Des Moines is one of the best real estate investment markets in the Midwest. Rental yields are consistently higher than Chicago, Minneapolis, and Kansas City, inventory is affordable, and the metro's steady job growth keeps vacancy rates low. Here are the Des Moines metro neighborhoods where my investor clients get the best cash-on-cash returns in 2026.
The Investment Scorecard
Good rental neighborhoods share four traits:
1. Median home price under $300K — lower purchase price drives higher yield
2. Strong rent-to-price ratio — 0.8%+ monthly rent vs purchase price is good, 1%+ is excellent
3. Low vacancy and strong demand — renter population, job growth, school quality
4. Stable or appreciating values — you don't want to buy into a declining market
1. Pleasant Hill — Best Rent-to-Price Ratio
- Median home price: ~$265K
- Typical rent (3BR): $1,950 - $2,200
- Rent-to-price ratio: 0.8 - 0.85%
- Vacancy: Low
- Why it works: East-side affordability, access to downtown, Southeast Polk schools, strong renter demand from Des Moines employers
2. Altoona — Best Combination of Appreciation and Yield
- Median home price: ~$290K
- Typical rent (3BR): $2,000 - $2,250
- Rent-to-price ratio: ~0.78%
- Vacancy: Low
- Why it works: Strong growth tied to Facebook/Meta data center employment, proximity to Prairie Meadows, newer construction
3. East Side Des Moines — Best Cash Flow
- Median home price: ~$185K
- Typical rent (3BR): $1,500 - $1,750
- Rent-to-price ratio: 0.8 - 0.95%
- Vacancy: Low to moderate
- Why it works: Cheapest entry into Polk County, strong rental demand, proximity to Des Moines Area Community College
- Watch out for: Some pockets have heavy deferred maintenance and higher turnover
4. Beaverdale — Best for Long-Term Quality Tenants
- Median home price: ~$250K
- Typical rent (3BR): $1,750 - $2,000
- Rent-to-price ratio: ~0.75%
- Vacancy: Very low
- Why it works: Walkable village center, character 1920s-1940s homes, long-term tenant demand, school quality
5. Norwalk — Best Suburb Investment
- Median home price: ~$290K
- Typical rent (3BR): $2,100 - $2,400
- Rent-to-price ratio: ~0.78%
- Vacancy: Low
- Why it works: Strong Norwalk school district, small-town feel, newer construction, stable demand
6. Ankeny — Best Appreciation Play
- Median home price: ~$315K
- Typical rent (3BR): $2,100 - $2,400
- Rent-to-price ratio: ~0.72%
- Vacancy: Very low
- Why it works: Lower cash flow but strong appreciation — Ankeny has been the fastest-appreciating suburb in the metro for a decade
7. Urbandale — Best Balance
- Median home price: ~$285K
- Typical rent (3BR): $2,000 - $2,250
- Rent-to-price ratio: ~0.76%
- Vacancy: Very low
- Why it works: Central location, strong schools, long-term tenants, slow and steady appreciation
Multi-Family Considerations
Small multi-family (duplex to 4-unit) is scarce in most Des Moines metro suburbs but available in Des Moines proper:
- Beaverdale, Drake, Sherman Hill, and East Village have the most duplex inventory
- Typical duplex purchase: $275K-$400K with rents of $1,200-$1,600 per side
- Cap rates: 7-9% for most well-located duplexes in good condition
Cap Rate Benchmarks
For Des Moines metro single-family rentals, expect:
- Class A (newer, best neighborhoods): 4-5% cap rate, slow cash flow, strong appreciation
- Class B (established, middle neighborhoods): 6-7% cap rate, balanced
- Class C (older, cash flow markets): 8-10% cap rate, strong cash flow, weaker appreciation
Frequently Asked Questions
Q: What is the best Des Moines neighborhood to buy a rental property?
A: For cash flow, Pleasant Hill, Altoona, and the East Side. For appreciation, Ankeny and Urbandale. For long-term quality tenants, Beaverdale and Norwalk.
Q: What is a good cap rate in Des Moines?
A: 6-7% is typical for a well-managed Class B single-family rental in the Des Moines metro. Class C markets can hit 8-10% but come with more management complexity.
Q: How much cash do I need to buy a rental property in Des Moines?
A: Plan on 20-25% down for an investment property, plus closing costs and 6 months of reserves. For a $275K rental, that's roughly $65K-$80K in total cash at closing.
Q: What are the best suburbs for Des Moines Airbnb rentals?
A: Downtown Des Moines, East Village, and Valley Junction in West Des Moines have the strongest short-term rental demand. Check the specific city's short-term rental ordinance before buying — most require a permit.
Related Resources
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