Johnson County

Johnson County sits at a gross rent-to-price ratio of 0.0683, which translates to a 4.44% cap rate on a median-priced asset. That combination places it squarely in appreciation-first territory, not a cash-flow market. The model underwrite at 6.85% financing shows a monthly cash flow of negative $476 and a cash-on-cash return of negative 8.03% on a $61,837 down payment. Those are not rounding errors, they are structural. The 2.76% year-over-year home price growth is real but modest, and the affordability index of 64 suggests the market is not wildly overpriced relative to incomes, yet prices at $309,187 median are high enough that the rent level, $1,760 per month, cannot carry the debt at current rates without a subsidy from appreciation or a larger down payment that dilutes the yield further.

The investor this market suits is not hunting monthly cash flow. The cash-flow score of 68 out of 100 is above average but the actual underwrite bleeds red, so read that score as relative, not absolute. The appreciation score of 78 is the number worth focusing on. An investor comfortable with negative carry who believes in the underlying demand driver, namely a large anchored university, will underwrite this as a long-hold asset where equity accumulation and rent growth over time close the gap. A value-add operator who can buy below median, force rent through renovation, and close the spread between the current gross yield and the break-even yield has a path, but it is narrow. A pure cash-flow buyer should look elsewhere in this data set before committing here.

The University of Iowa sits in Iowa City, which is the county seat of Johnson County, and it is the single largest economic anchor in this market. A university of that scale drives enrollment-linked rental demand that is structurally different from demand in a purely employment-driven market. Enrollment cycles, on-campus housing expansion, and student population mix all affect absorption in ways that a standard residential underwrite does not capture cleanly. The stability score of 50 is the lowest of all Johnson County's scored dimensions, and that is a signal worth taking seriously. Markets anchored by a single institution carry concentration risk: if enrollment contracts, demand for off-campus housing contracts with it, and you do not get the diversified employer base that buffers a typical metro rental market.

The monthly tax and insurance figure deserves its own line on any underwrite here. At $482 per month combined, it represents nearly a third of the $1,760 median rent before debt service, maintenance, or vacancy are touched. Iowa's state-average effective property tax rate of 1.53% is flagged as high, and at that rate on a $309,187 asset the annual tax bill alone comes to $4,731. That is a real cost, not a rounding assumption, and it is one of the structural reasons the levered cash flow goes negative so quickly. The note on this data is worth repeating: 1.53% is a state-average estimate from Tax Foundation 2024 data, and actual Johnson County or township-level rates may differ, so pull the county assessor's effective rate before closing any deal.

The single-institution concentration risk is the most important structural risk in this market, and the stability score of 50 reflects it. Regulatory risk around student housing, including zoning changes or university-driven dormitory expansion, could compress rental demand without any change in the broader economy. Demographic risk is also present in the sense that the renter base skews toward students and university employees, a narrower pool than a diverse employment market produces. None of that makes the market uninvestable, but it means the underwriting assumptions around vacancy and tenant quality are more variable than in a market with distributed demand.

Against its neighbors, Johnson County is the premium-priced, higher-yield option among markets where the comparables mostly score within a few points of each other overall. Linn County, at a $228,475 median and a 0.0563 rent-to-price ratio, is cheaper but produces a lower gross yield than Johnson and scores 66 overall, essentially the same. Jasper County's 0.0488 ratio is the weakest in this peer group despite prices of $233,695, making it harder to justify on either cash-flow or yield grounds. Madison County at $328,942 and no rent data provided is difficult to compare directly. Lee County at $117,640 is the lowest-priced option in the group and may offer better cash-flow arithmetic, but without rent data its yield is unknown. An investor should choose Johnson County over these neighbors specifically when they have a thesis around university-driven demand, can stomach negative carry in the early years, and are underwriting for rent growth and appreciation over a five-plus-year hold. If the goal is day-one cash flow, the lower price points in this peer group are the more logical starting point.