Bloomington is the textbook flagship-university metro — Indiana University's ~43K students dominate the local economy and tenant pool in a way few US metros are dominated by a single university. The 4.18% cap rate at a $290,000 median price keeps the 0.51% rent-to-price ratio close to functional for the campus-adjacent inventory. Population growth at 0.8%/yr is steady.
Employment is anchored by Indiana University (the state flagship with ~43K students plus the IU Health Bloomington Hospital and the broader medical complex, the Kelley School of Business, the Jacobs School of Music, and the broader research footprint), Cook Group (the privately-held medical-device manufacturer headquartered here — one of the larger Indiana employers across multiple subsidiaries), Catalent Pharma Solutions (biotech and pharmaceutical contract manufacturing), Hoosier Energy, the broader Monroe County and Indiana state government, and a meaningful tech / startup community tied to the IU spinout pipeline. Submarkets stratify cleanly: the campus zones (Greek Row, near Bryan Park, Elm Heights) are student-heavy with operational complexity tied to August-to-July leasing; the southwestern neighborhoods (Hyde Park, Sherwood Oaks) are premium suburban-school; downtown / The Bloomington Square is walkable urban with strong appreciation; Ellettsville west and the broader Monroe County suburbs offer cheaper-basis options.
Indiana property tax at 0.83% is among the lower rates nationally, with Indiana's 1%/2%/3% tax cap on residential / agricultural / other property classifications providing predictable upside protection. Indiana state income tax is a flat ~3.05%. Insurance is reasonable. The structural advantages: IU enrollment is genuinely durable (the Indiana legislature has prioritized IU funding, and state-flagship enrollment doesn't cycle the way private-college enrollment can); Cook Group + Catalent provide diversified medical/biotech employment beyond the university; cost basis is materially below Indianapolis. The structural risks: student-market concentration is the central operational reality — campus-adjacent inventory has summer vacancy if leases aren't structured for 12-month August-to-July cycles, and the per-block variance between purpose-built student rentals and traditional family rentals is large. For investors who want a college-town with genuinely diversified medical-and-biotech employer support, Bloomington is the most defensible Indiana college-town option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Bloomington's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $290,000, the $1,480/mo rent produces only $1,009/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
At current rates, a 20% down conventional loan ($58K at 7%) would result in approximately $-534/mo cash flow — negative at median prices. Larger down payments, seller financing, or buying 15–25% below median are strategies to turn the numbers positive.
The 16.3x gross rent multiplier and 5.2% vacancy rate position Bloomington as a balanced market. With annual appreciation at 2.6%, total returns (cash flow + equity growth) run approximately 6.8% before financing leverage.
All figures below are computed from Bloomington's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
At 0.83% effective rate on the $290,000 median price, the annual tax bill is $2,407 — that's below national average (-22% vs the national average of ~1.06%). Verify the actual assessed value before purchase; sale-triggered reassessments can push the bill higher than the seller's current statement.
If Bloomington continues appreciating at 2.6%/yr while rents grow at a conservative 3%/yr, cap rate holds roughly steady as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $290K | $1,480 | 4.2% |
| Year 1 | $298K | $1,524 | 4.2% |
| Year 2 | $305K | $1,570 | 4.2% |
| Year 3 | $313K | $1,617 | 4.2% |
| Year 4 | $321K | $1,666 | 4.2% |
| Year 5 | $330K | $1,716 | 4.3% |
Same median-priced Bloomington property — different capital structures. All-cash maximizes cap rate. Leverage trades cash flow for higher cash-on-cash return when the spread between cap rate and borrowing cost is positive.
| Scenario | Cash Invested | Monthly Cash Flow | Annual CF | Cash-on-Cash |
|---|---|---|---|---|
| All cash | $290K | $1,009 | $12,109 | 4.2% |
| 20% down conventional @ 7% | $67K | $-534 | $-6,404 | -9.6% |
| 25% down DSCR @ 8.5% | $84K | $-663 | $-7,961 | -9.5% |
Properties don't always trade at the median. Lower-priced units typically offer higher cap rates but harder operations; higher-priced properties tend to compress cap rates while attracting better tenants. All-cash assumptions below:
| Tier | Price | Rent/Mo | NOI/Yr | Cap Rate | Monthly CF |
|---|---|---|---|---|---|
| Below median (~75% price) | $218K | $1,258 | $9,220 | 4.2% | $768 |
| At median | $290K | $1,480 | $10,428 | 3.6% | $869 |
| Above median (~125% price) | $363K | $1,702 | $11,635 | 3.2% | $970 |
Cap rate is just one piece. Real estate returns come from four sources: cash flow, appreciation, principal paydown, and tax benefits. Assuming 20% down conventional financing at 7% and a 5-year hold at Bloomington's historical appreciation rate of 2.6%:
On a $58K down payment, that's a 43.3% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Automated checks against the underlying data — surface only the risks that actually apply to Bloomington, not generic boilerplate:
Pre-filled with Bloomington medians. Adjust to match a specific property.
Factor in financing to see your actual return on invested capital in Bloomington.
Bloomington, IN has a population of 87,000 and has been growing at 0.8% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $290,000 paired with median rents of $1,480/mo produces an estimated cap rate of 4.18%.
Property taxes at 0.83% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 5.2% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 7.6x, homes cost about 7.6 times the local median income of $38,400. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. Home values have appreciated at roughly 2.6% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Bloomington presents moderate opportunities. Cap rates near 4.18% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.