Cap rate, real cash flow, and return on the cash you put in — including the expenses most analyses leave out. Estimate only, not investment advice.
Estimates only — not investment, tax, or legal advice. How we calculate every figure
Estimated all-in monthly payment for a home price you have in mind.
What homeowners insurance costs in your state, and whether what you pay is out of line.
Income, savings, and debts in — max home price and qualification signal out.
A rental bought for $300,000 and sold seven years later for $394,780 nets $158,925 at closing — and owes about $24,753 of federal tax, $15,273 of it on depreciation you were required to take. Here is the math, why a sale with zero appreciation still owes tax, and the three clocks a fourth-quarter sale starts.
A leveraged rental makes money three ways and cash flow is only one of them. Here is what the other two are worth — and why the structure that maximises them is a bet, not a plan.
How to verify one specific rental deal: audit the seller's pro-forma line by line, comp a real rent, reassess the tax, age the systems, and price the offer the numbers actually support.
Set up basis correctly, claim the depreciation you are owed, survive the passive-loss rules, and know what the sale will cost — with every figure tied to the statute.
Alabama guide
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.
Read the full Alabama guide →22 min read · Updated 2026-08-28