1st Advantage MortgageFor Dothan, AL rentals, the DSCR test compares rent to the full payment. The Census medians that frame it are $960 rent, $194,000 value and $606 in yearly taxes.
Dothan by the Census numbers
A DSCR lender in Dothan is comparing a rent against a payment, and the citywide benchmarks are a median gross rent of $960 and a median home value of $194,000. The rent figure is close to the Alabama median of $1,007. The gross rent-to-value ratio for Dothan works out to 5.9% (twelve months of median rent divided by median value), neither especially thin nor especially rich. The figure combines all rental types with all owner-occupied homes, so it is a screening number and not an appraisal.
| Indicator | Alabama | Dothan | Difference |
|---|---|---|---|
| Share in 2-4 unit buildings | 4.8% | 9.7% | +104% |
| Share of homes detached | 69.1% | 70.8% | +2% |
| Long commuters, 45 min plus | 14.7% | 9.5% | -35% |
| Degree holders, age 25+ | 28.4% | 27.6% | -3% |
| Workers on their own account | 9.1% | 10.1% | +10% |
| Renters paying 30%+ of income | 48.8% | 47.1% | -3% |
| Units sitting vacant | 14.5% | 13.0% | -11% |
| Typical construction year | 1986 | 1982 | |
| Annual rent divided by value | 5.8% | 5.9% | +3% |
| Households that rent | 29.8% | 42.9% | +44% |
| Tax as a share of home value | 0.38% | 0.31% | -17% |
| Annual property tax bill, median | $788 | $606 | -23% |
| Household income, median | $63,999 | $55,792 | -13% |
| Typical owner-occupied value | $209,900 | $194,000 | -8% |
| Residents (Census estimate) | 5,086,768 | 71,514 |
Roughly 42.9% of occupied housing in Dothan is rented, well above the Alabama median of 30%. Median household income of $55,792 (about 13% below the Alabama median of $63,999) sets the ceiling for rent growth, and 47% of renters already spend 30 percent or more of income on rent.
The kind of housing in Dothan
About 71% of Dothan's housing is detached single-family, which means a typical rental purchase is a house with its own roof, yard and repair schedule. With 1982 as the median build year, expect aging HVAC and roofs and ask for the dates of the last replacements.
Vacancy is a quiet driver of rent. 13% of homes are vacant citywide and 8.7% of the rental inventory was listed for rent when the Census surveyed.
What the data means for Dothan buyers
With a gross ratio near 5.9%, Dothan rewards buyers who negotiate price and shop insurance, because the margin above the lender's threshold is not wide. Mid-aged stock (median built 1982) means many roofs and HVAC units are near the end of their lives, so ask for installation dates. Renters are 43% of households, which gives investors a real tenant base to market to.
What costs can do to a Dothan ratio
Property taxes in Dothan run a median $606 a year for owners, about 23% below the Alabama median of $788. As a share of median value, that is about 0.31%. In rent terms, the tax bill equals roughly 5% of twelve months of median rent.
The federal National Risk Index scores Houston County relatively moderate for overall risk, led by tornadoes (relatively high), lightning (relatively high) and hurricanes (relatively high). That is a county-level view, so check the flood map for the exact parcel.
| Hazard in Houston County, FEMA index | Level |
|---|---|
| Strong wind exposure | Relatively High |
| Hurricanes exposure | Relatively High |
| Lightning exposure | Relatively High |
| Tornadoes exposure | Relatively High |
| Social vulnerability score | Relatively High |
| Annualized loss estimate | Relatively Moderate |
| Composite risk | Relatively Moderate |
In Houston County, as anywhere, the premium is part of PITIA, which means a quote with the roof, age and flood zone of the actual Dothan address belongs in your file early.
Working the Dothan rent math
Try the math at the medians. With rent at $960 and taxes near $50 a month, a 1.00 DSCR leaves $910 for everything else in the payment, a 1.20 ratio leaves $750, and a 1.25 ratio leaves $718. Any real property will differ, but the exercise shows how little room insurance and dues can take.
What AL law and Dothan require of landlords
Before you underwrite a Dothan rental, confirm with city hall and Houston County whether landlords must register, pass an inspection or hold a permit, especially for stays under 30 days, because those rules can change what income a lender will count. State tax treatment of short stays, as it applies to Dothan. Alabama's state lodgings tax applies to short-term rentals of less than 180 continuous days, and counties and cities may add their own lodging taxes with rates and filing rules that vary by locality.
After move-out, the Dothan owner has 60 days to return the deposit or account for deductions.
Dothan in a Alabama comparison
For a statewide comparison, the cities below range from $196,300 in Florence to $255,500 in Tuscaloosa on median home value, with Dothan at $194,000.
| Market | Renter share | Tax bill | Home value | Residents | Rent |
|---|---|---|---|---|---|
| Florence | 48% | $845 | $196,300 | 41,701 | $820 |
| Tuscaloosa | 57% | $1,210 | $255,500 | 111,038 | $1,055 |
| Opelika | 31% | $1,183 | $241,800 | 32,820 | $950 |
| Dothan | 43% | $606 | $194,000 | 71,514 | $960 |
Employers and institutions near Dothan rentals
Self-employment accounts for 10.1% of Dothan's workforce, so many local investors earn income that a standard payroll-based mortgage underwrites poorly. Looking at who fills the rentals, government workers are about 14% of employment, 28% of adults hold a bachelor's degree or higher and 10% of commuters travel 45 minutes or more.
Employers named in Wikipedia's Dothan entry for 2011 include Southeast Alabama Medical Center, Dothan City & Houston County Schools, Flowers Hospital, City of Dothan and Southern Nuclear (Farley), which is where many tenants earn the income that pays rent. Campuses such as Wallace Community College and Alabama College of Osteopathic Medicine pull tenants into Dothan, and landlords near them can plan around move-in seasons. Dothan offers air service through Dothan Regional Airport, details that affect commute times and how easily a distant investor can inspect a property.
Putting a Dothan file together
Gather the lease or rent estimate, the tax estimate and an insurance quote for the Dothan address, check them in the calculator, and begin your application or get a quote first.
More Alabama markets
- All Alabama DSCR loans
- DSCR loans in Opelika, AL
- DSCR loans in Tuscaloosa, AL
- DSCR loans in Florence, AL
- Every market we cover
Where we checked
- Encyclopedia entry for Dothan
- Alabama landlord deposit rules, Ala. Code 35-9A-201(a)-(f)
- State rule cited for Dothan hosts: Alabama Department of Revenue, lodgings tax
- ACS 2020 to 2024 estimates for Dothan
- National Risk Index entry, Houston County
Census figures are 2020 to 2024 ACS five-year estimates for Dothan and carry margins of error. The Alabama legal summaries are from the RedFlagLease dataset, licensed CC BY 4.0, with statute links. Verified October 2026. Ordinances and statutes change, so confirm before acting.
A short buyer checklist
For a Dothan rental, request the current lease, the last tax bill and the insurance declarations page early, and confirm which utilities the tenant pays, because each one changes the monthly figure a lender compares with the rent.
DSCR loan availability varies by property and lender program and is not an offer to lend. See our disclosures.
Frequently asked questions
How is Dothan rent documented for a DSCR loan?
On most files the lender uses the lower of the signed lease rent and the appraiser's market rent for the address in Dothan. For orientation, the Census median gross rent here is $960 a month.
Does the ratio in Dothan include taxes and dues?
Taxes, insurance and dues are inside the payment the lender tests. Run $960 through a 1.25 ratio and the ceiling is about $768; subtract $50 for median taxes and $718 remains.
What do Dothan owners pay in real estate taxes?
Typical owners pay $606, or 0.31% of home value, with Alabama overall at 0.38%. Do not assume the seller's bill carries over to you.
Do DSCR lenders count short-term rental income in Dothan?
It depends on the program and on local law. A Dothan owner needs the right permit or registration, an association that allows nightly stays, and documented bookings.
Are there deposit limits for Dothan rentals?
Return is due within 60 days after the tenant leaves. The governing section is Ala. Code 35-9A-201(a)-(f).
What does FEMA say about hazard risk near Dothan?
FEMA's National Risk Index rates the county's overall natural hazard risk as relatively moderate. That is a county-level view, so check the FEMA flood map and an insurance quote for the exact Dothan address.
Do I need an LLC to buy a rental in Dothan?
You do not need one, and many investors close in an entity. If you use an LLC, the lender asks for formation documents and usually a personal guaranty. Talk to your attorney and accountant about structure for a Alabama property.