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Investor questions, answered plainly
The questions we hear most about DSCR loans, cap rate, and the Investor Yield Index, each answered in a sentence or two before the detail.
About the numbers. Home values and rents are live from Zillow public feeds across 18 metros, recomputed each week. The 6.69% 30-year mortgage rate is a current market estimate rather than a live feed. The full math sits on the methodology page.
Quick reference
| Metric | What it answers | Index weight |
|---|---|---|
| Cap rate | Unlevered yield, ignores your mortgage. Best for comparing deals. | 0.3 |
| Gross yield | Annual rent divided by price. A fast rent-to-price read. | 0.2 |
| DSCR | Does the rent cover the loan. Lenders want 1.2 or higher. | 0.3 |
| Cash-on-cash | Your real return after financing, on the cash you put in. | 0.2 |
These four blend into one 0 to 100 Investor Yield Index score per metro. At today's 6.69% rate, 0 of the 18 tracked metros clear the 1.2 lender minimum, and the Index ranks the rest by how close they come. Chicago, IL leads at 56 with a 0.79 DSCR and a -4.5% cash-on-cash return. The cheaper Midwest and Southern metros cash-flow today, while the pricier coastal and Sun Belt markets do not.
A worked read on the leader. Chicago averages about $359,888 on the home value with $2,275 in monthly rent, which pencils to a 4.55% cap rate and a 0.79 DSCR at 25% down. That clears the 1.2 bar with room to spare. See every metro ranked.
Answers in detail
Are the rates and Index scores on DSCRRadar live?
Yes. Home values and rents come from Zillow public research data and refresh every week, so the Index scores reflect real market figures across all 18 tracked metros. The 30-year mortgage rate is the Freddie Mac PMMS weekly average, pulled from the FRED MORTGAGE30US series, and every market page prints the observation date next to it.
Two things to know about what the numbers describe. Prices are the mid-tier median, the middle third of each metro by value, and the rate is a national weekly average rather than a quote on your file. So the cash-flow rankings are real, but run your own lender quote when you price a specific deal. The full method is on the methodology page.
Does the 1% rule still work in 2026?
Rarely. The 1% rule says monthly rent should be at least 1% of the purchase price, but high home prices and today’s mortgage rates mean no major metro meets it on a mid-tier median purchase in 2026. It survives mainly in the entry-tier price band of cheaper Midwest and Southern metros. Treat it as a 10-second filter, not a verdict. The rule ignores operating costs and the loan, so confirm any deal with cap rate, DSCR, and cash-on-cash before you act.
What does DSCR stand for and what does it mean?
DSCR stands for Debt Service Coverage Ratio. It is a rental property’s net operating income (NOI) divided by its annual debt service, meaning the mortgage payments. A DSCR of 1.20 means the NOI covers those payments with 20% to spare. Most lenders set 1.20 as the minimum for a DSCR loan. The catch in 2026 is that at current rates none of the metros we track clear 1.20 on a mid-tier median purchase, so the ratio doubles as a quick test of whether a market truly pays for itself. Compute yours with the DSCR calculator.
What is a good cap rate for a rental property?
It depends on risk. In 2026, 5 to 7 percent is typical for solid single-family rentals, while 8 percent and up tends to show up in cheaper, higher-risk markets. A very high cap rate often signals more vacancy or rougher areas, so it is a warning as much as a reward. The better question is whether the cap rate pays you fairly for the risk, and whether it still leaves a positive cash-on-cash return once the loan is in the math. See the cap rate benchmarks.
What's the difference between cap rate and cash-on-cash return?
Cap rate ignores your mortgage. Cash-on-cash includes it. Cap rate (NOI divided by value) measures the property’s unfinanced yield and is best for comparing deals side by side. Cash-on-cash (annual cash flow divided by cash invested) measures your real return after the loan payment. At 2026 rates, a property can post a fine cap rate yet still hand you a negative cash-on-cash return. That gap is what the Investor Yield Index is built to show. The Index weights cap rate at 30 percent and cash-on-cash at 20 percent, so it rewards markets where both hold up.
Which U.S. markets still cash-flow for rentals in 2026?
At current mortgage rates, real cash flow on a median-priced home is scarce. Of the 18 metros tracked by the Investor Yield Index, none covers the lender’s 1.2 DSCR minimum at the mid-tier median price with 25% down, and none runs a positive cash-on-cash return. The lower-cost Midwest and Southern metros come closest, because their rent-to-price ratios survive the financing best. Expensive Sun Belt and coastal markets sit furthest behind and trade current cash flow for the bet on appreciation. Buyers who do find cash flow are usually shopping the entry-tier price band rather than the median, which each market page now shows side by side.