Let's follow a family preparing to move to Cincinnati from another state. They were considering whether to rent out their current home or purchase a rental property in their new location. While calculating rental yield is not difficult, it is essential to first verify the local market conditions before entering any numbers.

The average rent in Cincinnati is $1,482 per month as of 2026 (RentCafe). This translates to an annual income of $17,784. The purchase price varies by source, typically ranging from the high $180,000s to the low $200,000s, but we will use $188,710 for our calculations. The total yield, calculated by dividing the annual rental income by the purchase price, is 9.4 percent, which is among the highest in the areas we examined.

The next step is the cap rate. The average property tax rate in Hamilton County is 1.53 percent (according to Ownwell). For a property priced at $188,710, the annual property tax would be approximately $2,887. Adding insurance, maintenance costs, and vacancy losses, and estimating the net operating income using the 50 percent rule, we arrive at an annual figure of $8,892, resulting in a cap rate of around 4.7 percent. This means the total yield of 9.4 percent is nearly halved by the cap rate of 4.7 percent.

This family took it a step further by checking the cash-on-cash return in the case of financing. By putting down 20 percent of the purchase price, which is $37,742, and including closing costs, they estimated their actual cash investment to be around $42,000. The pre-tax cash flow is calculated by subtracting the loan principal and interest from the net operating income. Areas with lower purchase prices tend to have smaller down payment burdens, making markets like Cincinnati relatively accessible in terms of cash-on-cash return.

Ultimately, this family chose to purchase a separate rental property in Cincinnati instead of renting out their current home. The decision was influenced by the concern of managing a property in an unfamiliar area and the relatively low property tax burden in Cincinnati, which means less reduction in net operating income. However, such choices can vary based on personal circumstances, so it's important to note that different assumptions could lead to different conclusions even with the same numbers.

Before making a purchase, the last thing they checked was the vacancy period. The Cincinnati rental market is known for steady demand, but it is common to experience one or two months of vacancy when tenants change. By accounting for 5 to 8 percent of the annual rental income as vacancy loss in advance, it is more realistic to estimate the actual cap rate to be slightly lower than the previously calculated 4.7 percent. By calculating conservatively, even if the vacancy lasts longer than expected, the cash flow plan remains largely intact. If moving to a new area, it is wise to check the local vacancy practices, as relying solely on the standards from their previous state could lead to missed insights.

The relatively low purchase price compared to other areas was also a reason this family chose Cincinnati, as it reduces the initial investment burden. However, it is important to note that a lower purchase price does not necessarily mean less time and effort in management. Older homes may incur higher maintenance costs than anticipated, so thoroughly reviewing inspection results before purchase can help estimate future repair costs, aiding in cash flow planning. For those moving from another state, simply comparing the property tax rates of their previous area with those in Cincinnati can be helpful, but while the rates may seem lower, actual bills can vary by county and school district, so it is essential to check the most recent tax bills for each property.

To summarize the order of checks this family made:

• Confirm total yield by dividing annual rental income by purchase price
• Calculate cap rate using net operating income after deducting operating costs, including property tax
• Verify actual perceived yield using cash-on-cash return based on down payment and closing costs

Since the purchase price can vary by source, it is advisable to check the latest listing prices when reviewing actual properties. Property tax rates can also differ by school district and special zones. This article is not investment advice, and it is recommended to consult with a real estate professional and accountant before making any actual contracts.