Kokomo, IN Cap Rate 4.55%
Kokomo is a budget-friendly market in the Midwest with a small but investable metro of 50,000. At a 4.55% estimated cap rate, this is a moderate market where rents of $1,010/mo lag behind home prices. With a median home price of $185,000 and steady population growth supports long-term rental demand, Kokomo offers opportunities for investors who source deals carefully.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Kokomo
Kokomo's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $185,000, the $1,010/mo rent produces only $702/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 ($37K at 7%) would result in approximately $-282/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 15.3x gross rent multiplier and 5.5% vacancy rate position Kokomo as a balanced market. With annual appreciation at 2.6%, total returns (cash flow + equity growth) run approximately 7.2% before financing leverage.
Deal Modeling & Scenarios for Kokomo
All figures below are computed from Kokomo's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.84% effective rate on the $185,000 median price, the annual tax bill is $1,554 — that's below national average (-21% 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 Kokomo 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 | $185K | $1,010 | 4.6% |
| Year 1 | $190K | $1,040 | 4.6% |
| Year 2 | $195K | $1,072 | 4.6% |
| Year 3 | $200K | $1,104 | 4.6% |
| Year 4 | $205K | $1,137 | 4.6% |
| Year 5 | $210K | $1,171 | 4.6% |
Three Financing Scenarios
Same median-priced Kokomo 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 | $185K | $702 | $8,419 | 4.6% |
| 20% down conventional @ 7% | $43K | $-283 | $-3,391 | -8.0% |
| 25% down DSCR @ 8.5% | $54K | $-365 | $-4,384 | -8.2% |
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) | $139K | $859 | $6,371 | 4.6% | $531 |
| At median | $185K | $1,010 | $7,220 | 3.9% | $602 |
| Above median (~125% price) | $231K | $1,162 | $8,079 | 3.5% | $673 |
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 Kokomo's historical appreciation rate of 2.6%:
On a $37K down payment, that's a 52.6% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Kokomo
Automated checks against the underlying data — surface only the risks that actually apply to Kokomo, not generic boilerplate:
Cap Rate Calculator — Kokomo
Pre-filled with Kokomo medians. Adjust to match a specific property.
Cash-on-Cash Return — Kokomo
Factor in financing to see your actual return on invested capital in Kokomo.
Is Kokomo a Good Place to Invest in Rental Property?
Kokomo, IN has a population of 50,000 and has been growing at 0.9% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $185,000 paired with median rents of $1,010/mo produces an estimated cap rate of 4.55%.
Property taxes at 0.84% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 5.5% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 3.0x, homes cost about 3.0 times the local median income of $60,888. 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 2.6% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Kokomo presents moderate opportunities. Cap rates near 4.55% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.