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Cap Rate Analysis: Madison, WI

Investment metrics, interactive calculators, and data-driven analysis for Madison rental properties.

Challenging for pure cash flow
Based on $360,000 median price and $1,580/mo median rent
Est. Cap Rate
2.38%
1% Rule
0.44%
Fails
GRM
19.0x
Price / Income
5.3x

Market Data

Median Home Price$360,000
Median Monthly Rent$1,580
Property Tax Rate1.85%
Population280,904
Population Growth1.2% / yr
Median Household Income$68,400
Vacancy Rate4.4%
Annual Appreciation3%

Cap Rate Calculator — Madison

Pre-filled with Madison medians. Adjust to match a specific property.

Property Details
$
$
3–8% typical
%
Monthly Expenses
1.85% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
1.84%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$6,618
net operating income
Gross Rent Multiplier
19.0x
High (>15)
1% Rule
0.44%
✗ Fails
Monthly Cash Flow
$551
before debt service
Annual Breakdown
Gross Rental Income$18,960
Less Vacancy−$834
Effective Income$18,126
Less Operating Expenses−$11,508
Net Operating Income$6,618

Cash-on-Cash Return — Madison

Factor in financing to see your actual return on invested capital in Madison.

$
$90,000
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-10.05%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$100,800
$90,000 down + $10,800 closing
Monthly Mortgage
$1,760
on $270K loan
Monthly Cash Flow
$-844
after all expenses
Annual Cash Flow
$-10,130
before taxes
Cash Flow Breakdown
Monthly Rent$1,580
Less Expenses−$664
Less Mortgage−$1,760
Monthly Cash Flow$-844

Is Madison a Good Place to Invest in Rental Property?

Madison, WI has a population of 280,904 and has been growing at 1.2% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $360,000 paired with median rents of $1,580/mo produces an estimated cap rate of 2.38%.

Property taxes at 1.85% are notably high and represent a significant drag on cash flow — model this expense carefully, as it can make or break a deal. The vacancy rate of 4.4% is impressively low, indicating tight rental supply and strong tenant demand — favorable for landlords.

At a price-to-income ratio of 5.3x, homes cost about 5.3 times the local median income of $68,400. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 3% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.

Bottom line: At current median prices, Madison is challenging for pure cash flow investing. Consider BRRRR strategies with below-market purchases, or look at neighboring metros with stronger price-to-rent ratios.

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