Houma, LA Cap Rate 7.10%
Houma is one of the most affordable markets in the country in the South with a small but investable metro of 50,000. At a 7.10% estimated cap rate, this is a high-yield market where rents of $1,320/mo lag behind home prices. With a median home price of $175,000 and population is roughly stable, Houma stands out as a market worth serious analysis for rental investors.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Houma
Houma's 0.8% rent-to-price ratio is well below the 1% rule. At median prices of $175,000, the $1,320/mo rent produces only $1,036/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
On a conventional loan with 20% down ($35K) at 7%, estimated monthly cash flow is $105 — a thin 3.6% cash-on-cash return. Investors should negotiate below asking price or target properties with above-median rents to build a meaningful cash flow buffer.
The 11.0x gross rent multiplier and 6.7% vacancy rate position Houma as a value-oriented market. With annual appreciation at 2.1%, total returns (cash flow + equity growth) run approximately 9.2% before financing leverage.
Deal Modeling & Scenarios for Houma
All figures below are computed from Houma's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.54% effective rate on the $175,000 median price, the annual tax bill is $945 — that's very low (bottom 15% of US markets) (-49% vs the national average of ~1.06%). Verify the actual assessed value before purchase; sale-triggered reassessments can push the bill higher than the seller's current statement.
5-Year Cap Rate Trajectory
If Houma continues appreciating at 2.1%/yr while rents grow at a conservative 3%/yr, cap rate holds roughly steady as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $175K | $1,320 | 7.1% |
| Year 1 | $179K | $1,360 | 7.2% |
| Year 2 | $182K | $1,400 | 7.2% |
| Year 3 | $186K | $1,442 | 7.3% |
| Year 4 | $190K | $1,486 | 7.4% |
| Year 5 | $194K | $1,530 | 7.4% |
Three Financing Scenarios
Same median-priced Houma property — different capital structures. All-cash maximizes cap rate. Leverage trades cash flow for higher cash-on-cash return when the spread between cap rate and borrowing cost is positive.
| Scenario | Cash Invested | Monthly Cash Flow | Annual CF | Cash-on-Cash |
|---|---|---|---|---|
| All cash | $175K | $1,036 | $12,434 | 7.1% |
| 20% down conventional @ 7% | $40K | $105 | $1,262 | 3.1% |
| 25% down DSCR @ 8.5% | $51K | $27 | $322 | 0.6% |
Three Price Tiers: Below, At, and Above the Median
Properties don't always trade at the median. Lower-priced units typically offer higher cap rates but harder operations; higher-priced properties tend to compress cap rates while attracting better tenants. All-cash assumptions below:
| Tier | Price | Rent/Mo | NOI/Yr | Cap Rate | Monthly CF |
|---|---|---|---|---|---|
| Below median (~75% price) | $131K | $1,122 | $9,174 | 7.0% | $764 |
| At median | $175K | $1,320 | $10,599 | 6.1% | $883 |
| Above median (~125% price) | $219K | $1,518 | $12,025 | 5.5% | $1,002 |
Total Return Over a 5-Year Hold
Cap rate is just one piece. Real estate returns come from four sources: cash flow, appreciation, principal paydown, and tax benefits. Assuming 20% down conventional financing at 7% and a 5-year hold at Houma's historical appreciation rate of 2.1%:
On a $35K down payment, that's a 102.8% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Houma
Automated checks against the underlying data — surface only the risks that actually apply to Houma, not generic boilerplate:
Cap Rate Calculator — Houma
Pre-filled with Houma medians. Adjust to match a specific property.
Cash-on-Cash Return — Houma
Factor in financing to see your actual return on invested capital in Houma.
Is Houma a Good Place to Invest in Rental Property?
Houma, LA has a population of 50,000 and has been growing at 0.3% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $175,000 paired with median rents of $1,320/mo produces an estimated cap rate of 7.10%.
Property taxes at 0.54% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 6.7% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 3.8x, homes cost about 3.8 times the local median income of $45,760. This relatively affordable ratio suggests a deep pool of renters who find buying out of reach, supporting rental demand. Home values have appreciated at roughly 2.1% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Houma offers attractive fundamentals for rental investors. low taxes, and cap rates above 6% put it in the upper tier of investable markets.