Peoria is one of the most affordable markets in the country in the Midwest with a smaller market with 113,150 residents. At a 4.86% estimated cap rate, this is a moderate market where rents of $1,150/mo lag behind home prices. With a median home price of $165,000 and the population has been declining, which investors should factor into long-term projections, Peoria 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
Peoria's 0.7% rent-to-price ratio is well below the 1% rule. At median prices of $165,000, the $1,150/mo rent produces only $668/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 ($33K at 7%) would result in approximately $-210/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.
Property taxes consume 25% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Peoria a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
All figures below are computed from Peoria's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
At 2.1% effective rate on the $165,000 median price, the annual tax bill is $3,465 — that's very high (top 15% of US markets) (+98% 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 Peoria continues appreciating at 1.6%/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 | $165K | $1,150 | 4.9% |
| Year 1 | $168K | $1,185 | 4.9% |
| Year 2 | $170K | $1,220 | 5.0% |
| Year 3 | $173K | $1,257 | 5.1% |
| Year 4 | $176K | $1,294 | 5.1% |
| Year 5 | $179K | $1,333 | 5.2% |
Same median-priced Peoria 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 | $165K | $668 | $8,021 | 4.9% |
| 20% down conventional @ 7% | $38K | $-209 | $-2,512 | -6.6% |
| 25% down DSCR @ 8.5% | $48K | $-283 | $-3,398 | -7.1% |
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) | $124K | $978 | $5,919 | 4.8% | $493 |
| At median | $165K | $1,150 | $6,473 | 3.9% | $539 |
| Above median (~125% price) | $206K | $1,323 | $7,037 | 3.4% | $586 |
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 Peoria's historical appreciation rate of 1.6%:
On a $33K down payment, that's a 33.2% 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 Peoria, not generic boilerplate:
Pre-filled with Peoria medians. Adjust to match a specific property.
Factor in financing to see your actual return on invested capital in Peoria.
Peoria, IL has a population of 113,150 and has been growing at -0.3% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $165,000 paired with median rents of $1,150/mo produces an estimated cap rate of 4.86%.
Property taxes at 2.1% 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 7.2% runs above average, which increases cash flow volatility and warrants conservative underwriting.
At a price-to-income ratio of 3.4x, homes cost about 3.4 times the local median income of $48,200. 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 1.6% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Peoria presents moderate opportunities. Cap rates near 4.86% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.