Rental Property in Alabama: What the Numbers Actually Look Like

Alabama has the second-lowest effective property tax rate in America — 0.38% — and a statewide median home price of $282,139. On paper that is the friendliest combination for a rental buyer in this entire eight-state series, and Alabama does in fact produce the best expense ratio and one of the highest cap rates in it.

Two things complicate the picture, and both are the kind of detail that only shows up when you go looking.

First, that 0.38% is measured on owner-occupied housing value, and Alabama's constitution does not assess a rental the same way it assesses a home. Alabama classifies property, and owner-occupied residential property sits in a class with a lower assessment ratio than other real property. A rental is not owner-occupied. This article runs the numbers at the county's published effective rate and then shows you what happens if the assessment ratio doubles, because the answer changes materially and it is the first thing you should verify with the county revenue commissioner.

Second, Alabama's Gulf coast is a separate insurance market, and its residual market is not a FAIR plan. The Alabama Insurance Underwriting Association is a coastal wind pool — wind-and-hail only, and only in Baldwin and Mobile counties. Some national roundups list Alabama alongside true FAIR-plan states. They are wrong, and if you are an inland Alabama landlord who cannot find coverage, the difference is the whole difference: the AIUA offers you nothing.

A note before you start: this is general educational information about how rental property arithmetic works in Alabama. It is not investment, tax, insurance, or legal advice, and it is not a recommendation about any property. Alabama property tax classification and assessment are administered at the county level; insurance is priced per structure and the coastal market works differently from the rest of the state. Alabama is an attorney-closing state, so a licensed Alabama attorney will be at your closing — use them. Talk to an Alabama CPA about tax treatment and a licensed Alabama insurance agent about a real quote.

1. What a rental costs to buy here

The statewide median sale price is $282,139 (Alabama Association of REALTORS, June 2026, up 13.2% year over year — a large jump worth noting, and worth spot-checking against a current source before you rely on it). County figures:

• Jefferson County (Birmingham): $243,900, effective property tax rate 0.59%, average insurance $2,601
• Mobile County: $211,700, effective property tax rate 0.50%, average insurance $4,591

Those two counties are the whole Alabama story in four numbers. Mobile's houses are 13% cheaper and its property tax rate is 15% lower — and its insurance is 77% higher.

Price growth in the site's data is +2.40% year over year, the third-best figure in this series behind Indiana and Ohio.

The cash you actually need

Alabama charges the buyer on both the deed and the note, and the amounts are small:

• Deed transfer tax: 0.1% — $0.50 per $500 of sale price. The buyer customarily pays, though sellers sometimes cover it in slower markets and it is negotiable by local custom. Cities and counties may add local fees on top of the state rate.
• Mortgage recording tax: 0.15% — $0.15 per $100 of indebtedness secured by a mortgage or deed of trust, under Code of Alabama sections 40-22-1 through 40-22-12 and confirmed by the Alabama Department of Revenue. Two-thirds goes to the state General Fund and one-third to the county.
• Closing costs: 2% to 5%. ClosingCorp-derived data cites a much narrower ~1.4% average, but that figure appears to exclude prepaids and title insurance. The site uses 2% to 5% as the more inclusive buyer range; this article takes the 3.5% midpoint.

On the $243,900 Jefferson County example at 25% down:

• Down payment: $243,900 x 0.25 = $60,975
• Loan amount: $182,925
• Closing costs: $243,900 x 3.5% = $8,536.50
• Deed transfer tax: $243,900 x 0.1% = $243.90
• Mortgage recording tax: $182,925 x 0.15% = $274.39
• Total cash in: $70,029.79

The two recording taxes together are $518.29, or about 0.21% of the purchase price. Some closing-cost estimates already fold them in, so watch for double counting.

2. The two expenses that decide whether it works

Property tax: the lowest bill in this series, with a classification question attached

WalletHub puts Alabama's effective real-estate tax rate at 0.38%, second-lowest in the US, cross-checked against the Tax Foundation's 0.37%. County effective rates: Jefferson 0.59%, Mobile 0.50%.

On the Jefferson example: $243,900 x 0.59% = $1,439.01 a year, or $119.92 a month. That is the smallest property tax bill in this entire eight-state comparison, less than a third of what the same-priced house would cost in Cuyahoga County, Ohio.

Now the part to verify before you rely on any of it.

Alabama's constitution classifies property and applies different assessment ratios to different classes. Owner-occupied residential property is assessed at a lower ratio than other real property, and a rental is not owner-occupied. Alabama's homestead exemption likewise requires the owner to occupy the property, so a rental gets neither the exemption nor the lower assessment class.

The effective rates above — from WalletHub and the Tax Foundation — are measured on owner-occupied housing value. That means they describe what a homeowner pays, not necessarily what a landlord pays on the same house.

So run the sensitivity explicitly. Here is the worked example from Section 3 with the property tax doubled, and nothing else changed:

A 0.59 point swing in cap rate and $1,439.01 a year, from one classification question. That is larger than the entire county-to-county tax difference in Georgia or North Carolina.

The instruction is simple: call the county revenue commissioner, tell them the property will be a rental, and ask what class it will be assessed in and at what ratio. Then compute the tax from that, not from any effective rate published anywhere — including this article. It is a five-minute phone call and it is worth more than any other five minutes of Alabama due diligence.

Insurance: moderate inland, and a different market on the coast

The reference figure is $3,616 a year at $300,000 of dwelling coverage with a $1,000 deductible. (The site's separate state file carries $3,140 from a different source; the insurance-specific file's coverage-normalized $3,616 is used here.) The county spread is what matters:

• Jefferson County: $2,601
• Mobile County: $4,591

That is a $1,990 a year difference — Mobile pays 77% more than Birmingham for the same nominal coverage. Section 5 works out what that does to a deal.

The statewide trend is +1% year over year — the calmest premium trend of the eight states in this series, and a genuine point in Alabama's favor.

On the worked example, property tax and insurance together are $4,040.01 — 21.04% of gross rent and 22.87% of rent actually collected. Only North Carolina (19.39%) and Georgia (19.93%) are lower, and both of those states have far higher purchase prices.

A rental is not insured on a homeowners form. You need a landlord policy — a dwelling fire form with loss-of-rents coverage — priced for the specific address.

The named-storm deductible, and why it is a landlord's problem specifically

Alabama is one of the 19 states plus DC the Insurance Information Institute lists as having hurricane or windstorm deductibles. Unlike Florida, Alabama does not set the menu by statute — the percentages are carrier practice, not a legislated list — so what a policy actually carries depends heavily on where in the state the house sits.

Statewide, named-storm deductibles of 2% to 5% of the dwelling limit are the working range, triggered when the National Hurricane Center formally names a tropical storm or hurricane that causes the damage.

In Mobile and Baldwin counties the picture is harsher: 5% to 10% named-storm deductibles are common, and many standard carriers exclude windstorm from the homeowners policy entirely, pushing wind coverage onto a separate AIUA Beach Pool policy.

Alabama construction runs about $210 per square foot to rebuild, so a 1,500 square foot house has a replacement cost near $315,000. On a $300,000 dwelling limit:

• 2% = $6,000
• 5% = $15,000
• 10% = $30,000

Now put those against the property. Section 3 works out that the Birmingham example produces $9,937.59 of net operating income in a good year:

• 2% ($6,000) is 60.4% of a full year's NOI
• 5% ($15,000) is 151% — more than a full year's NOI
• 10% ($30,000) is 302%

And on the Mobile County example in Section 5, which produces $7,017.70 of NOI, a 5% deductible is 214% of a year's NOI and a 10% deductible is over four years' worth.

You cannot pass any of that to a tenant. It is not a lease obligation, it is not billable, and it does not wait for rent to accumulate. Meanwhile a named storm severe enough to trigger it has probably made the property uninhabitable, so the rent stops at the same moment the deductible comes due. That is what loss-of-rents coverage exists for — confirm you have it, on which policy, and for how many months.

Alabama's two genuine offsets, and they are worth real money

Alabama is unusual in this series for having statutory mitigation incentives, and a landlord should use both.

Ala. Code 27-31D-2 requires insurers to give an actuarially justified premium discount for construction retrofitted to the IBHS FORTIFIED standard — roughly 35% to 60% off the hurricane portion of premium and 20% to 35% off the other-wind portion. On a Mobile County premium those are large numbers in absolute terms.

Ala. Code 27-31D-2.1 requires insurers to offer a fortified roof endorsement that upgrades a non-fortified home to the FORTIFIED standard when a covered loss requires the roof to be replaced. That changes what gets built back after a claim. It does not stop an insurer from withholding depreciation.

Strengthen Alabama Homes, run by the Alabama Department of Insurance, pays grants of up to $10,000 toward a FORTIFIED Roof retrofit. On a coastal rental where the wind premium is the dominant expense, a FORTIFIED roof plus the mandated discount can be the difference between a deal and no deal — and the grant covers a meaningful share of the cost. Ask about it by name.

Roof settlement, and one Alabama case worth knowing

No Alabama statute or regulation fixes the roof settlement basis, and Alabama has no matching regulation. Graffeo v. State Farm Fire & Cas., 628 So.2d 790 (Ala. Civ. App. 1993), holds that a replacement-cost policy obliges the insurer to pay only for the pieces actually damaged — so a carrier here is generally not required to replace undamaged adjacent shingles to make a roof look uniform.

For a landlord that means a hail or wind claim on a partially damaged roof can produce a patch rather than a roof. What decides the payout beyond that is roof age and the endorsement attached: replacement cost is standard on newer roofs, while carriers writing the wind-exposed southern counties commonly move roofs past roughly 15 years to actual cash value or to a payment schedule paying a declining percentage by age.

A national change pushed the same direction in March 2026: the Federal Housing Finance Agency relaxed Fannie Mae and Freddie Mac requirements so ACV roof coverage can satisfy a lender rather than replacement cost being required.

The residual market is a wind pool, not a FAIR plan

This distinction matters more in Alabama than almost anywhere, and some national FAIR-plan roundups get it wrong.

The Alabama Insurance Underwriting Association — the Beach Pool — writes windstorm-and-hail-only coverage, and only for property in the Gulf Front, Beach, and Seacoast territories of Baldwin and Mobile counties (broadly, south of the 31st parallel). It will not write a full homeowners policy, and it offers nothing at all to an inland Alabama owner who cannot find coverage — that owner's fallback is the surplus lines market.

The mechanics if you are coastal:

• Residential limits run to $500,000 on the dwelling and $250,000 on contents, capped at $750,000 combined for a one-to-four-family location
• If the property is in a flood zone, AIUA requires flood insurance carried equal to the fire and wind coverage
• Policies must be bound through a licensed Alabama agent authorized to write AIUA

Read that as a coastal landlord: your Baldwin or Mobile County rental may need three policies — a private or surplus-lines policy for everything except wind, an AIUA policy for wind and hail, and flood, which AIUA will require anyway. Price all three before you make the offer, and note that a $500,000 dwelling cap is well above the $315,000 rebuild cost of a typical house but binding on a larger one.

3. A full worked example

The property. A single-family house in Jefferson County at the county median of $243,900.

The rent — read this carefully. This site does not carry rent data. The $1,600 a month used below is an assumption chosen to be plausible for a house at that price in that county. It is not a market observation. Pull three to five real comparable listings for the specific neighborhood and substitute the actual number.

The other assumptions:

• Vacancy: 8% of gross rent (roughly one month of turnover a year)
• Property management: 10% of collected rent
• Repairs and maintenance: 5% of gross scheduled rent
• Capital reserve: 5% of gross scheduled rent
• Financing: 25% down, 30-year fixed at 7.00% — the rate is an assumption, not a quote
• Property tax at Jefferson County's published 0.59% effective rate. See Section 2 — if the property is assessed in a higher class as a rental, this figure is too low
• No HOA

Step 1 — income

• Gross scheduled rent: $1,600 x 12 = $19,200
• Vacancy loss: $19,200 x 8% = $1,536
• Effective gross income: $19,200 - $1,536 = $17,664

Step 2 — operating expenses

Management is charged on rent actually collected, not scheduled rent:

• Management: $17,664 x 10% = $1,766.40
• Property tax: $243,900 x 0.59% = $1,439.01
• Insurance: $2,601 (Jefferson County average)
• Maintenance: $19,200 x 5% = $960
• Capital reserve: $19,200 x 5% = $960
• Total operating expenses: $7,726.41

Expense ratio: $7,726.41 / $17,664 = 43.74% of collected rent — inside the healthy band, and third-best of the eight states in this series.

Step 3 — net operating income and cap rate

• NOI = $17,664 - $7,726.41 = $9,937.59
• Cap rate = $9,937.59 / $243,900 = 4.07%

That 4.07% is the second-highest cap rate in this series, behind only Ohio's 4.14%.

The mortgage is deliberately absent from that figure. Cap rate exists to compare properties independently of how they are financed; including debt service in it makes two identical houses look like different investments because one buyer put more down, and it is the most common error in this whole exercise.

Step 4 — debt service and cash flow

Loan: $243,900 x 75% = $182,925. At 7.00% over 30 years, principal and interest is $1,217.00 a month, or $14,604 a year.

• Annual cash flow = $9,937.59 - $14,604 = -$4,666.41
• Monthly cash flow = -$388.87
• Debt service coverage ratio = $9,937.59 / $14,604 = 0.68

Step 5 — cash-on-cash return

• Cash invested: $70,029.79 (Section 1)
• Cash-on-cash = -$4,666.41 / $70,029.79 = -6.66%

Rate sensitivity, since 7.00% was an assumption

• At 6.50%: P&I $1,156.21/mo, annual cash flow -$3,936.93
• At 7.00%: P&I $1,217.00/mo, annual cash flow -$4,666.41
• At 7.50%: P&I $1,279.04/mo, annual cash flow -$5,410.89

The check that Alabama passes, and why it is dangerous

Add up the four bills a lender escrows:

• Principal and interest: $1,217.00
• Property tax: $1,439.01 / 12 = $119.92
• Insurance: $2,601 / 12 = $216.75
• Total: $1,553.67 a month

Against $1,600 of assumed rent, that is +$46.33 a month.

Alabama and Ohio are the only two states in this eight-state set where the naive "does the rent cover the mortgage" check passes. That is genuinely good news about Alabama, and it is also precisely the trap — which is what the next section is about.

4. The expenses people leave out

Vacancy, management, and capital reserves do not arrive as invoices. Nobody bills you for the month between tenants, or for the roof you will need in nine years, or — if you self-manage — for your own weekends. So they fall out of the mental model.

Here is the same Jefferson County house with those three removed and everything else identical:

Read the left column the way an optimistic buyer would. A 5.82% cap rate. A DSCR of 0.97, which rounds to "basically covers itself." A monthly shortfall of thirty-four dollars — the kind of number you stop thinking about.

Now read the right column. A 4.07% cap rate, a DSCR of 0.68, and $4,666.41 a year out of pocket.

Three line items worth $4,262.40 a year — $1,536 of vacancy, $1,766.40 of management, $960 of reserve — are the entire difference between "about breakeven" and "losing $389 a month." They flatter the cap rate by 1.75 percentage points and hide 91% of the annual loss, the largest proportion of any example in this series.

Alabama produces that result more starkly than almost any state precisely because its costs are so low. When tax and insurance are small, the three invisible expenses are proportionally enormous — they are 55% of total operating expenses in the right column.

Vacancy is not optional. Eight percent is roughly one month a year — what a single clean turnover costs between move-out and the next tenant's first full month, assuming nothing goes wrong. Setting it to zero assumes the house is never empty, including between tenants.

Management is a real cost even if you do it yourself. Zeroing it means the return is paying you for your labor, not for the property. Self-managing this house saves $1,766.40 a year, lifting NOI to $11,703.99 and the cap rate to 4.80%, with cash flow improving to -$241.67 a month. Real saving, does not fix the deal, and it stops being free the moment you move or buy a second house.

Capital reserves are certain, not unlikely. Section 2 makes the Alabama-specific case: Graffeo means a carrier is generally not required to replace undamaged adjacent shingles, carriers move roofs past roughly 15 years to actual cash value, and the FORTIFIED grant program exists precisely because roofs here need replacing before they fail. Reserve as if the insurer will pay for a patch, because on a partial loss that is what the law entitles you to.

The 5%-of-rent convention used above is one option. A harsher and equally common convention is 1% of purchase price a year for maintenance and 1% for capital, which here is $2,439 each. Run that way: total operating expenses $10,684.41, expense ratio 60.49%, NOI $6,979.59, cap rate 2.86%, cash flow -$635.37 a month, cash-on-cash -10.89%.

The honest cap-rate range for this property is 2.86% to 4.07%. Birmingham has a large stock of older housing, which argues for the percentage-of-price convention.

What would actually have to be true

The rent this property needs. For cash flow to reach zero at this price and this financing, gross scheduled rent must reach about $25,610 a year, or $2,134.16 a month — 0.88% of purchase price per month. The assumed $1,600 is 0.66%. The gap is about $534 a month, the smallest in this series in dollar terms.

The price this rent supports. Hold rent at $1,600 and solve for the price at which cash flow reaches zero with 25% down: about $172,957, which is 71% of the Jefferson County median — the second-best ratio in this series after Ohio's 76%.

The down payment this price needs. Keep the $243,900 price and the $1,600 rent and solve for the loan the NOI can service: about $124,475 — roughly $119,425 down, or 49% of the price. Alabama and Ohio are the only two states in this series where the breakeven down payment is under 50%.

A middle option that actually works. At 40% down ($97,560), the loan falls to $146,340, principal and interest to $973.60 a month, and cash flow to -$145.47 a month with a DSCR of 0.85. Combine 40% down with self-management and this property clears breakeven. That is a real, reachable outcome, and Alabama and Ohio are the two states in this series where it is available.

5. What actually varies by county here

Alabama's county variation is not primarily about tax. It is about the Gulf.

Take the identical $243,900 house at the identical $1,600 rent and apply each county's actual tax rate and average insurance:

$1,770.49 a year of net operating income and 0.72 points of cap rate. Mobile's lower tax rate returns $219.51 of that; its higher insurance takes $1,990 away. On the Alabama coast, insurance is roughly nine times more important than property tax to the outcome.

Now run Mobile County at its own median. At $211,700 with a $1,450 assumed rent, 0.50% tax and $4,591 insurance: total operating expenses $8,990.30, expense ratio 56.16%, NOI $7,017.70, cap rate 3.31%, cash flow -$471.52 a month, DSCR 0.55.

Mobile's cheaper houses do not rescue it. A 13% discount on price is not enough to offset a 77% premium on insurance, and the cap rate lands three-quarters of a point below Birmingham's.

And that Mobile example is the one where the deductible arithmetic bites hardest. Against $7,017.70 of NOI:

• A 5% named-storm deductible on a $300,000 limit ($15,000) is 214% of a full year's NOI
• A 10% deductible ($30,000) is 427%

Two further coastal facts to check on a specific address, neither captured in a county average:

Whether wind is on the policy at all. In Mobile and Baldwin, many standard carriers exclude windstorm, moving it to an AIUA Beach Pool policy with its own premium and its own deductible. The $4,591 county average does not tell you which structure a specific property will get.

Whether the property is in an AIUA territory. The Beach Pool writes only in the Gulf Front, Beach, and Seacoast territories — broadly south of the 31st parallel. A Mobile County property north of that line is neither coastal-priced nor AIUA-eligible, which is a better position to be in.

And inland, the thing to check is the assessment class, not the rate. Section 2's sensitivity shows a doubled assessment ratio costs 0.59 points of cap rate on the Birmingham example — comparable to the entire Jefferson-versus-Mobile insurance gap. Verify it with the county revenue commissioner.

6. Financing a rental is not financing a home

These are standard mechanisms across the mortgage market. Any specific rate or overlay is your lender's, not this article's.

Down payment. Conventional financing on a non-owner-occupied one-unit property generally requires more equity than an owner-occupied purchase — 20% is usually the floor and 25% the common expectation, which is why this article models 25%. FHA and VA are not available for a property you do not occupy. The real exception is house hacking: a two-to-four-unit property you live in one unit of qualifies for owner-occupied programs.

Rate. Investment-property loans price above owner-occupied loans. Fannie Mae and Freddie Mac apply loan-level price adjustments for investment occupancy that scale with loan-to-value and credit score, and lenders pass those through as a higher rate or points.

Loan size. Many lenders set a minimum loan amount, and below roughly $75,000 to $100,000 the conventional market thins considerably. At the cheaper end of the Alabama market that is a live constraint, and it pushes small purchases toward portfolio lenders, local banks, and credit unions.

Reserves. Lenders typically require post-closing reserves — months of principal, interest, taxes, and insurance held in liquid assets — scaling with the number of financed properties you own. On the coast, size them against the named-storm deductible in dollars rather than against the lender's minimum.

Rental income counting. Lenders credit a portion of market or lease rent toward qualifying, not all of it. Ask what percentage yours uses and whether they need an appraiser's rent schedule.

DSCR loans. A debt service coverage ratio loan qualifies the property rather than the borrower, comparing property income to debt service and largely skipping personal income documentation. The trade is a higher rate, a larger down payment, frequent prepayment penalties, and a minimum DSCR — commonly stated at or above 1.0 and often above 1.2. Many DSCR lenders also set minimum property values that exclude the cheapest Alabama stock.

Section 3's example has a DSCR of 0.68. Even stripped of vacancy, management, and reserves it is 0.97 — and 0.97 is the flattered number. That is the underwriting telling you the same thing the cash flow line is.

Insurance is a closing condition, and on the coast it is a sequencing problem. If wind is excluded from the primary policy you need an AIUA policy bound too, and AIUA will require flood if the property is in a flood zone. Start that at the beginning of your inspection period, not the end.

Alabama is an attorney-closing state. A licensed Alabama attorney conducts the closing. Use them on the title work and on anything unusual in the contract.

7. What to check before you buy in this state

The assessment class, first. This is the Alabama-specific one.

1. Call the county revenue commissioner, say the property will be a rental, and ask what class it will be assessed in and at what ratio. Then compute the tax from that figure, not from any published effective rate — including the ones in this article.
2. Confirm the current bill does not reflect a homestead exemption you will lose.
3. Check for municipal rates stacking on the county rate if the property is inside city limits.

Insurance, before your inspection period ends.

1. Get a bindable landlord policy quote for the specific address, with loss of rents coverage, and check how many months it pays.
2. Ask explicitly whether windstorm is included or excluded. In Mobile and Baldwin counties this is the single most important insurance question. If excluded, get an AIUA Beach Pool quote as a separate line item.
3. Find the named-storm deductible percentage on the quote and multiply it into dollars against the dwelling limit. Write the number down. It is your minimum cash reserve, and Section 2 shows it can exceed a full year's NOI.
4. Ask about the FORTIFIED discount by name. Ala. Code 27-31D-2 requires the insurer to give one for FORTIFIED construction — roughly 35% to 60% off the hurricane portion and 20% to 35% off the other-wind portion.
5. Ask about the fortified roof endorsement required to be offered under Ala. Code 27-31D-2.1, and about Strengthen Alabama Homes grants of up to $10,000 toward a FORTIFIED Roof retrofit.
6. Get the roof age in writing and ask how the policy settles a roof claim. Fifteen years is the threshold; remember Graffeo means a partial loss may be paid as a patch.
7. Price flood separately, and note AIUA requires it at equal limits in a flood zone anyway.

The rent, from the market.

1. Pull three to five genuine comparable rentals for the specific neighborhood and note how long they sat.
2. Divide monthly rent by purchase price. Section 4's breakeven for this example was 0.88%. Alabama is one of the few states in this series where properties above that threshold genuinely exist.

The law, from the statute rather than from an article.

1. Do not take eviction timelines, notice periods, security-deposit rules, or late-fee limits from a blog — including this one. Alabama's Uniform Residential Landlord and Tenant Act is at Code of Alabama Title 35, Chapter 9A. Read it through the Alabama Legislature's code system at https://alison.legislature.state.al.us/, or — better — ask the closing attorney you are already paying. These rules are genuinely state-specific and they change.
2. Check the city and county separately: rental registration, inspection programs, business licensing, and short-term rental rules are local, and Birmingham, Mobile, Huntsville, and the Gulf Shores/Orange Beach area each have their own.

The building.

1. Get the age of the roof, HVAC, water heater, and electrical panel in writing. Much of Alabama's rental stock predates 1978, which brings lead-paint disclosure obligations with it.

The money.

1. Size cash reserves against the named-storm deductible in dollars if you are anywhere south of Montgomery, and against real component replacement costs elsewhere.
2. Ask an Alabama CPA about depreciation, passive activity loss rules, Alabama income tax on rental income, business privilege tax on any entity you use, and what happens on sale.

What to do next

Every figure above came from a data file or was computed in front of you. Re-run all of it with your own numbers.

The Alabama rental analysis calculator does exactly the work in Sections 3 and 4 — enter your price, your real local rent, and your own vacancy, management, and reserve assumptions, and it produces NOI, cap rate, cash flow, cash-on-cash, and DSCR. Given Section 4's finding that Alabama's low costs make the three invisible expenses proportionally larger, the important thing is that it warns you when you have left them out rather than letting a flattered number pass. Run it twice: once at the published tax rate and once at double, until the county tells you which is right.

The Alabama insurance premium estimator gets you closer to a real figure for a specific dwelling limit than the $3,616 statewide average — essential in Mobile and Baldwin counties, where the statewide average does not describe the market at all, and where the named-storm deductible in dollars is the number that decides your reserve.

The Alabama mortgage payment calculator gives you the principal and interest figure for the rate you are actually quoted.

This article is general educational information about rental property arithmetic in Alabama, based on figures current as of August 2026. It is not investment, tax, insurance, or legal advice. The rent figures in the worked examples are stated assumptions, not market data. The property tax figures are published effective rates measured on owner-occupied housing value; a rental may be assessed in a different class, which is why Section 2 shows the sensitivity and tells you to verify with the county. Alabama's statewide median home price rose 13.2% year over year in the source cited and is worth spot-checking. Consult an Alabama CPA, a licensed Alabama insurance agent, and an Alabama real estate attorney before buying.