Lafayette, IN Cap Rate: 4.06% — Rental Property Analysis
Lafayette is a mid-range market in the Midwest with a smaller market with 73,000 residents. At a 4.06% estimated cap rate, this is a moderate market where rents of $1,390/mo lag behind home prices. With a median home price of $275,000 and steady population growth supports long-term rental demand, Lafayette offers opportunities for investors who source deals carefully.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
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Moderate — source deals carefully
Based on $275,000 median price and $1,390/mo median rent
Est. Cap Rate
4.06%
1% Rule
0.51%
Fails
GRM
16.5x
Price / Income
6.0x
Market Data
Median Home Price$275,000
Median Monthly Rent$1,390
Property Tax Rate0.85%
Population73,000
Population Growth0.6% / yr
Median Household Income$46,200
Vacancy Rate5.8%
Annual Appreciation2.4%
2026 Market Update: Lafayette
Lafayette's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $275,000, the $1,390/mo rent produces only $931/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
At current rates, a 20% down conventional loan ($55K at 7%) would result in approximately $-532/mo cash flow — negative at median prices. Larger down payments, seller financing, or buying 15–25% below median are strategies to turn the numbers positive.
The 16.5x gross rent multiplier and 5.8% vacancy rate position Lafayette as a balanced market. With annual appreciation at 2.4%, total returns (cash flow + equity growth) run approximately 6.5% before financing leverage.
Cap Rate Calculator — Lafayette
Pre-filled with Lafayette medians. Adjust to match a specific property.
Property Details
$
$
3–8% typical
%
Monthly Expenses
0.85% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.37%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$9,269
net operating income
Gross Rent Multiplier
16.5x
High (>15)
1% Rule
0.51%
✗ Fails
Monthly Cash Flow
$772
before debt service
Annual Breakdown
Gross Rental Income$16,680
Less Vacancy−$967
Effective Income$15,713
Less Operating Expenses−$6,444
Net Operating Income$9,269
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Factor in financing to see your actual return on invested capital in Lafayette.
$
$68,750
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-8.39%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$77,000
$68,750 down + $8,250 closing
Monthly Mortgage
$1,345
on $206K loan
Monthly Cash Flow
$-539
after all expenses
Annual Cash Flow
$-6,463
before taxes
Cash Flow Breakdown
Monthly Rent$1,390
Less Expenses−$584
Less Mortgage−$1,345
Monthly Cash Flow$-539
Is Lafayette a Good Place to Invest in Rental Property?
Lafayette, IN has a population of 73,000 and has been growing at 0.6% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $275,000 paired with median rents of $1,390/mo produces an estimated cap rate of 4.06%.
Property taxes at 0.85% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 5.8% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 6.0x, homes cost about 6.0 times the local median income of $46,200. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 2.4% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Lafayette presents moderate opportunities. Cap rates near 4.06% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
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