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Ames vs Iowa City for Rental Property Investing

Side-by-side comparison of Ames, IA and Iowa City, IA — cap rates, rent, prices, and investment metrics.

Iowa City wins 4–2 across key metrics
Iowa City leads on cash flow (3.33% vs 3.33% cap rate) · Ames leads on population growth
Metric
Ames, IA
Iowa City, IA
Est. Cap Rate
3.33%
3.33%
Median Home Price
$235,000
$245,000
Median Monthly Rent
$1,150
$1,200
1% Rule
0.49%
0.49%
GRM
17.0x
17.0x
Price / Income
5.3x
5.0x
Property Tax Rate
1.5%
1.48%
Vacancy Rate
4.2%
4.5%
Population Growth
0.8% / yr
0.6% / yr
Annual Appreciation
2.5%
2.5%
Population
66,427
74,000
Median Income
$44,200
$48,600

Ames vs Iowa City: Which Is Better for Investors?

Cash flow: Iowa City has the edge with an estimated cap rate of 3.33% compared to Ames's 3.33%. Neither city passes the 1% rule outright, so deal sourcing and value-add strategies become more important. Median home prices are $235,000 in Ames vs $245,000 in Iowa City, while rents come in at $1,150/mo and $1,200/mo respectively.

Growth & appreciation: Ames is growing faster at 0.8% annually vs Iowa City's 0.6%. Ames leads on home value appreciation at 2.5% per year.

Costs & risk: Property taxes are 1.5% in Ames vs 1.48% in Iowa City. Vacancy rates of 4.2% and 4.5% are both healthy, suggesting strong tenant demand in both markets.

Bottom line: Iowa City edges out Ames on most key metrics. While cap rates are moderate at 3.33%, Iowa City's overall profile is stronger. Use our free calculators to model specific deals in Ames or Iowa City.

Ames, IA
3.33% cap rate · $235,000 median · $1,150/mo
Full analysis →
Iowa City, IA
3.33% cap rate · $245,000 median · $1,200/mo
Full analysis →
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