Evansville, IN Cap Rate 3.86%
Evansville is the third-largest metro in Indiana — anchored by the Toyota Princeton vehicle assembly plant (one of the larger Toyota US facilities), Deaconess Health System, and the University of Southern Indiana. The 3.86% cap rate at a $215,000 median price keeps the 0.49% rent-to-price ratio at or above the 1% rule in many submarkets — Evansville is a genuine cash-flow market. Population growth at 0.2%/yr is essentially flat.
Employment is anchored by Toyota Motor Manufacturing Indiana in nearby Princeton (~25 miles north — builds Highlander, Sienna, and Sequoia for the North American market, with the broader supplier ecosystem extending throughout the Evansville metro), Deaconess Health System (the dominant regional medical system serving southwestern Indiana, southern Illinois, and western Kentucky), Mead Johnson Nutrition (Enfamil baby formula manufacturer — historic Evansville operations though now a Reckitt subsidiary), the University of Southern Indiana (the regional public university with ~10K students), University of Evansville (private liberal arts), Berry Global (packaging manufacturer headquartered here), the broader Vanderburgh County government, the broader Ohio River barge logistics, and a meaningful manufacturing supplier base. Submarkets stratify cleanly: the historic East Side / Newburgh area is walkable urban-historic with strong appreciation; the broader North Park draws professional family rentals; the broader Warrick County (Newburgh) extends the metro east with cheaper basis; central and west Evansville offer deeper-value workforce inventory.
Indiana property tax at 0.82% is among the lower rates nationally, with Indiana's 1%/2%/3% tax cap providing predictable upside protection. Indiana state income tax is a flat ~3.05%. Insurance is reasonable but verify tornado / severe-weather deductible structure (the broader Tri-State region has meaningful severe-weather exposure). The structural advantages: Toyota Princeton + Deaconess + Berry Global + USI is a genuinely diversified employer mix for an Indiana metro this size; Toyota's long-term commitment to Indiana appears durable; IN tax structure favors landlords; genuine cash-flow math at the median. The structural risks: Toyota concentration matters (any major program shift would affect supplier employment); population trajectory has been weak; per-block variance in some Evansville neighborhoods. For investors who want southwestern Indiana exposure with manufacturing + healthcare + university anchors at genuine cash-flow math, Evansville is the most defensible Indiana Tri-State option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Evansville
Evansville's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $215,000, the $1,050/mo rent produces only $692/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 ($43K at 7%) would result in approximately $-452/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 17.1x gross rent multiplier and 6.5% vacancy rate position Evansville as a balanced market. With annual appreciation at 2.2%, total returns (cash flow + equity growth) run approximately 6.1% before financing leverage.
Deal Modeling & Scenarios for Evansville
All figures below are computed from Evansville's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.82% effective rate on the $215,000 median price, the annual tax bill is $1,763 — that's below national average (-23% 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 Evansville continues appreciating at 2.2%/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 | $215K | $1,050 | 3.9% |
| Year 1 | $220K | $1,082 | 3.9% |
| Year 2 | $225K | $1,114 | 3.9% |
| Year 3 | $230K | $1,147 | 3.9% |
| Year 4 | $235K | $1,182 | 4.0% |
| Year 5 | $240K | $1,217 | 4.0% |
Three Financing Scenarios
Same median-priced Evansville 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 | $215K | $692 | $8,298 | 3.9% |
| 20% down conventional @ 7% | $49K | $-452 | $-5,428 | -11.0% |
| 25% down DSCR @ 8.5% | $62K | $-549 | $-6,582 | -10.6% |
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) | $161K | $893 | $6,338 | 3.9% | $528 |
| At median | $215K | $1,050 | $7,142 | 3.3% | $595 |
| Above median (~125% price) | $269K | $1,208 | $7,956 | 3.0% | $663 |
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 Evansville's historical appreciation rate of 2.2%:
On a $43K down payment, that's a 24.4% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Evansville
Automated checks against the underlying data — surface only the risks that actually apply to Evansville, not generic boilerplate:
Cap Rate Calculator — Evansville
Pre-filled with Evansville medians. Adjust to match a specific property.
Cash-on-Cash Return — Evansville
Factor in financing to see your actual return on invested capital in Evansville.
Is Evansville a Good Place to Invest in Rental Property?
Evansville, IN has a population of 117,429 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 $215,000 paired with median rents of $1,050/mo produces an estimated cap rate of 3.86%.
Property taxes at 0.82% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 6.5% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 4.9x, homes cost about 4.9 times the local median income of $44,200. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.2% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: At current median prices, Evansville is challenging for pure cash flow investing. Consider BRRRR strategies with below-market purchases, or look at neighboring metros with stronger price-to-rent ratios.