Cap Rate for Rhode Island (2026)
Rhode Island (RI) Key Facts
Average Cap Rate
5.5%
Market Type
Balanced market
Median Property Value
$420,000
Average Annual Rent (1 B R)
$16,800
Estimated N O I
$10,080
How This Calculator Works in Rhode Island
This cap rate calculator helps you evaluate the return potential of investment properties in Rhode Island. Enter the property's value, annual rental income, and operating expenses to instantly calculate the cap rate. Compare your result against Rhode Island's average of 5.5% to see how a specific property stacks up. The calculator is pre-loaded with Rhode Island averages for quick estimates.
Rhode Island Overview
The average cap rate in Rhode Island is 5.5%, with median property values of $300,000 and average 1BR rents of $1,200/month. Rhode Island is tenant-friendly, requiring careful due diligence on local regulations. Without statewide rent control, Rhode Island allows market-rate rent adjustments that can improve cap rates over time.
How Rhode Island Compares
Rhode Island's cap rate of 5.5% is near the national mid-range. Neighboring Massachusetts has a cap rate of 4.5% and Connecticut is at 5.5%. Investors often diversify across states with different cap rate profiles to balance cash flow and appreciation.
| State | Top Rate | Notes |
|---|---|---|
| Massachusetts | 4.5% | Average cap rate of 4.5% with median property value of $570,000. Seller's market. |
| Connecticut | 5.5% | Average cap rate of 5.5% with median property value of $380,000. Balanced market. |
| New York | 5% | Average cap rate of 5% with median property value of $420,000. Balanced market. |
Rhode Island's average cap rate of 5.5% places it in balanced market territory. Nationally, cap rates range from about 3.5% in expensive coastal markets to 8% or more in affordable Midwest and Southern states. Higher cap rates indicate better cash-flow returns, while lower cap rates often come with stronger appreciation potential.
Tips for Rhode Island Residents
- 1The average cap rate in Rhode Island is 5.5%. Cap rate = net operating income / property value. This moderate cap rate in Rhode Island offers a balance of cash flow and potential appreciation.
- 2When calculating cap rate in Rhode Island, deduct all operating expenses: property taxes (1.1%), insurance, maintenance, vacancy, and management fees. Do not include mortgage payments—cap rate measures unleveraged return.
- 3Rhode Island has no rent control, meaning you can raise rents to market rates and improve your cap rate as the local rental market appreciates.
- 4Compare cap rates across Rhode Island neighborhoods. Urban cores often have lower cap rates (higher prices, lower yields) while suburban and secondary markets may offer better returns. A 1-2% cap rate difference on a $300,000 property changes annual net income by $3,000-$6,000.
- 5Rhode Island's tenant-friendly regulations increase operational complexity and risk. Investors should demand higher cap rates in Rhode Island to compensate for longer eviction timelines and potential rent restrictions.
Frequently Asked Questions
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