Danville, KY Cap Rate 4.70%
Danville is a budget-friendly market in the South with a small but investable metro of 50,000. At a 4.70% estimated cap rate, this is a moderate market where rents of $1,170/mo lag behind home prices. With a median home price of $210,000 and steady population growth supports long-term rental demand, Danville 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: Danville
Danville's 0.6% rent-to-price ratio is well below the 1% rule. At median prices of $210,000, the $1,170/mo rent produces only $823/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 ($42K at 7%) would result in approximately $-294/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 15.0x gross rent multiplier and 5.6% vacancy rate position Danville as a balanced market. With annual appreciation at 2.8%, total returns (cash flow + equity growth) run approximately 7.5% before financing leverage.
Deal Modeling & Scenarios for Danville
All figures below are computed from Danville's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.81% effective rate on the $210,000 median price, the annual tax bill is $1,701 — that's below national average (-24% 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 Danville continues appreciating at 2.8%/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 | $210K | $1,170 | 4.7% |
| Year 1 | $216K | $1,205 | 4.7% |
| Year 2 | $222K | $1,241 | 4.7% |
| Year 3 | $228K | $1,278 | 4.7% |
| Year 4 | $235K | $1,317 | 4.7% |
| Year 5 | $241K | $1,356 | 4.7% |
Three Financing Scenarios
Same median-priced Danville 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 | $210K | $823 | $9,873 | 4.7% |
| 20% down conventional @ 7% | $48K | $-294 | $-3,534 | -7.3% |
| 25% down DSCR @ 8.5% | $61K | $-388 | $-4,661 | -7.7% |
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) | $158K | $995 | $7,455 | 4.7% | $621 |
| At median | $210K | $1,170 | $8,466 | 4.0% | $706 |
| Above median (~125% price) | $263K | $1,346 | $9,487 | 3.6% | $791 |
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 Danville's historical appreciation rate of 2.8%:
On a $42K down payment, that's a 62.0% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Danville
Automated checks against the underlying data — surface only the risks that actually apply to Danville, not generic boilerplate:
Cap Rate Calculator — Danville
Pre-filled with Danville medians. Adjust to match a specific property.
Cash-on-Cash Return — Danville
Factor in financing to see your actual return on invested capital in Danville.
Is Danville a Good Place to Invest in Rental Property?
Danville, KY has a population of 50,000 and has been growing at 0.8% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $210,000 paired with median rents of $1,170/mo produces an estimated cap rate of 4.70%.
Property taxes at 0.81% fall within the national average range and shouldn't present unusual challenges. The vacancy rate of 5.6% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 4.1x, homes cost about 4.1 times the local median income of $51,300. 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 2.8% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: Danville presents moderate opportunities. Cap rates near 4.70% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.