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Cap Rate Analysis: Lexington, KY

Investment metrics, interactive calculators, and data-driven analysis for Lexington rental properties.

Moderate — source deals carefully
Based on $260,000 median price and $1,300/mo median rent
Est. Cap Rate
4.08%
1% Rule
0.50%
Fails
GRM
16.7x
Price / Income
4.5x

Market Data

Median Home Price$260,000
Median Monthly Rent$1,300
Property Tax Rate0.81%
Population325,000
Population Growth0.9% / yr
Median Household Income$58,400
Vacancy Rate5.2%
Annual Appreciation3.1%

Cap Rate Calculator — Lexington

Pre-filled with Lexington medians. Adjust to match a specific property.

Property Details
$
$
3–8% typical
%
Monthly Expenses
0.81% rate
$
$
8–10% of rent
$
8–12% of rent
$
Cap Rate
3.39%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$8,825
net operating income
Gross Rent Multiplier
16.7x
High (>15)
1% Rule
0.50%
✗ Fails
Monthly Cash Flow
$735
before debt service
Annual Breakdown
Gross Rental Income$15,600
Less Vacancy−$811
Effective Income$14,789
Less Operating Expenses−$5,964
Net Operating Income$8,825

Cash-on-Cash Return — Lexington

Factor in financing to see your actual return on invested capital in Lexington.

$
$65,000
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-8.53%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$72,800
$65,000 down + $7,800 closing
Monthly Mortgage
$1,271
on $195K loan
Monthly Cash Flow
$-517
after all expenses
Annual Cash Flow
$-6,207
before taxes
Cash Flow Breakdown
Monthly Rent$1,300
Less Expenses−$546
Less Mortgage−$1,271
Monthly Cash Flow$-517

Is Lexington a Good Place to Invest in Rental Property?

Lexington, KY has a population of 325,000 and has been growing at 0.9% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $260,000 paired with median rents of $1,300/mo produces an estimated cap rate of 4.08%.

Property taxes at 0.81% 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 4.5x, homes cost about 4.5 times the local median income of $58,400. 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 3.1% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.

Bottom line: Lexington presents moderate opportunities. Cap rates near 4.08% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.

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