Published by: PEAK Business Consultancy Services | Updated: 2025
Table of Contents
- 1. Des Moines Real Estate Market Overview
- 2. Why Invest in Des Moines, IA?
- 3. Understanding Cash Flow Potential
- 4. Best Neighborhoods to Buy Rental Property
- 5. Legal & Regulatory Considerations
- 6. Best Types of Rental Properties
- 7. ROI Expectations and Market Trends
- 8. Tips for New Investors
- 9. Conclusion
1. Des Moines Real Estate Market Overview
As of April 2025, the average home value in Des Moines, IA is approximately $210,105, reflecting a 2.9% increase over the past year. Homes typically go to pending status in around 18 days, indicating a highly active market. The average rent in Des Moines is $1,200, which is below the national average of $2,024. [Source]
2. Why Invest in Des Moines, IA?
- Affordability: Des Moines offers low property prices compared to national averages, making it accessible for investors.
- High Rental Demand: With a significant portion of households occupied by renters, there’s a strong demand for rental properties.
- Economic Growth: The city’s economy is experiencing steady growth, driven by sectors such as healthcare, education, and technology.
3. Understanding Cash Flow Potential
Investing in Des Moines rental properties can yield positive cash flow, especially when leveraging long-term rental strategies. For instance, a property rented at $1,200 per month with expenses totaling $900 can generate a monthly cash flow of $300. Key factors influencing cash flow include property location, management efficiency, and occupancy rates.
4. Best Neighborhoods to Buy Rental Property
1. Downtown
Downtown Des Moines, the vibrant heart of Iowa’s capital city, has emerged as a prime location for Airbnb and short-term rental investments. With its thriving arts and culture scene, diverse dining options, and proximity to major employers, Downtown Des Moines offers a unique blend of urban convenience and Midwestern charm. [Source]
2. Waterbury
Waterbury is ranked as the best neighborhood in Des Moines by Niche.com, and the area also has a large percentage of renters. Waterbury is home to beautiful historic homes and tree-lined streets, making it a desirable location for tenants. [Source]
3. Beaverdale
Beaverdale is a charming neighborhood known for its unique brick homes and strong community feel. It’s a popular area for families and young professionals, offering a mix of suburban tranquility and urban accessibility. [Source]
4. Sherman Hill
Sherman Hill is one of Des Moines’ oldest neighborhoods, featuring historic Victorian homes and a vibrant arts scene. Its proximity to downtown and unique character make it attractive to renters seeking a blend of history and modern amenities. [Source]
5. Drake Neighborhood
Located near Drake University, this neighborhood is ideal for student rentals and young professionals. The area has a mix of single-family homes and apartments, providing diverse investment opportunities. [Source]
5. Legal & Regulatory Considerations
- Short-Term Rental Regulations: Des Moines has specific regulations for short-term rentals, including registration requirements and adherence to zoning laws. It’s essential to consult the city’s official guidelines before investing in properties intended for short-term rentals.
- Property Taxes: Iowa’s property tax rates vary by county and municipality. Investors should research local tax rates and assess their impact on potential returns.
6. Best Types of Rental Properties
- Single-Family Homes: Ideal for families and long-term rentals, offering privacy and space.
- Multi-Family Units: Duplexes or triplexes can maximize rental income and reduce vacancy risks.
- Condos: Suitable for short-term rentals, especially in tourist-heavy areas.
7. ROI Expectations and Market Trends
Investors in Des Moines can anticipate annual returns between 6% and 9%, depending on property type and management efficiency. The market trend shows a steady appreciation in property values, with a 2.9% increase in median home prices over the past year. Rental demand remains strong, particularly in tourist-heavy areas. [Source]
8. Tips for New Investors
- Research Local Regulations: Understand the latest rental laws and zoning regulations to ensure compliance.
- Work with Local Experts: Engage with real estate agents and property managers familiar with the Des Moines market.
- Consider Long-Term Rentals: Given the area’s regulations on short-term rentals, long-term rentals may offer more stability.
- Evaluate Property Management Options: Professional management can help maintain property condition and tenant satisfaction.
9. Conclusion
Des Moines, IA, presents a promising opportunity for investors seeking steady cash flow and long-term appreciation. By selecting the right neighborhood, understanding local regulations, and effectively managing properties, investors can capitalize on the city’s strong rental demand and limited housing supply.
For personalized investment strategies and property analysis, contact PEAK Business Consultancy Services today.
