Lake City, FL Cap Rate 4.87%
Lake City is a mid-range market in the South with a small but investable metro of 50,000. At a 4.87% estimated cap rate, this is a moderate market where rents of $1,520/mo lag behind home prices. With a median home price of $265,000 and steady population growth supports long-term rental demand, Lake City 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
Market Data
2026 Market Update: Lake City
Lake City's 0.6% rent-to-price ratio is well below the 1% rule. At median prices of $265,000, the $1,520/mo rent produces only $1,074/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 ($53K at 7%) would result in approximately $-336/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.
With 1.9% annual population growth paired with 3.7% home appreciation, Lake City offers a rare combination of current cash flow and future equity upside. The 14.5x gross rent multiplier suggests the market hasn't fully priced in this growth trajectory.
Deal Modeling & Scenarios for Lake City
All figures below are computed from Lake City's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.86% effective rate on the $265,000 median price, the annual tax bill is $2,279 — that's near national average (-19% 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 Lake City continues appreciating at 3.7%/yr while rents grow at a conservative 3%/yr, cap rate compresses as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $265K | $1,520 | 4.9% |
| Year 1 | $275K | $1,566 | 4.8% |
| Year 2 | $285K | $1,613 | 4.8% |
| Year 3 | $296K | $1,661 | 4.8% |
| Year 4 | $306K | $1,711 | 4.7% |
| Year 5 | $318K | $1,762 | 4.7% |
Three Financing Scenarios
Same median-priced Lake City 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 | $265K | $1,074 | $12,893 | 4.9% |
| 20% down conventional @ 7% | $61K | $-335 | $-4,025 | -6.6% |
| 25% down DSCR @ 8.5% | $77K | $-454 | $-5,448 | -7.1% |
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) | $199K | $1,292 | $9,713 | 4.9% | $809 |
| At median | $265K | $1,520 | $11,034 | 4.2% | $920 |
| Above median (~125% price) | $331K | $1,748 | $12,355 | 3.7% | $1,030 |
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 Lake City's historical appreciation rate of 3.7%:
On a $53K down payment, that's a 91.6% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Lake City
Automated checks against the underlying data — surface only the risks that actually apply to Lake City, not generic boilerplate:
Cap Rate Calculator — Lake City
Pre-filled with Lake City medians. Adjust to match a specific property.
Cash-on-Cash Return — Lake City
Factor in financing to see your actual return on invested capital in Lake City.
Is Lake City a Good Place to Invest in Rental Property?
Lake City, FL has a population of 50,000 and has been growing at 1.9% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $265,000 paired with median rents of $1,520/mo produces an estimated cap rate of 4.87%.
Property taxes at 0.86% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 5.2% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 5.2x, homes cost about 5.2 times the local median income of $50,639. This moderate ratio indicates a balanced rent-vs-buy market. Home values have appreciated at roughly 3.7% annually. Above-average appreciation adds an equity component to total returns, though deals should still pencil on cash flow alone.
Bottom line: Lake City presents moderate opportunities. Cap rates near 4.87% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.