Danville, IL Cap Rate 7.24%
Danville is one of the most affordable markets in the country in the Midwest with a small but investable metro of 50,000. At a 7.24% estimated cap rate, this is a high-yield market where rents of $850/mo lag behind home prices. With a median home price of $95,000 and population is roughly stable, Danville stands out as a market worth serious analysis for rental investors.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Danville
At a 0.9% rent-to-price ratio, Danville falls just below the 1% rule threshold. A median-priced property at $95,000 with $850/mo rent yields approximately $573/mo in NOI — workable with favorable financing but not a slam-dunk cash flow market.
On a conventional loan with 20% down ($19K) at 7%, estimated monthly cash flow is $68 — a thin 4.3% cash-on-cash return. Investors should negotiate below asking price or target properties with above-median rents to build a meaningful cash flow buffer.
Property taxes consume 19% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Danville a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Deal Modeling & Scenarios for Danville
All figures below are computed from Danville's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 2.06% effective rate on the $95,000 median price, the annual tax bill is $1,957 — that's very high (top 15% of US markets) (+94% 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.
5-Year Cap Rate Trajectory
If Danville continues appreciating at 2.1%/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 | $95K | $850 | 7.2% |
| Year 1 | $97K | $876 | 7.3% |
| Year 2 | $99K | $902 | 7.4% |
| Year 3 | $101K | $929 | 7.4% |
| Year 4 | $103K | $957 | 7.5% |
| Year 5 | $105K | $985 | 7.6% |
Three Financing Scenarios
Same median-priced Danville 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 | $95K | $573 | $6,881 | 7.2% |
| 20% down conventional @ 7% | $22K | $68 | $816 | 3.7% |
| 25% down DSCR @ 8.5% | $28K | $26 | $306 | 1.1% |
Three Price Tiers: Below, At, and Above the Median
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) | $71K | $723 | $5,023 | 7.1% | $419 |
| At median | $95K | $850 | $5,629 | 5.9% | $469 |
| Above median (~125% price) | $119K | $977 | $6,235 | 5.3% | $520 |
Total Return Over a 5-Year Hold
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 Danville's historical appreciation rate of 2.1%:
On a $19K down payment, that's a 106.2% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Danville
Automated checks against the underlying data — surface only the risks that actually apply to Danville, not generic boilerplate:
Cap Rate Calculator — Danville
Pre-filled with Danville medians. Adjust to match a specific property.
Cash-on-Cash Return — Danville
Factor in financing to see your actual return on invested capital in Danville.
Is Danville a Good Place to Invest in Rental Property?
Danville, IL has a population of 50,000 and has been growing at 0.2% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $95,000 paired with median rents of $850/mo produces an estimated cap rate of 7.24%.
Property taxes at 2.06% are notably high and represent a significant drag on cash flow — model this expense carefully, as it can make or break a deal. The vacancy rate of 5.9% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 1.5x, homes cost about 1.5 times the local median income of $62,333. This relatively affordable ratio suggests a deep pool of renters who find buying out of reach, supporting rental demand. Home values have appreciated at roughly 2.1% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Danville offers attractive fundamentals for rental investors. and cap rates above 6% put it in the upper tier of investable markets.