment rent is $1,135, up 0.88% year-over-year, while Zillow reports median rent at $1,274.

Occupancy rates exceed 95%, signaling low vacancy and consistent demand. Meridian Property Management reports an impressive 3.5% vacancy rate in their portfolio—well below national averages. The rental market saw 90.6% occupancy in 2024, up 4.1% from the previous year.

FedEx headquarters and Amazon anchor the logistics hub, driving stable employment. St. Jude Children’s Research Hospital adds healthcare stability. Per American Heritage Lending’s Tennessee market analysis, Memphis average rents range from $1,050 to $1,175 with only 0-1% YoY growth—but the low entry prices make DSCR math work beautifully.

Tennessee’s tax-friendly environment—no state income tax—means investors keep more of their earnings. 54% of Memphis households rent, providing a deep tenant pool.

Target neighborhoods: Downtown Memphis, Midtown, and Binghampton offer the highest yields. Cooper-Young commands $1,100/month average for 1BR. Suburbs like Horn Lake and Olive Branch offer stability.

Watch for: Property crime in some areas. Insurance and property management costs can be higher than expected. About 3.9% of homes have mortgage delinquencies.

5. Birmingham, AL

Underrated market with solid fundamentals and some of the best landlord protections in the country. Per RentCafe, the average rent in Birmingham is $1,353, while Zillow reports median rent at $1,175—43% lower than the national median.

According to Matthews Real Estate’s Q3 2025 report, Birmingham multifamily cap rates average 7.0% with price per unit at $119,000. The metro’s 575,000+ jobs are anchored by the University of Alabama at Birmingham (UAB), which has an annual economic impact exceeding $12.1 billion.

MMG Real Estate Advisors projects healthy rent growth continuing in 2025, peaking at 3.2% in Q3 before easing to 2.9% by year-end. As of Q4 2024, Birmingham’s occupancy rate of 95.9% ranked sixth nationally among major markets.

Alabama is among the most landlord-friendly states. Per RealWealth, landlords can issue a 7-day notice for non-payment and terminate leases with 30-day notice. Property tax rates are among the lowest nationally. No rental licenses required.

Since 2018, over $725 million in mobility-related investment has created 2,200+ jobs, highlighting Birmingham’s emergence as a hub for electric vehicle production, led by Mercedes-Benz’s partnerships.

Target neighborhoods: Focus on revitalizing areas like Avondale, Highland Park, and Crestwood. Properties near UAB are in high demand.

Watch for: Class A vacancy reached 18.2% in Q3 2025 due to new supply—focus on Class B/C workforce housing which has been more resilient. Slower appreciation than higher-growth markets. This is a cash flow play, not a growth play.

6. St. Louis, MO

Large metro with surprising affordability. Per Northmarq’s 2025 analysis, St. Louis maintains 6% vacancy with rising rents—significantly better than oversupplied Sun Belt markets. The city proper has areas with excellent rent-to-price ratios (0.85%+), while suburban areas offer more appreciation potential with slightly lower yields.

Healthcare and education anchor the economy, with Washington University and BJC HealthCare providing stable employment.

Watch for: City vs. county dynamics—they’re essentially different markets with different regulatory environments.

7. Kansas City, MO/KS

One of our favorite balanced markets. Per PropStream’s 2026 analysis, Kansas City offers affordable living with a growing arts and culture scene, a central location ideal for logistics and business growth, and consistent rental demand.

Strong rent-to-price ratios (0.75-0.85%) combined with genuine population and job growth make this market compelling. Yardi’s apartment search data showed Kansas City among the markets most searched by renters seeking affordability—a sign of sustained demand.

Top employers include the Food and Drug Administration, T-Mobile, Ford Motor Inc., Tyson Foods, and Garmin International. The tech sector is expanding, and cost of living attracts remote workers relocating from coastal cities.

Watch for: Properties straddle Missouri and Kansas lines—different tax and regulatory environments.

8. Columbus, OH

The growth market among Midwest cash flow plays—and the data supports the hype. According to RL Property Management’s Q1 2025 Columbus market update, the average rent for a three-bedroom home sits at $1,738 per month—which remains well below the national average of $2,179, reinforcing Columbus’s affordability advantage.

The rental vacancy rate stands at just 4.1%—significantly lower than the 6.8% national average. Columbus offers a gross rental yield of 6.6%, making it an attractive market for investors seeking steady cash flow. Tenant demand remains high, with well-priced properties leasing in as little as 14-16 days in desirable areas.

The Intel semiconductor investment ($20 billion in new manufacturing facilities) is bringing thousands of high-paying jobs to the region. Ohio State University and a growing tech presence drive consistent demand.

RL Property Management notes that high-yield urban neighborhoods offer cap rates between 7-10% in areas like Hilltop, Linden, Franklinton, and Whitehall/Eastmoor. Franklinton is experiencing major redevelopment, with new mixed-use projects, breweries, and cultural hubs driving demand. Linden’s $50 million “ONE Linden” redevelopment initiative is enhancing amenities and infrastructure.

Ohio’s eviction process is landlord-friendly—if a tenant fails to pay rent, they must vacate within three days of receiving notice.

Watch for: Getting more competitive as institutional investors discover it. Best deals require off-market sourcing. New Source-of-Income Protection Ordinance requires landlords to accept Section 8 tenants if they meet screening criteria.

9. Cincinnati, OH

Slightly more expensive than Cleveland but with better growth prospects. Per Innago’s landlord-friendly state analysis, Columbus and Cincinnati have become Midwestern investment hotspots in 2025, with average gross rental yields between 7-12% and low competition compared to coastal cities.

Rent-to-price around 0.75-0.85%. Procter & Gamble headquarters and strong healthcare sector provide economic stability. Urban core is genuinely revitalizing.

Watch for: Neighborhoods vary dramatically. Target areas with stabilized revitalization, not speculative gentrification.

10. Pittsburgh, PA

Post-industrial rebirth story with legs. Tech sector growth (Google, Uber, CMU spinoffs) is real. Rent-to-price ratios around 0.75-0.85% in stable neighborhoods. Educated workforce supports rent growth.

Watch for: Older housing stock means higher maintenance. Factor in capital expenditure reserves.

Top 10 Markets for DSCR 1.0-1.25x Deals (Growth-Oriented)

These markets are harder to hit 1.25x+ DSCR, but 1.0-1.24x is achievable—and the appreciation and rent growth potential may justify the thinner initial margins.

1. San Antonio, TX

The most affordable of the major Texas metros. Rent-to-price ratios around 0.65-0.75% make 1.0-1.15x DSCR achievable with good deal selection. Strong military and healthcare employment. Per Fannie Mae’s January 2025 multifamily commentary, San Antonio should see above-average job growth of 1.3%. Our Texas DSCR lending guide covers the state’s unique considerations.

Why it works: Genuine affordability relative to other Texas cities. Population growth continues despite challenges elsewhere in the state.

2. Jacksonville, FL

Northeast Florida’s largest city offers better DSCR math than South Florida markets. Rent-to-price around 0.65-0.75%. Port and logistics growth drives employment. No state income tax makes Florida attractive for landlords. Per U.S. Census Bureau data, Jacksonville crossed the 1 million population threshold in 2024.

Watch for: Insurance costs are elevated (it’s still Florida). Hurricane risk is real but lower than South Florida.

3. Phoenix, AZ

The math has gotten harder here as prices appreciated faster than rents—but the market is showing early signs of recovery. Per Matthews Real Estate’s Q3 2025 report, Phoenix recorded 17,000 units of absorption over the past year—more than double the pre-pandemic average—providing evidence that renter demand remains robust despite overwhelming supply.

However, the supply wave has been brutal. The vacancy rate reached 12.1% with asking rents falling 2.8-3.0% year-over-year to around $1,600 per unit. Over 23,000 new units were delivered in the past year—triple the 2015-2019 average—with another 21,000+ under construction.

Per GetMultifamily’s October 2025 report, more than 50% of apartment communities are offering concessions—often six to eight weeks of free rent. Both luxury (4-5 Star) and workforce (1-2 Star) properties are seeing rent declines.

The good news: construction starts are slowing, with the pipeline down 40% from mid-2023 peaks. Market stabilization is expected by 2026. TSMC’s $100 billion semiconductor investment and Arizona State University’s 56,600-student campus provide long-term demand drivers.

Watch for: Focus on suburban and exurban areas. Avoid Downtown Phoenix, Tempe, and Southwest Valley where oversupply is concentrated. Rent growth may not turn positive until late 2025 or 2026.

4. Atlanta, GA

Sprawling metro with huge variation in rent-to-price ratios. Inner suburbs can hit 0.65-0.75%, making 1.0-1.20x DSCR possible. Per Northmarq’s analysis, Atlanta maintains a 5.9% vacancy rate with median pricing around $189,500/unit—significantly better than Phoenix or Austin. Our Georgia DSCR lending guide has local insights.

Yardi Matrix projects Atlanta will add 16,398 new units in 2025. Focus on Class B and C inventory that isn’t competing directly with new construction.

Watch for: Traffic and commute times affect which neighborhoods are desirable. Understand the employment centers and their feeder neighborhoods.

5. Tampa, FL

Strong population growth continues despite insurance challenges. Per Dominion Financial Services, Tampa continues to benefit from migration trends out of higher-cost states. With no state income tax, year-round sunshine, and a robust job market, Tampa is a magnet for renters seeking lifestyle and opportunity.

Best opportunities in adjacent markets like Brandon, Riverview, and Wesley Chapel where rent-to-price ratios around 0.60-0.70% are achievable.

Watch for: Insurance costs can blow up your DSCR calculation. Get quotes early and factor in conservatively. Premiums that might run $1,500-2,500 annually in Ohio could easily exceed $5,000-8,000+ in Florida coastal markets.

6. Charlotte, NC

Banking hub with strong job growth and population inflows. Rent-to-price around 0.60-0.70%. DSCR of 1.0-1.15x achievable in suburbs and secondary neighborhoods. Per Yardi Matrix, Charlotte will add 6.2% to its existing multifamily stock in 2025—one of the highest rates nationally.

Watch for: Institutional buyer competition is intense. Be prepared to compete or find off-market deals.

7. Raleigh-Durham, NC

Research Triangle fundamentals are excellent—educated workforce, tech/biotech employment, university anchors. Rent-to-price around 0.60-0.70%. Appreciation potential is strong but current cash flow is thinner.

Watch for: This is more of a growth play than a cash flow play. Make sure your reserves can handle tighter margins.

8. Nashville, TN

Music City’s boom has cooled slightly, which is actually good news for investors—prices have moderated while rents held. Per American Heritage Lending’s Tennessee analysis, Nashville median rents sit near $1,422, about 1.4% lower year-over-year, with occupancy around 93.6%.

Per Landlord Studio’s 2026 market outlook, Nashville’s transformation into a major business hub has created sustained job growth across multiple sectors. Corporate relocations and population growth support both occupancy and rent appreciation. Yardi Matrix projects Nashville will add 6.1% to its multifamily stock in 2025.

Watch for: Short-term rental regulations have tightened significantly. Make sure your strategy complies. Over 16,000 units still underway as of mid-2025.

9. Dallas-Fort Worth, TX

Massive metro working through a historic supply wave—but fundamentals remain strong. Per Matthews Real Estate’s Q4 2025 report, DFW vacancy sits at 12.0% with rent growth down 1.8% as the market digests excess supply.

However, demand is surging. Per Northmarq, absorption in Q2 2025 totaled nearly 15,700 units—the highest level since Q3 2021 and the fifth consecutive quarter with net move-ins exceeding 10,000 units. Absorption has outpaced deliveries in each of the last four quarters, leading to a vacancy decline of 160 basis points year-over-year.

Per U.S. Census Bureau data, the Dallas-Fort Worth region added 177,922 new residents between 2023-2024—the second-largest numeric increase among U.S. metro areas. Fort Worth crossed the 1 million population threshold. Collin and Denton Counties have both grown by more than 50% since 2010.

The construction pipeline is contracting. Per Yardi Matrix, DFW’s pipeline has dropped to a 10-year low of ~30,000 units under construction. New starts in 2024 totaled just 18,400 units—approximately 10,000 below the 10-year historical average. MMG Real Estate projects rents to increase by 1.5% by end of 2025—the return to positive growth for the first time in over two years.

Core Dallas/Fort Worth is tough for DSCR math, but outer suburbs and exurbs (Forney, Midlothian, Weatherford, Frisco, McKinney) can hit 0.65-0.75% rent-to-price.

Watch for: Property taxes are high in Texas. Make sure you’re modeling accurate tax estimates—not the seller’s grandfathered amount. Per Texas Tribune, suburban “ring counties” like Kaufman County saw the fastest growth in the state at 6%+.

10. Las Vegas, NV

The market that keeps surprising. Strong rent growth, improving diversification beyond gaming, and rent-to-price ratios around 0.65-0.75% make 1.0-1.15x DSCR achievable. No state income tax sweetens the deal.

Watch for: Volatility. Las Vegas has historically been boom-bust. Make sure you can ride out cycles.

Markets for Sub-1.0 DSCR (Appreciation Plays)

At American Heritage Lending, our Invest Star program finances deals down to 0.75x DSCR—and even below that in some cases. But these deals require experienced investors with strong reserves. See our article on no-ratio and low-ratio DSCR loans for program specifics.

Where do sub-1.0 DSCR deals make sense? Generally, high-appreciation markets where you’re trading current cash flow for long-term gains:

• Coastal California: San Diego, parts of LA, Orange County. Rent-to-price ratios of 0.40-0.55% mean you’re feeding the property, but appreciation potential and rent growth can justify it.
• South Florida: Miami, Fort Lauderdale, Palm Beach. Similar math—weak initial cash flow, strong appreciation thesis.
• Denver, CO: Mountain West migration story continues but prices have outpaced rents. Sub-1.0 DSCR territory for most deals.

Remember: Sub-1.0 DSCR at AHL requires 12 months PITIA reserves, 0x30x12 mortgage history, and investment property experience. These aren’t starter deals—they’re strategic plays for investors who understand what they’re doing.

Markets to Approach with Caution

We’re not going to tell you never to invest in these markets—but the DSCR math is challenging, and you should go in with eyes open:

Austin, TX

Austin represents the most extreme example of what happens when supply overwhelms demand. Per Team Price Real Estate’s June 2025 analysis, the metro area vacancy rate reached 10.01%—a 20-year high and a staggering 152.78% increase from the 3.96% low recorded in September 2021.

Rents have cratered accordingly. Two-bedroom apartments that peaked at $1,726 in August 2022 have fallen to $1,425 by mid-2025—a decline of approximately 17.44%. Per CoStar data cited by Austin Business Journal, average asking rent dropped 4.6% in Q4 2024, with the average rent in the metro at $1,580.

The culprit: a historic building boom. Between 2019 and 2022, Austin saw over 20,000 multifamily units permitted annually, peaking at nearly 25,000 permits in 2021. Per Apartments.com analysis, Austin took the top spot for highest vacancy among major markets in Q3 2025, with an overall multifamily vacancy rate of 15.4%.

Per CoStar’s Israel Linares, 65% of apartment complexes in Austin offered concessions in 2025 to find tenants. The impact on property values has been severe—a 100-unit complex that supported a $33 million valuation at the peak may now appraise at just $25.6 million, a 22.6% drop.

The silver lining: the pipeline is finally contracting. CoStar estimates 2026 deliveries will drop to just 4,600 units—a 74% decrease from the 17,500 units delivered in 2025. MMG Real Estate projects rent growth could turn positive by Q4 2025, with a modest 0.8% annual increase possible. But per Newmark’s Patton Jones, the market may go “from oversupplied to undersupplied, possibly even going into a housing shortage” by 2027.

Our take: Austin has some of the worst DSCR math in Texas right now. If you believe in the long-term story, sub-1.0 DSCR with reserves might make sense—but you’ll be swimming against the current for at least another 12-18 months.

Phoenix (Revisited)

We included Phoenix in our “growth-oriented” list because the fundamentals are strong—but investors need to understand the current reality. Per GetMultifamily’s reports, vacancy has reached 12.1% with rents down 3% year-over-year. Over 50% of communities are offering discounts, often six to eight weeks of free rent.

Downtown Phoenix, Tempe, and the Southwest Valley are particularly challenged. Rent growth has been negative since early 2023. A slowdown in new construction starts should ease pressure by 2026, but 2025 will see continued high vacancy and negative rent growth.

New York Metro

Rent control, tenant-friendly laws, high property taxes, and prices that rarely make cash flow sense. The rent-to-price ratios are among the worst in the country. Can you make money in NYC real estate? Sure. Will it be through DSCR-financed rentals? Rarely.

San Francisco Bay Area

Similar story to New York but with added California regulatory complexity. Rent control, just-cause eviction requirements, and astronomical prices create challenging DSCR math. Most investors need all-cash or owner-occupied strategies.

Seattle

Tech money has pushed prices to levels where rents don’t keep pace. Tenant-friendly regulations add operational complexity. Some suburban opportunities exist, but the core market is tough for DSCR.

Portland, OR

Regulatory environment has become increasingly challenging for landlords. Statewide rent control, eviction restrictions, and slow permitting. Prices haven’t corrected enough to make the DSCR math work for most investors.

How to Research a Market Before You Buy

Don’t take our word for it—or anyone else’s. Here’s how to do your own market analysis:

Step 1: Pull Rent Data

Look at actual rents for comparable properties in specific neighborhoods—not metro averages. Zillow, Rentometer, RentCafe, and local property management company reports can help. Talk to local landlords if you can.

Step 2: Analyze Recent Sales

What are properties actually selling for? Look at closed transactions, not list prices. Calculate the rent-to-price ratio for each comparable. Are they hitting your target DSCR threshold?

Step 3: Get Real Expense Data

Property taxes, insurance, HOA dues, and property management costs vary dramatically by market. Get actual quotes and tax records—don’t estimate.

Step 4: Run the Numbers

Use our DSCR Calculator to model specific scenarios. Test sensitivity to rate changes, rent growth, and expense increases. Make sure the deal works under conservative assumptions.

Step 5: Understand the Regulatory Environment

Is it a landlord-friendly state? What are eviction timelines? Are there rent control laws? What about short-term rental regulations if that’s part of your strategy?

Step 6: Visit the Market

There’s no substitute for boots on the ground. Drive the neighborhoods. Talk to property managers. Meet local investors. The best market data in the world doesn’t capture the feel of an area.

State-by-State Considerations

A few factors that vary by state and affect DSCR investors:

Landlord-Friendly States

Texas, Florida, Georgia, Tennessee, Indiana, Ohio, Alabama, Arizona, Nevada—these states generally favor property owners in landlord-tenant disputes, have reasonable eviction timelines, and limited rent regulation.

Per TurboTenant’s 2025 analysis, Texas ranks at the top for landlord-friendly markets due to “lightning-fast evictions, no state income tax, and surging home values.” Texas allows electronic eviction filings—ideal for remote landlords. Alabama offers 7-day eviction notice for non-payment with no rental licenses required.

Tenant-Friendly States

California, New York, Oregon, Washington, New Jersey, Illinois—stronger tenant protections, longer eviction processes, and more regulatory burden on landlords.

Property Tax Considerations

Texas has high property taxes but no income tax. California has Prop 13 limiting tax increases but high everything else. New Jersey has the highest property taxes in the nation. Factor these into your market analysis.

Insurance Hotspots

Florida, Louisiana, and coastal areas generally have elevated insurance costs. Wildfire zones in California and Colorado are increasingly expensive to insure. This directly affects your DSCR calculation.

Getting Financing in Your Target Market

At American Heritage Lending, we lend in most states and have experience with the nuances of different markets. Our Invest Star DSCR program offers:

• DSCR ratios from 0.75x to 1.25x+
• Up to 85% LTV on purchases (760+ FICO, 1.0+ DSCR)
• Vacant property financing on purchases using Form 1007 market rent
• Loan amounts from $75,000 to $3,000,000
• 30-year fixed, 40-year with 10-year I/O options
• 45-day rate locks at application

We also have state-specific landing pages with localized information for Texas, Georgia, Michigan, and other key markets.

The Bottom Line

Market selection isn’t about chasing headlines or following the herd. It’s about finding places where the DSCR math works for your strategy—whether that’s conservative cash flow, balanced growth, or appreciation-focused.

The markets we’ve highlighted aren’t the only options. They’re starting points for your research. Every market has micro-markets within it, and every neighborhood has deals that work and deals that don’t.

Do the work. Run the numbers. Understand what you’re buying and why. The investors who thrive in 2026 will be the ones who pick their spots carefully rather than buying wherever the latest podcast tells them to.

Ready to see if your target market makes sense? Get prequalified today and let’s discuss your strategy. We’re here to help you find financing that works for your specific scenario—wherever you’re investing.

Questions about a specific market? Contact our team or call (800) 745-9280. We’ve financed deals across the country and can share insights on what we’re seeing.

 

Sources

Data and analysis referenced in this article:

• CBRE U.S. Real Estate Market Outlook 2025, Multifamily
• CoStar Group rental market analysis and forecasts
• S. Census Bureau Vintage 2024 Population Estimates
• RL Property Management, Q1 2025 Columbus Rental Market Update
• RentCafe Average Rent Market Trends (Cleveland, Memphis, Birmingham, Indianapolis)
• Zillow Rental Manager Market Trends
• Matthews Real Estate Investment Services, Q3/Q4 2025 Market Reports
• MMG Real Estate Advisors, 2025 Market Forecasts (Birmingham, Dallas-Fort Worth, Austin)
• Yardi Matrix, 2025 Multifamily Outlook and Market Reports
• Northmarq Investment Sales, 2025 Multifamily Market Reports
• Fannie Mae Multifamily Economic and Market Commentary, January 2025
• Texas Tribune, “Texas counties lead in growth” (March 2025)
• TurboTenant, “10 Most Landlord-Friendly States in 2025”
• Innago, “Top 5 Most Landlord Friendly States to Invest In”
• RealWealth, “25 Best Places to Buy Rental Property in 2025”
• PropStream, “Top Affordable Real Estate Markets for New Investors 2026”
• The Luxury Playbook, Indianapolis and Memphis Housing Market Analysis
• RiverTown Realty, “Why Memphis Remains a Top U.S. Market for High Rental Yields”
• Norada Real Estate, Cleveland Housing Market Trends and Forecast
• Steadily, Cleveland Real Estate Market Overview 2025
• GetMultifamily, Phoenix Multifamily Market Reports (January-October 2025)
• Team Price Real Estate, Austin Rental Market Analysis 2025
• CoStar, “Spotlight on Austin: Why This Multifamily Market Is Struggling”
• Austin Business Journal, Multifamily Market Analysis
• American Heritage Lending, Tennessee Rental Property Market Report
• Roots Realty, Indianapolis Rental Market 2025 Analysis
• CNBC, “Apartment rents drop further, with vacancies at record high” (December 2025)