Sioux City, IA Cap Rate 3.52%
Sioux City is the regional anchor of the Tri-State (Iowa-Nebraska-South Dakota) region — anchored by one of the larger US meat-processing employment clusters and a deep agricultural base. The 3.52% cap rate at a $215,000 median price keeps the 0.52% rent-to-price ratio at or close to functional — Sioux City is one of the more genuine cash-flow markets in the Midwest. Population growth at 0.1%/yr is essentially flat.
Employment is anchored by the meat-processing economy (Tyson Foods, Smithfield, and Seaboard Triumph Foods all operate major beef and pork processing plants in Sioux City and the broader metro — collectively one of the larger US meat-processing employment concentrations, with the broader supplier and trucking economy), MercyOne Sioux City Medical Center and UnityPoint Health St. Luke's, the broader healthcare ecosystem, the broader Woodbury County government, Sioux Gateway Airport, Briar Cliff University and Morningside University, the broader I-29 logistics corridor employment, and a meaningful agricultural-services base tied to the surrounding Tri-State farming economy. The tenant base mixes meat-processing workers (with significant immigrant-worker tenant patterns), healthcare professionals, and the broader regional services workforce. Submarkets stratify cleanly: the historic Morningside / Indian Hills area is walkable urban-historic with strong appreciation; the broader Sergeant Bluff and North Sioux City suburbs draw professional family rentals; South Sioux City NE across the Missouri River offers cheaper basis with similar tenant pool; central Sioux City offers deeper-value workforce inventory with the operational complexity that comes with older Class C housing.
Iowa property tax at 1.54% is moderate. Iowa state income tax is moving toward a flat ~3.9% structure. Insurance is reasonable but verify winter / freeze deductible structure. The structural advantages: meat-processing employment is genuinely durable (US protein demand is structurally stable, the larger processors have continued investing in Sioux City facilities); cost basis is materially below Des Moines or Omaha; cash-flow math at the median actually works; the tri-state geography concentrates retail and services employment that wouldn't otherwise exist. The structural risks: meat-processing labor practices and worker-safety issues have been ongoing political topics; immigrant-worker tenant patterns can produce specific operational characteristics (verify lease enforcement and tenant-screening practices for local compliance); population trajectory has been weak. For local operators with comfort around meat-processing-anchored tenant management, Sioux City produces genuine cash-flow math.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Sioux City
Sioux City's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $215,000, the $1,120/mo rent produces only $631/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 $-513/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 Sioux City a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Deal Modeling & Scenarios for Sioux City
All figures below are computed from Sioux City's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 1.54% effective rate on the $215,000 median price, the annual tax bill is $3,311 — that's above national average (+45% 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 Sioux City continues appreciating at 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 | $1,120 | 3.5% |
| Year 1 | $219K | $1,154 | 3.6% |
| Year 2 | $224K | $1,188 | 3.6% |
| Year 3 | $228K | $1,224 | 3.6% |
| Year 4 | $233K | $1,261 | 3.7% |
| Year 5 | $237K | $1,298 | 3.7% |
Three Financing Scenarios
Same median-priced Sioux City 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 | $631 | $7,576 | 3.5% |
| 20% down conventional @ 7% | $49K | $-512 | $-6,150 | -12.4% |
| 25% down DSCR @ 8.5% | $62K | $-609 | $-7,304 | -11.7% |
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 | $952 | $5,760 | 3.6% | $480 |
| At median | $215K | $1,120 | $6,285 | 2.9% | $524 |
| Above median (~125% price) | $269K | $1,288 | $6,811 | 2.5% | $568 |
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 Sioux City's historical appreciation rate of 2%:
On a $43K down payment, that's a 10.5% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Sioux City
Automated checks against the underlying data — surface only the risks that actually apply to Sioux City, not generic boilerplate:
Cap Rate Calculator — Sioux City
Pre-filled with Sioux City medians. Adjust to match a specific property.
Cash-on-Cash Return — Sioux City
Factor in financing to see your actual return on invested capital in Sioux City.
Is Sioux City a Good Place to Invest in Rental Property?
Sioux City, IA has a population of 85,000 and has been growing at 0.1% 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 $1,120/mo produces an estimated cap rate of 3.52%.
Property taxes at 1.54% 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 6.2% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 4.5x, homes cost about 4.5 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 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, Sioux City 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.