The 1% Rule in DFW: What Actually Exists in 2026
No North Texas city we track clears 1% rent-to-value. Dallas tops out at 0.74% and Frisco sits at 0.47%. Here’s the full table, and what to screen on instead.
Not one North Texas city we track clears the 1% rule. The best is Dallas, at 0.74%. Frisco is 0.47%.
The rule says monthly rent should be at least 1% of the purchase price - a $250,000 house renting for $2,500. It is still repeated in every investing forum as though it were a live screen. In this metro it is a filter that returns nothing.
That is not an argument against investing in North Texas. It is an argument for knowing what the actual numbers are before you inherit a rule of thumb from a different market and a different decade. Here they are.
Every City, Ranked
Median single-family value against median single-family rent, ranked by monthly rent-to-value.
| City | Median value | Median rent | Rent-to-value | Gross yield |
|---|---|---|---|---|
| Dallas | $326,100 | $2,400 | 0.74% | 8.8% |
| Garland | $291,500 | $1,950 | 0.67% | 8.0% |
| Rowlett | $372,300 | $2,200 | 0.59% | 7.1% |
| McKinney | $484,100 | $2,700 | 0.56% | 6.7% |
| Celina | $526,600 | $2,900 | 0.55% | 6.6% |
| Carrollton | $415,100 | $2,250 | 0.54% | 6.5% |
| Plano | $507,600 | $2,750 | 0.54% | 6.5% |
| Allen | $499,600 | $2,650 | 0.53% | 6.4% |
| Richardson | $455,200 | $2,300 | 0.51% | 6.1% |
| Frisco | $656,300 | $3,100 | 0.47% | 5.7% |
| Prosper | $776,600 | $3,300 | 0.43% | 5.1% |
| Addison | $549,400 | $2,100 | 0.38% | 4.6% |
One honesty note on this table, because it matters for how hard you lean on it. The values are Zillow ZHVI single-family, one consistent vintage as of mid-2026 - a solid figure. The rents are estimates, and deliberately the softest numbers here: no authoritative median single-family rent is published for these cities, and the available indices either smooth across all housing types or average current listings rather than signed leases. Treat the ranking as sound and any individual rent as approximate.
What a Sub-1% Metro Means
The spread from top to bottom is nearly two to one. Dallas produces almost twice the gross income per dollar invested that Addison does. In a market where nothing clears the traditional bar, that relative spread is the information - not the absolute number.
It also tells you what you are buying in each place. At 8.8% gross, Dallas is an income play. At 5.1%, Prosper is not: you are buying an appreciation thesis, and the honest version of that trade is that you will feed the property monthly in exchange for a bet on growth. Both are legitimate. Confusing one for the other is not.
Worth pairing with a fact that complicates the appreciation half of that bet: every city in this table is down year over year right now - Plano about 5.1%, Celina about 9.7%. The decade-long appreciation record is real, and so is the trailing twelve months.
The Tax Trap in the Top Half
Now re-read the table with tax rates attached, because the ranking does not survive it intact.
The best-yielding cities are all Dallas County: Dallas 2.23%, Garland 2.39%, Rowlett 2.51%. The worst-yielding are Collin County: Frisco 1.68%, Plano 1.71%. That is not a coincidence - Dallas County funds a hospital district and Collin County does not.
On a $291,500 Garland house, the difference between Garland's 2.39% and Frisco's 1.68% is about $172 a month. Against $1,950 of rent, that is nearly nine points of gross yield handed back. The gross-yield advantage of the Dallas County submarkets is real but roughly half of it is an illusion created by not charging tax.
This is the single most common error I see in DFW rental underwriting: ranking submarkets on gross yield, then applying one blended tax assumption across all of them.
Why Gross Yield, Never Cap Rate
Every figure in that table is gross - annual rent over price, nothing deducted. That is deliberate, and the reason is worth stating because it applies to any screening tool you use, ours included.
There is no per-parcel property tax, insurance quote, HOA figure, or vacancy history available at screening scale. A cap rate computed without them would be a precise-looking number that is quietly wrong - and precision is exactly what makes a wrong number persuasive. So the market read stays gross and honest about it.
Net numbers get built one property at a time, from inputs you supply, in the rental analyzer. For reference, on a typical DFW rental the stack that separates gross from net is roughly 5% vacancy, 8% management, 8% maintenance, 5% capex reserve, insurance near 0.9% of value, and tax between 1.68% and 2.51%.
What to Screen On Instead
Retire the 1% rule and replace it with three questions that still discriminate in this market.
- Does it beat its own submarket median? A Garland property at 0.75% is genuinely interesting; a Frisco property at 0.75% is either mispriced or something is wrong with it. Yield is only meaningful relative to its market.
- Does it cash flow at 7.3%? That is roughly the investor purchase rate right now - about 75 basis points above owner-occupied. Underwrite at the rate you will actually get, not the one in the headlines.
- Does it survive a full expense stack? If a deal only works when you omit capex and vacancy, it does not work. It just hasn't failed yet.
The market finder ranks North Texas submarkets on yield, entry price, and growth across a much wider set than the twelve cities above, and the property screener runs the property-level version - counts, medians, and per-city breakdowns for whatever price band and yield bar you set.
One Thing the Data Cannot Tell You
A caveat that applies to every yield screen in this category, and that most of them do not disclose: the underlying property dataset carries no listing status. It is a record per US home, with a value estimate and a rent estimate. It does not know what is for sale.
So a screen result is a set of properties whose numbers work. It is not inventory, and it is not a list of things you can go buy this weekend. What it is genuinely good for is telling you where to concentrate - which submarkets, which price bands, which property profiles - so that when something does list, you already know whether it is worth a call.
Any tool that presents that output as available listings is either misunderstanding its own data source or hoping you will. Worth checking before you trust one.
Frequently Asked Questions
Does anything in DFW meet the 1% rule in 2026?+
Not at the city-median level. Across the fifteen North Texas cities tracked here, the highest rent-to-value ratios are Dallas at about 0.74% and Garland at about 0.67%, and it falls from there - Plano is 0.54%, Frisco 0.47%, and Prosper 0.43%. Individual properties can beat their city median, particularly smaller or distressed ones, but a metro whose best submarket is a third short of the bar is telling you the rule no longer functions as a screen here. Applying it strictly would mean never buying in North Texas at all.
What is a good gross rental yield in North Texas?+
Given the table, roughly 8% gross is the realistic top of the market - Dallas sits near 8.8% and Garland near 8.0% on median figures - and anything above that at the property level deserves scrutiny rather than excitement, because it usually signals deferred maintenance, a difficult submarket, or a rent figure that reflects an asking price rather than a signed lease. Around 6% is typical for the Collin County cities. Below 5%, as in Addison at 4.6% or Prosper at 5.1%, you are buying an appreciation thesis rather than an income stream, and you should be explicit with yourself about that.
Why is the 1% rule useless in Dallas-Fort Worth now?+
Because prices and rents moved apart for a decade. North Texas home values compounded at roughly 6% to 8% a year while rent growth has been running between 0.5% and 2.6% depending on the city, held down by a record wave of new apartment deliveries the metro is still absorbing. A ratio has a numerator and a denominator, and the denominator ran away. The rule was a product of a period when entry prices were far lower relative to rents; it survives as folklore because it is easy to remember, not because it still describes anything.
Which North Texas city has the best rental yield?+
On median figures, Dallas at about 8.8% gross and Garland at about 8.0%. But the ranking flips once you charge property tax properly, and this is the part most yield tables omit: Dallas County funds a hospital district that Collin County does not, so Dallas sits at a 2.23% effective tax rate, Garland at 2.39%, and Rowlett at 2.51%, against Frisco at 1.68% and Plano at 1.71%. The submarkets with the best gross yields carry the worst tax rates, and the gap is large enough to consume much of the yield advantage.
Is gross yield the same as cap rate?+
No, and conflating them is the most common way an investor talks themselves into a bad deal. Gross yield is annual rent divided by price - nothing subtracted. A cap rate is net operating income divided by price, after vacancy, management, maintenance, capital expenditure reserves, insurance, and tax. On a typical DFW rental those deductions run roughly 5% vacancy, 8% management, 8% maintenance, 5% capex, insurance near 0.9% of value, and tax between 1.68% and 2.51%. A 6.5% gross yield does not leave a 6.5% cap rate; it leaves considerably less than half of it.
Can I filter for high-yield properties directly?+
Not on the underlying data source, which is a limitation worth understanding rather than working around. The property dataset rejects computed expressions in its filters, so yield - which is rent divided by price - cannot be evaluated on the server. The screener compensates by prefiltering on a price band and a sound rent floor, pulling the candidates, and computing yield locally. That is why the candidate pool is always larger than the qualified count, and why the pool figure should never be read as the number of matches.
Run Your Own Numbers
About the Author
Licensed Realtor · DFW North Texas
Specializing in Plano, Frisco, McKinney, and Allen. Helping buyers and sellers navigate North Texas since 2015, with honest advice, deep local knowledge, and no pressure.
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