So, you want to buy a rental property in Huntsville, Alabama?
Is Huntsville a good place to buy rental property?
What is the ROI on Huntsville investment properties?
When investing in real estate, understanding the numbers behind rental properties is crucial to making smart, profitable decisions. Huntsville, AL, with its growing economy and vibrant urban neighborhoods, continues to attract investors looking for strong rental returns. In this deep dive, we’ll explore the 2025 rental market data for Huntsville’s key urban zip codes—35801, 35802, and 35803. These could be Best neighborhoods to invest in Huntsville. By analyzing rental rates, occupancy trends, and market dynamics in these areas, you’ll gain a clear picture of where the best opportunities lie and how to maximize your investment potential in this thriving city. Whether you’re a seasoned investor or just starting out, this will give you a realistic look at Huntsville’s rental landscape and will equip you with the insights needed to make confident, informed decisions. This analysis will focus on buy-and-hold more than flipping.  We'll cover numbers for flips in a future article. The below analyses are summaries of large rental data files.  If you would like more specific data, please contact Ben Nemec at bmnemec@gmail.com, or any of our team's real estate experts at www.huntsvillehomesforyou.com. Search real estate for sale in Huntsville, AL HERE.

Huntsville housing market 2025-2026
A few things to keep in mind with regards to the numbers below:
Search criteria includes:
- Location- 35801, 35802, and 35803. These are the  most central areas of the Huntsville, AL metro.
- Age: no age restrictions
- Size: No size restrictions
- Timeline: homes leased in 2025. NOT those currently for rent.
- Source: The North Alabama Multiple Listing Service. 
- Home Type: Single Family and Townhomes

📍 35803 Deep-Dive Investment Analysis

With an average rent of $1,782/mo and average size near 1,875 sq ft, 35803 performs like a stable, middle-to-upper-tier rental market with relatively predictable tenant demand. Given typical Huntsville operating expenses, an investor’s total monthly costs on a rental here often fall in the $1,550–$1,750/mo range for properties purchased around $225K–$275K. That means today’s average rent would roughly break even at the top of that range and cash-flow positively at the lower end. To meet long-term buy-and-hold goals (5–8% cash-on-cash return), an investor would ideally target purchase prices below $240K—or ensure a property rents above the current ZIP average. Properties needing minimal cap-ex and located in the more desirable pockets south of Martin Road tend to justify slightly higher buy-in numbers, while above-market purchases in 35803 quickly erode returns because rent ceilings here remain relatively firm. Overall, 35803 is solid for appreciation + stable occupancy, but investors must keep acquisition cost in check to ensure long-term performance.

📍 35802 Deep-Dive Investment Analysis

Rentals in 35802 average $1,815/mo with similar square footage to 35803 (≈1,878 sq ft), but this area’s mix of established neighborhoods and aging properties often means higher ongoing maintenance. With these factors priced in, a sustainable long-term investment requires keeping total monthly expenses in the $1,450–$1,650/mo range, which is achievable when purchase prices fall roughly between $210K–$260K. Because this ZIP includes parts of Jones Valley—one of Huntsville’s most desirable areas—investors often pay premiums that rents cannot fully support, leading to neutral or negative cash flow unless rents exceed the area’s average. For a strong long-term hold, an investor should ideally acquire properties at <$230K or focus on smaller, well-renovated homes where rent per square foot exceeds the average $1.01/sqft. If bought correctly, 35802 shines for low vacancy, stable tenant quality, and appreciation, but overpaying is the primary risk, as rent growth in this ZIP is steady but not explosive.

📍 35801 Deep-Dive Investment Analysis

35801 is Huntsville’s closest thing to an “urban core” rental market, with significantly higher rent per square foot ($1.21) despite a lower overall average rent of $1,683/mo due to smaller properties (≈1,466 sq ft). This ZIP benefits from proximity to Huntsville Hospital, downtown, Five Points, and Lowe Mill—producing premium rents but also premium purchase prices. For long-term investment viability, a rental here needs operating costs to remain in the $1,300–$1,500/mo zone, which typically corresponds to purchase prices of $175K–$220K for smaller cottages or townhomes. However, the market rarely sells under $250K for turnkey properties in central Huntsville, meaning most purchases at retail pricing will not cash flow without rents exceeding $1,900–$2,000/mo. The ZIP rewards investors with fast appreciation, very strong demand, and minimal vacancy, but the numbers only pencil out if you buy under market, add value through renovation, or target units with high rent-per-foot efficiency. For this ZIP more than any other, the buy-box must be extremely disciplined to make the investment worthwhile.


If you are considering dipping your toes in the world of real estate as an investment, our team has insights we would love to share with you that will help you determine if investing in Huntsville, AL real estate is right for you. Call us today at (256) 663-8427.