Des Moines, Iowa's capital and largest city with a population of 213,164, has become one of the Midwest's most attractive markets for real estate investors running the BRRRR strategy. With a median home value of $170,700—well below the national average—investors can acquire properties with hard money loans, complete rehab projects, and exit into permanent financing at price points that cash flow from day one. But the key to making this strategy work is the exit: refinancing out of that expensive hard money loan before the interest eats your profit. This guide breaks down exactly how hard money refinancing works in the Des Moines market, using real local data to help you plan your next move.
Des Moines Market Snapshot
| Population | 213,164 |
| Median Home Value | $170,700 |
| Median Household Income | $62,378 |
| Fair Market Rent (2BR) | $1,144/month |
| Estimated DSCR at Median Price | 1.12 |
Why Des Moines Is Active for BRRRR Investors
Des Moines offers a combination of factors that make it particularly well-suited for the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy. The city's median home value of $170,700 keeps acquisition costs manageable, and the estimated DSCR of 1.12 at median prices signals positive cash flow potential right out of the gate. That means investors don't need to hunt for deeply discounted properties just to make the numbers work—though buying below median certainly improves returns.
The rental market is driven by a diversified economy anchored by the insurance and financial services industries—Des Moines is home to Principal Financial Group, EMC Insurance, and numerous other firms that employ tens of thousands of workers who need housing. The city's median household income of $62,378 supports a renter base that can afford the $1,144 average fair market rent for a two-bedroom unit, reducing vacancy risk for landlords.
Investors who buy below the median—targeting properties in the $100,000 to $140,000 range before rehab—can push their DSCR well above 1.2 or even 1.3 after stabilization. This creates a comfortable cushion for lender approval and protects against vacancy or maintenance expenses cutting into cash flow. The gap between acquisition cost and after-repair value (ARV) in many Des Moines neighborhoods is wide enough to support a full capital recovery on refinance.
How Hard Money Refinancing Works in Des Moines
The hard money refinance process in Des Moines follows the same proven BRRRR sequence that investors use nationwide, but the local market conditions make each step more accessible:
Step 1: Acquire with hard money. You purchase a distressed or value-add property in Des Moines using a hard money loan. At local price points, a typical deal might involve a $120,000 purchase with a hard money loan covering 85-90% of the acquisition price. Rates are typically 10-14% with 2-4 points, and terms run 6 to 18 months.
Step 2: Rehab the property. Complete renovations to bring the property to rent-ready condition. In Des Moines, rehab budgets for a typical BRRRR property range from $20,000 to $50,000 depending on the scope. The goal is to force appreciation so the after-repair value supports a refinance that recovers most or all of your invested capital.
Step 3: Stabilize with a tenant. Place a qualified tenant and collect rent. Most DSCR lenders want to see a signed lease—some require one or two months of rent collection history. At Des Moines fair market rents of $1,144 for a 2BR, a property with an ARV of $170,000 to $190,000 can comfortably clear the 1.0 DSCR threshold.
Step 4: Refinance into permanent financing. Replace your hard money loan with a DSCR loan. A typical DSCR refinance at 75% LTV on a $180,000 ARV gives you a $135,000 loan—enough to pay off a $120,000 hard money balance and potentially recover a portion of your rehab costs. Your rate drops from 12%+ down to the 7-8% range, and your term extends to 30 years, dramatically reducing your monthly payment.
Step 5: Repeat. With your capital freed up, move on to the next Des Moines deal and do it again.
DSCR Loan Requirements for Des Moines Properties
DSCR loans are the most popular refinance exit for hard money borrowers because they qualify based on the property's income rather than the borrower's personal income. Here are the standard requirements:
- Minimum DSCR: 1.0 (some lenders go to 0.75 with a rate premium). At Des Moines median values, the estimated DSCR of 1.12 clears this threshold.
- Credit score: 660 minimum for most programs, with better rates at 720+.
- LTV (cash-out refinance): Up to 75% of appraised value. Rate-and-term refinances may go to 80%.
- LLC ownership allowed: You can keep the property titled in your LLC—no need to transfer to personal name.
- No tax returns required: Qualification is based on property cash flow, not your W-2 or tax returns.
- Seasoning period: Many DSCR lenders require 3 to 6 months of ownership before a cash-out refinance. Some allow refinance off the appraised value from day one with no seasoning.
- Property types: Single-family, 2-4 unit, condos, and townhomes. Some lenders also finance 5-8 unit small multifamily under DSCR programs.
Key Considerations for Des Moines Investors
Iowa landlord-tenant law. Iowa law is generally balanced between landlord and tenant interests. Landlords must provide 3 days' notice for nonpayment of rent before filing for eviction, and the eviction process through the courts typically takes 2 to 4 weeks once initiated. Iowa does not have rent control, giving landlords flexibility on pricing. Security deposits are capped at two months' rent.
Judicial foreclosure state. Iowa is a judicial foreclosure state, meaning foreclosures must go through the court system. This process typically takes 5 to 7 months. For investors, this means more time to work out a refinance or sale if things go sideways—but it also means buying foreclosed properties can involve a longer acquisition timeline.
Property taxes. Polk County, where Des Moines is located, has effective property tax rates that average around 1.5% to 1.8% of assessed value. On a $170,700 home, that translates to roughly $2,560 to $3,070 per year. Factor this into your DSCR calculation, as property taxes are a significant component of your monthly payment estimate.
Market trends. Des Moines has experienced steady, moderate appreciation over the past decade without the dramatic boom-bust cycles seen in coastal markets. This stability is attractive for BRRRR investors because it supports reliable ARV projections. The city continues to attract corporate employers and has consistently ranked among the top cities for cost of living and job growth in the Midwest.
Des Moines Neighborhoods Popular with BRRRR Investors
Drake neighborhood. Located near Drake University on the city's west side, the Drake area offers a mix of older homes and duplexes at price points often below the city median. Strong rental demand from university students and young professionals makes this a reliable area for BRRRR projects. Properties in the $80,000 to $130,000 range before rehab are common.
Capitol East / Capitol Park. Just east of the State Capitol, this neighborhood has seen increasing investor activity due to affordable acquisition prices and proximity to downtown employment centers. Older housing stock provides rehab opportunities, and completed renovations in this area have seen solid ARV growth as the neighborhood develops.
Beaverdale. A well-established neighborhood north of the Drake area known for its distinctive Tudor and Craftsman-style homes. Beaverdale commands slightly higher rents due to its walkable commercial district and strong community identity. It's a good fit for investors who want stable, long-term tenants and moderate but reliable cash flow.
South Side Des Moines. The South Side offers some of the lowest entry points in the city, with acquisition prices frequently in the $70,000 to $110,000 range. Investors willing to take on more extensive rehab can achieve strong DSCRs above 1.2 after stabilization. The area is served by public transit and has a growing population of working-class renters.
East Village. Des Moines' trendiest neighborhood sits just east of the Des Moines River and the downtown core. While acquisition costs are higher here, the area commands premium rents and has experienced meaningful appreciation. East Village is better suited for investors focused on appreciation and higher-end rental product rather than pure cash flow plays.