South Bend, IN Cap Rate: 5.29% — Rental Property Analysis
South Bend is a budget-friendly market in the Midwest with a smaller market with 103,453 residents. At a 5.29% estimated cap rate, this is a moderate market where rents of $1,390/mo lag behind home prices. With a median home price of $225,000 and population is roughly stable, South Bend 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
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Moderate — source deals carefully
Based on $225,000 median price and $1,390/mo median rent
Est. Cap Rate
5.29%
1% Rule
0.62%
Fails
GRM
13.5x
Price / Income
5.5x
Market Data
Median Home Price$225,000
Median Monthly Rent$1,390
Property Tax Rate0.86%
Population103,453
Population Growth0.3% / yr
Median Household Income$40,800
Vacancy Rate6.3%
Annual Appreciation2.3%
2026 Market Update: South Bend
South Bend's 0.6% rent-to-price ratio is well below the 1% rule. At median prices of $225,000, the $1,390/mo rent produces only $991/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 ($45K at 7%) would result in approximately $-206/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 13.5x gross rent multiplier and 6.3% vacancy rate position South Bend as a value-oriented market. With annual appreciation at 2.3%, total returns (cash flow + equity growth) run approximately 7.6% before financing leverage.
Cap Rate Calculator — South Bend
Pre-filled with South Bend medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
0.86% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
4.35%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$9,797
net operating income
Gross Rent Multiplier
13.5x
Good (<15)
1% Rule
0.62%
✗ Fails
Monthly Cash Flow
$816
before debt service
Annual Breakdown
Gross Rental Income$16,680
Less Vacancy−$1,051
Effective Income$15,629
Less Operating Expenses−$5,832
Net Operating Income$9,797
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Factor in financing to see your actual return on invested capital in South Bend.
$
$56,250
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-5.60%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$63,000
$56,250 down + $6,750 closing
Monthly Mortgage
$1,100
on $169K loan
Monthly Cash Flow
$-294
after all expenses
Annual Cash Flow
$-3,529
before taxes
Cash Flow Breakdown
Monthly Rent$1,390
Less Expenses−$584
Less Mortgage−$1,100
Monthly Cash Flow$-294
Is South Bend a Good Place to Invest in Rental Property?
South Bend, IN has a population of 103,453 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 $225,000 paired with median rents of $1,390/mo produces an estimated cap rate of 5.29%.
Property taxes at 0.86% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 6.3% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 5.5x, homes cost about 5.5 times the local median income of $40,800. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.3% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: South Bend presents moderate opportunities. Cap rates near 5.29% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
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