Richmond, IN Cap Rate 4.13%
Richmond is one of the most affordable markets in the country in the Midwest with a small but investable metro of 50,000. At a 4.13% estimated cap rate, this is a moderate market where rents of $840/mo lag behind home prices. With a median home price of $165,000 and steady population growth supports long-term rental demand, Richmond 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: Richmond
Richmond's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $165,000, the $840/mo rent produces only $568/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 $-310/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 16.4x gross rent multiplier and 5.5% vacancy rate position Richmond as a balanced market. With annual appreciation at 2.6%, total returns (cash flow + equity growth) run approximately 6.7% before financing leverage.
Deal Modeling & Scenarios for Richmond
All figures below are computed from Richmond'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 $165,000 median price, the annual tax bill is $1,386 — 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 Richmond 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 | $165K | $840 | 4.1% |
| Year 1 | $169K | $865 | 4.1% |
| Year 2 | $174K | $891 | 4.2% |
| Year 3 | $178K | $918 | 4.2% |
| Year 4 | $183K | $945 | 4.2% |
| Year 5 | $188K | $974 | 4.2% |
Three Financing Scenarios
Same median-priced Richmond 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 | $568 | $6,820 | 4.1% |
| 20% down conventional @ 7% | $38K | $-309 | $-3,714 | -9.8% |
| 25% down DSCR @ 8.5% | $48K | $-383 | $-4,600 | -9.6% |
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) | $124K | $714 | $5,191 | 4.2% | $433 |
| At median | $165K | $840 | $5,867 | 3.6% | $489 |
| Above median (~125% price) | $206K | $966 | $6,542 | 3.2% | $545 |
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 Richmond's historical appreciation rate of 2.6%:
On a $33K down payment, that's a 42.2% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Richmond
Automated checks against the underlying data — surface only the risks that actually apply to Richmond, not generic boilerplate:
Cap Rate Calculator — Richmond
Pre-filled with Richmond medians. Adjust to match a specific property.
Cash-on-Cash Return — Richmond
Factor in financing to see your actual return on invested capital in Richmond.
Is Richmond a Good Place to Invest in Rental Property?
Richmond, 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 $165,000 paired with median rents of $840/mo produces an estimated cap rate of 4.13%.
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 2.7x, homes cost about 2.7 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: Richmond presents moderate opportunities. Cap rates near 4.13% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.