1031 Exchange in Ames MSA
The Ames MSA offers unique 1031 exchange opportunities with cap rates of 5.5-7.0%, property taxes around 1.36%, university-driven rental demand, and median home prices of $316,500 in Iowa's premier college town.
Population
129,227
Key Industries
Education, Research, Technology
Table of Contents
Information is for educational purposes only. Consult qualified professionals for specific advice.
Local Tax Considerations
Property taxes, transfer taxes, and local incentives
Property Tax Rates
Average Rate
1.36%
Assessment Method
Assessed Value (Iowa Property Tax System)
MSA rate (1.36%) vs State average (1.81%)
-25% below state average, +33% above national average
Transfer Taxes & Fees
Transfer Tax Rate
$0.80 per $500
Iowa real estate transfer tax paid to county recorder
Local Tax Incentives
Iowa Enterprise Zone Program
Tax incentives for businesses in designated enterprise zones
Eligibility: Properties located in designated enterprise zones
Research Activities Credit
Tax credits for qualifying research and development activities
Eligibility: Properties used for qualifying research activities
Agricultural Land Tax Credit
Reduced property taxes for agricultural land use
Eligibility: Properties meeting agricultural use requirements
Opportunity Zones
Number of Zones
1
Key Locations
- East Ames
Opportunity Zones offer significant tax benefits for long-term investments, including deferral and potential elimination of capital gains taxes.
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Market Profile Dashboard
Economic indicators and market trends
Population
129,227
Growth: +3.3% annually
Median Income
$60,102
Unemployment
1.5-2.8%
Job Growth
+2.1% annually
Economic Drivers
Market Trends
Median Home Price
$316,500
Average Rent
$1,090/mo
Cap Rates
5.5-7.0%
Demographics
Median Age
23.6 years
Bachelor's Degree+
65.5%
Owner Occupied
Variable due to student population
Property Type Analysis
Investment opportunities by asset class
Student Housing
Dominant rental market with strong demand from 30,177 Iowa State University students.
Market Metrics
- Cap Rates: 7.2%
- Vacancy Trends: Seasonal patterns with low vacancy during academic year, higher summer vacancy
- Demand Forecast: Stable demand supported by consistent university enrollment and housing needs
Risk Factors
- Seasonal occupancy fluctuations
- High tenant turnover
- Management-intensive operations
- Cyclical rental income
Opportunities
- Strong rental demand from large student population
- Premium rents for quality properties
- Parent-purchased investment properties
- Multi-unit property potential
Single-Family Rental
Good opportunities with professional and family demographics from university and research employment.
Market Metrics
- Cap Rates: 6.4%
- Vacancy Trends: Low vacancy around 4-6% due to stable employment and population
- Demand Forecast: Positive outlook supported by university employment and professional growth
Risk Factors
- Competition from homeownership
- Limited economic diversification
- Seasonal demand variations
- Higher maintenance costs in older properties
Opportunities
- University faculty and staff housing
- Research facility employees
- Young professional demographics
- Stable employment base
Multifamily
Strong market with diverse tenant base from students, professionals, and university employees.
Market Metrics
- Cap Rates: 6.8%
- Vacancy Trends: Moderate vacancy around 6-8% with seasonal variations
- Demand Forecast: Strong demand from university community and growing professional population
Risk Factors
- Student population seasonality
- Competition from new construction
- Management complexity with mixed demographics
- Cyclical rental patterns
Opportunities
- Mixed student and professional housing
- Graduate student and faculty housing
- Research facility worker housing
- Young professional market growth
Office
Limited opportunities with university, research, and government demand offset by remote work trends.
Market Metrics
- Cap Rates: 8.1%
- Vacancy Trends: Higher vacancy around 10-12% due to remote work and limited demand
- Demand Forecast: Cautious outlook due to remote work trends but supported by research facilities
Risk Factors
- Remote work reducing office demand
- Limited private sector growth
- Competition from university facilities
- Small market size
Opportunities
- Research and development facilities
- Professional services for university
- Government and institutional tenants
- Technology company growth
Neighborhood Spotlights
Up-and-coming areas and investment hotspots
Campus Area
High-density student housing area adjacent to Iowa State University campus
Investment Thesis
Strong rental demand from students with high turnover and seasonal patterns, though management-intensive and cyclical occupancy challenges.
Median Price
$285,000
Price Growth
+3.2% YoY
Rental Yield
7.8%
Days on Market
12 days
Key Highlights
Development Pipeline
Student housing developments and apartment complexes
West Ames
Established residential area with mix of families and professionals
Investment Thesis
Stable rental market with professional demographics and families, supported by university employment and local businesses, though higher entry prices.
Median Price
$345,000
Price Growth
+4.8% YoY
Rental Yield
6.2%
Days on Market
14 days
Key Highlights
Development Pipeline
New residential subdivisions and commercial development
Downtown Ames
Historic downtown core with mixed-use development and urban amenities
Investment Thesis
Growing rental demand from young professionals and graduate students, with downtown revitalization and walkability, though limited inventory.
Median Price
$295,000
Price Growth
+5.1% YoY
Rental Yield
6.8%
Days on Market
10 days
Key Highlights
Development Pipeline
Downtown revitalization and mixed-use projects
South Ames
Newer residential development with modern amenities and family appeal
Investment Thesis
Strong appreciation potential with newer construction and family demographics, though higher prices and competition from new builds.
Median Price
$375,000
Price Growth
+4.5% YoY
Rental Yield
5.8%
Days on Market
16 days
Key Highlights
Development Pipeline
Continued residential expansion and commercial development
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Compare Markets
See how this MSA stacks up against others
Compare Markets
| Metric | Ames (Current) | Iowa City | Cedar Rapids | Des Moines West Des Moines |
|---|---|---|---|---|
| Population | 4.0M | 4.0M | 4.0M | 4.0M |
| Median Property Price | $750K | $750K | $750K | $750K |
| Average Cap Rate | 5.2% | 5.2% | 5.2% | 5.2% |
| Job Growth Rate | 2.1% | 2.1% | 2.1% | 2.1% |
| Rental Yield | 4.8% | 4.8% | 4.8% | 4.8% |
| Days on Market | 25 | 25 | 25 | 25 |
Frequently Asked Questions
Common questions about Ames 1031 exchanges
Ames offers competitive cap rates of 5.5-7.0%, property taxes of 1.36% (below Iowa average), strong rental demand from 30,177 university students, stable employment from Iowa State University and research facilities, and a highly educated population in a growing technology sector.
The university dominates the local economy with 33% of city employment, creates strong rental demand from students and faculty, provides employment stability, drives research and technology growth, and generates seasonal rental patterns that investors must understand and manage.
Yes, Ames has 1 designated Opportunity Zone in East Ames. Iowa offers business-friendly policies and moderate property taxes, enhancing federal opportunity zone benefits for qualifying investments.
Property taxes are moderate at 1.36% effective rate, 25% below the Iowa average of 1.81% but 33% above the national average. The tax burden is reasonable given the stable university-driven economy and quality of life.
Student housing offers high cap rates (7.2%) and strong demand but requires understanding seasonal patterns, higher turnover, management intensity, and cyclical income. Success depends on location, property quality, and effective management of the unique student rental market dynamics.