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
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.
All figures below are computed from Lafayette's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
At 0.85% effective rate on the $275,000 median price, the annual tax bill is $2,338 — that's near national average (-20% 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.
If Lafayette continues appreciating at 2.4%/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 | $275K | $1,390 | 4.1% |
| Year 1 | $282K | $1,432 | 4.1% |
| Year 2 | $288K | $1,475 | 4.1% |
| Year 3 | $295K | $1,519 | 4.1% |
| Year 4 | $302K | $1,564 | 4.2% |
| Year 5 | $310K | $1,611 | 4.2% |
Same median-priced Lafayette 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 | $275K | $931 | $11,175 | 4.1% |
| 20% down conventional @ 7% | $63K | $-532 | $-6,381 | -10.1% |
| 25% down DSCR @ 8.5% | $80K | $-655 | $-7,858 | -9.9% |
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) | $206K | $1,182 | $8,514 | 4.1% | $709 |
| At median | $275K | $1,390 | $9,606 | 3.5% | $801 |
| Above median (~125% price) | $344K | $1,598 | $10,699 | 3.1% | $892 |
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 Lafayette's historical appreciation rate of 2.4%:
On a $55K down payment, that's a 34.9% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Automated checks against the underlying data — surface only the risks that actually apply to Lafayette, not generic boilerplate:
Pre-filled with Lafayette medians. Adjust to match a specific property.
Factor in financing to see your actual return on invested capital in Lafayette.
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.