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Indianapolis vs Bloomington for Rental Property Investing

Side-by-side comparison of Indianapolis, IN and Bloomington, IN — cap rates, rent, prices, and investment metrics.

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Indianapolis wins 5–2 across key metrics
Indianapolis leads on cash flow (4.24% vs 4.18% cap rate)
Metric
Indianapolis, IN
Bloomington, IN
Est. Cap Rate
4.24%
4.18%
Median Home Price
$285,000
$290,000
Median Monthly Rent
$1,490
$1,480
1% Rule
0.52%
0.51%
GRM
15.9x
16.3x
Price / Income
5.4x
7.6x
Property Tax Rate
0.84%
0.83%
Vacancy Rate
6.2%
5.2%
Population Growth
0.9% / yr
0.8% / yr
Annual Appreciation
2.8%
2.6%
Population
882,039
87,000
Median Income
$52,900
$38,400

Indianapolis vs Bloomington: Which Is Better for Investors?

Cash flow: Indianapolis has the edge with an estimated cap rate of 4.24% compared to Bloomington's 4.18%. Neither city passes the 1% rule outright, so deal sourcing and value-add strategies become more important. Median home prices are $285,000 in Indianapolis vs $290,000 in Bloomington, while rents come in at $1,490/mo and $1,480/mo respectively. For context, the national average cap rate is 3.81% and average price is $333K.

Growth & appreciation: Indianapolis is growing faster at 0.9% annually vs Bloomington's 0.8%. Indianapolis leads on home value appreciation at 2.8% per year.

Costs & risk: Property taxes are 0.84% in Indianapolis vs 0.83% in Bloomington. Vacancy rates of 6.2% and 5.2% are mixed — Bloomington has the tighter rental market.

Entry point: Indianapolis offers a lower entry at $285K vs Bloomington's $290K — a difference of $5K. With a 20% down payment, that's $57K vs $58K. Indianapolis combines the lower price with a higher cap rate — a compelling combination.

Bottom line: Indianapolis edges out Bloomington on most key metrics. While cap rates are moderate at 4.24%, Indianapolis's overall profile is stronger. Use our free calculators to model specific deals in Indianapolis or Bloomington.

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Indianapolis, IN
4.24% cap rate · $285,000 median · $1,490/mo
Full analysis →
Bloomington, IN
4.18% cap rate · $290,000 median · $1,480/mo
Full analysis →

Frequently Asked Questions

Is Indianapolis or Bloomington better for rental investing?
Indianapolis wins 5–2 across our 7 key metrics (cap rate, 1% rule, GRM, taxes, vacancy, growth, appreciation). Indianapolis's 4.24% cap rate and $285K median price offer both higher returns and a lower entry point.
What is the cap rate difference between Indianapolis and Bloomington?
Indianapolis has a 4.24% cap rate vs Bloomington's 4.18% — a difference of 0.07 percentage points. This is a relatively small difference — other factors like growth, taxes, and local market conditions may matter more. For context, the national average is 3.81%.
Which city has lower property taxes?
Bloomington has lower property taxes at 0.83% vs 0.84%. On a $288K property, that's a difference of approximately $13/year in tax expense — money that goes directly to (or from) your cash flow.
Which city is growing faster?
Indianapolis is growing at 0.9% annually vs Bloomington's 0.8%. Moderate growth provides stable demand. Indianapolis's appreciation rate of 2.8% also leads on home value growth.

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