Des Moines, Iowa is rapidly gaining attention as one of the Midwest’s most investor-friendly cities for rental property income. With its low cost of living, solid job market, and growing demand for housing, Des Moines provides a balanced environment for new and experienced investors alike. This beginner’s guide explores the top strategies, legal requirements, and neighborhood insights for generating reliable rental income in Des Moines, IA.
Why Des Moines is a Great Market for Rental Income
- Affordable Housing: The median home price in Des Moines is well below the national average, creating low barriers to entry for real estate investors.
- Stable Economy: A strong employment base in finance, healthcare, insurance, and technology helps ensure consistent tenant demand.
- High Renter Population: About 45% of the city’s population are renters, creating a healthy rental market.
- Solid Rental Yields: Investors can often achieve gross yields between 7% and 10% with the right property in the right location.
Top Strategies to Generate Rental Income in Des Moines, IA
1. Long-Term Residential Rentals
Buy-and-hold strategies involving single-family homes and duplexes are highly effective in areas like Beaverdale, Merle Hay, and Drake. These properties are ideal for stable, long-term tenants on 12-month leases.
2. Section 8 / Government-Assisted Housing
The Des Moines Municipal Housing Agency (DMMHA) manages the Housing Choice Voucher Program. Landlords benefit from guaranteed rent payments and high occupancy when renting to voucher recipients.
3. Student Rentals
Des Moines is home to institutions like Drake University, Des Moines University, and Grand View University. Properties near campus neighborhoods perform well when rented by the room or to small groups of students.
4. Mid-Term Furnished Rentals
Offer furnished housing on 1–6 month leases to travel nurses, corporate transferees, and remote workers. These are in demand near hospitals, downtown, and the Ingersoll corridor.
5. House Hacking / Duplex Living
Purchase a duplex or triplex, live in one unit and rent the others to offset your mortgage. This is a cost-effective and beginner-friendly path to property income.
Legal & Licensing Requirements for Des Moines Landlords
- Rental Certificate: Required for any property leased for more than 30 days. Certificates are issued by the Neighborhood Inspection Division and must be renewed every 2 years after inspection.
- Rental Code Inspection: Inspections check for code compliance on health, safety, HVAC, plumbing, and structure.
- Business License: May be required if operating under an LLC or managing multiple properties. Check with the City of Des Moines for specifics.
- Lead Paint Disclosure: Required for properties built before 1978. Tenants must receive EPA-approved disclosures.
- Compliant Lease Agreements: Use Iowa-specific leases to stay compliant with state laws on deposits, eviction procedures, and lease terms.
Estimated Monthly Costs for Rental Properties in Des Moines
| Expense Type | Monthly Estimate |
|---|---|
| Property Taxes | $100 – $350 |
| Landlord Insurance | $50 – $100 |
| Maintenance & Repairs | $100 – $250 |
| Property Management (optional) | 8% – 10% of gross monthly rent |
| Rental Certificate Fee | $50 – $150 every 2 years |
Best Neighborhoods in Des Moines for Rental Investment
- Beaverdale: Family-friendly, walkable, and popular with long-term renters.
- Drake / Sherman Hill: Ideal for student rentals and multi-family properties.
- Merle Hay: Affordable homes with consistent rental demand.
- South Side: Strong working-class community — good for long-term and Section 8 rentals.
- Ingersoll Park: Trendy area near downtown with strong mid-term rental appeal.
Tax Benefits for Des Moines Landlords
Rental income is subject to both federal and Iowa state income taxes, but investors can take advantage of the following deductions:
- Mortgage interest and property taxes
- Depreciation of the property and furnishings
- Insurance, utilities, and repairs
- HOA dues, lawn care, and cleaning
- Property management and legal/accounting fees
Short-term rentals may be subject to local hotel/motel tax. Verify with the Iowa Department of Revenue if renting for less than 30 days.
Tips to Maximize Rental Income in Des Moines
- Focus on Multifamily Units: Duplexes and triplexes are affordable and allow for greater cash flow.
- Build a Reliable Contractor Network: Keep your property well-maintained and reduce vacancy turnaround time.
- Partner with Property Managers: For out-of-state investors, professional management ensures compliance and efficiency.
- Leverage Mid-Term Niches: Target healthcare and education professionals with fully furnished units near major employers.
Conclusion
Des Moines combines affordability, rental demand, and economic stability — making it a prime market for beginner real estate investors. Whether you’re buying your first duplex in Merle Hay or setting up a mid-term rental near Ingersoll, Des Moines offers consistent returns and manageable regulations. With the right strategy and local insight, you can build long-term passive income through real estate investment in Iowa’s capital city.
Need help with rental certificates, licensing, or investment planning in Iowa?
Contact PEAK Business Consultancy Services — your trusted partner for rental compliance, income strategy, and property success in Des Moines, IA.
