Mount Sterling, KY Cap Rate: 5.90% — Rental Property Analysis
Mount Sterling is a budget-friendly market in the South with a small but investable metro of 50,000. At a 5.90% estimated cap rate, this is a solid market where rents of $1,260/mo lag behind home prices. With a median home price of $190,000 and steady population growth supports long-term rental demand, Mount Sterling stands out as a market worth serious analysis for rental investors.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
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Moderate — source deals carefully
Based on $190,000 median price and $1,260/mo median rent
Est. Cap Rate
5.90%
1% Rule
0.66%
Fails
GRM
12.6x
Price / Income
3.7x
Market Data
Median Home Price$190,000
Median Monthly Rent$1,260
Property Tax Rate0.81%
Population50,000
Population Growth0.8% / yr
Median Household Income$51,300
Vacancy Rate5.6%
Annual Appreciation2.8%
2026 Market Update: Mount Sterling
Mount Sterling's 0.7% rent-to-price ratio is well below the 1% rule. At median prices of $190,000, the $1,260/mo rent produces only $935/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 ($38K at 7%) would result in approximately $-76/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 12.6x gross rent multiplier and 5.6% vacancy rate position Mount Sterling as a value-oriented market. With annual appreciation at 2.8%, total returns (cash flow + equity growth) run approximately 8.7% before financing leverage.
Cap Rate Calculator — Mount Sterling
Pre-filled with Mount Sterling 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
4.87%Low
Net Operating Income ÷ Purchase Price
NOI / Year
$9,257
net operating income
Gross Rent Multiplier
12.6x
Good (<15)
1% Rule
0.66%
✗ Fails
Monthly Cash Flow
$771
before debt service
Annual Breakdown
Gross Rental Income$15,120
Less Vacancy−$847
Effective Income$14,273
Less Operating Expenses−$5,016
Net Operating Income$9,257
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Factor in financing to see your actual return on invested capital in Mount Sterling.
$
$47,500
%
%
years
$
taxes + ins + maint + mgmt
$
$
Cash-on-Cash Return
-4.47%Weak
Annual Cash Flow ÷ Total Cash Invested
Total Cash Invested
$53,200
$47,500 down + $5,700 closing
Monthly Mortgage
$929
on $143K loan
Monthly Cash Flow
$-198
after all expenses
Annual Cash Flow
$-2,376
before taxes
Cash Flow Breakdown
Monthly Rent$1,260
Less Expenses−$529
Less Mortgage−$929
Monthly Cash Flow$-198
Is Mount Sterling a Good Place to Invest in Rental Property?
Mount Sterling, 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 $190,000 paired with median rents of $1,260/mo produces an estimated cap rate of 5.90%.
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 3.7x, homes cost about 3.7 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: Mount Sterling presents moderate opportunities. Cap rates near 5.90% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.
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