Lafayette, LA Cap Rate 6.34%
Lafayette is the cultural and economic anchor of Acadiana — Louisiana's Cajun French-heritage southwest region — historically tied to oil-and-gas services and now restructuring around healthcare and the broader University of Louisiana Lafayette. The 6.34% cap rate at a $195,000 median price keeps the 0.68% rent-to-price ratio close to functional. Population growth at 0.6%/yr is essentially flat — Louisiana's broader demographic trajectory has been weak.
Employment is anchored by the broader Gulf of Mexico oil-and-gas services economy (Lafayette has historically been a major hub for offshore oil services — drilling, supply, helicopter transport to offshore platforms; the industry has cycled with global oil prices but persists at meaningful scale), the University of Louisiana at Lafayette (the regional research university with ~16K students plus the broader research and athletic enterprise — UL Lafayette has strong computer-science and engineering programs), Lourdes Health System and Our Lady of Lourdes Regional Medical Center, the broader Lafayette General Health network, Stuller (the major jewelry-manufacturing operations headquartered here), Cleco Power (utility), the broader Lafayette Parish government, and the broader Acadiana cultural tourism economy (Cajun and Creole food, music, and festival scene attracts continued regional tourism). Submarkets stratify cleanly: the historic downtown / River Ranch areas are walkable urban with strong appreciation; the broader South Lafayette and Broussard areas draw professional family rentals; the UL Lafayette-adjacent zones are student-heavy; the broader Lafayette extends with deeper-value workforce inventory.
Louisiana property tax at 0.52% looks moderate but the homestead exemption distortion means non-owner-occupant investors pay materially more than the headline rate suggests. LA state income tax is graduated with a top rate near 4.25%. Insurance is the dominant operational variable for inland Louisiana metros — even though Lafayette is inland, the Louisiana insurance crisis (driven by 2020-2021 hurricane seasons) has continued to affect carrier availability and pricing statewide. Get a binder quote per address. The structural advantages: UL Lafayette + healthcare provides durable white-collar employment; Cajun cultural tourism is genuinely distinctive; cost basis is materially below New Orleans or Baton Rouge for similar metro size. The structural risks: oil-and-gas services employment is highly cyclical (Lafayette boomed during 2010-2014 oil prices and contracted sharply during 2015-2016 and 2020 downturns); insurance trajectory remains the central operational variable; LA demographic trajectory has been weak. For investors who want defensible Acadiana cultural-economic anchor exposure with college-town stability, Lafayette is the most distinctive southwestern Louisiana option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Lafayette
Lafayette's 0.7% rent-to-price ratio is well below the 1% rule. At median prices of $195,000, the $1,330/mo rent produces only $1,030/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 ($39K at 7%) would result in approximately $-7/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 12.2x gross rent multiplier and 6.4% vacancy rate position Lafayette as a value-oriented market. With annual appreciation at 2.2%, total returns (cash flow + equity growth) run approximately 8.5% before financing leverage.
Deal Modeling & Scenarios for Lafayette
All figures below are computed from Lafayette's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.52% effective rate on the $195,000 median price, the annual tax bill is $1,014 — that's very low (bottom 15% of US markets) (-51% 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 Lafayette continues appreciating at 2.2%/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 | $195K | $1,330 | 6.3% |
| Year 1 | $199K | $1,370 | 6.4% |
| Year 2 | $204K | $1,411 | 6.4% |
| Year 3 | $208K | $1,453 | 6.5% |
| Year 4 | $213K | $1,497 | 6.5% |
| Year 5 | $217K | $1,542 | 6.6% |
Three Financing Scenarios
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 | $195K | $1,030 | $12,365 | 6.3% |
| 20% down conventional @ 7% | $45K | $-7 | $-84 | -0.2% |
| 25% down DSCR @ 8.5% | $57K | $-94 | $-1,131 | -2.0% |
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) | $146K | $1,131 | $9,186 | 6.3% | $766 |
| At median | $195K | $1,330 | $10,591 | 5.4% | $883 |
| Above median (~125% price) | $244K | $1,529 | $11,996 | 4.9% | $1,000 |
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 Lafayette's historical appreciation rate of 2.2%:
On a $39K down payment, that's a 86.4% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Lafayette
Automated checks against the underlying data — surface only the risks that actually apply to Lafayette, not generic boilerplate:
Cap Rate Calculator — Lafayette
Pre-filled with Lafayette medians. Adjust to match a specific property.
Cash-on-Cash Return — Lafayette
Factor in financing to see your actual return on invested capital in Lafayette.
Is Lafayette a Good Place to Invest in Rental Property?
Lafayette, LA has a population of 126,000 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 $195,000 paired with median rents of $1,330/mo produces an estimated cap rate of 6.34%.
Property taxes at 0.52% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 6.4% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 3.9x, homes cost about 3.9 times the local median income of $50,200. 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 2.2% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Lafayette offers attractive fundamentals for rental investors. low taxes, and cap rates above 6% put it in the upper tier of investable markets.