Murray, KY Cap Rate 5.77%
Murray is one of the most affordable markets in the country in the South with a small but investable metro of 50,000. At a 5.77% estimated cap rate, this is a solid market where rents of $1,140/mo lag behind home prices. With a median home price of $175,000 and steady population growth supports long-term rental demand, Murray 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
Market Data
2026 Market Update: Murray
Murray's 0.7% rent-to-price ratio is well below the 1% rule. At median prices of $175,000, the $1,140/mo rent produces only $841/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 ($35K at 7%) would result in approximately $-90/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 12.8x gross rent multiplier and 5.6% vacancy rate position Murray as a value-oriented market. With annual appreciation at 2.8%, total returns (cash flow + equity growth) run approximately 8.6% before financing leverage.
Deal Modeling & Scenarios for Murray
All figures below are computed from Murray'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 $175,000 median price, the annual tax bill is $1,418 — 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 Murray 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 | $175K | $1,140 | 5.8% |
| Year 1 | $180K | $1,174 | 5.8% |
| Year 2 | $185K | $1,209 | 5.8% |
| Year 3 | $190K | $1,246 | 5.8% |
| Year 4 | $195K | $1,283 | 5.8% |
| Year 5 | $201K | $1,322 | 5.8% |
Three Financing Scenarios
Same median-priced Murray 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 | $175K | $841 | $10,096 | 5.8% |
| 20% down conventional @ 7% | $40K | $-90 | $-1,076 | -2.7% |
| 25% down DSCR @ 8.5% | $51K | $-168 | $-2,015 | -4.0% |
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) | $131K | $969 | $7,528 | 5.7% | $627 |
| At median | $175K | $1,140 | $8,608 | 4.9% | $717 |
| Above median (~125% price) | $219K | $1,311 | $9,687 | 4.4% | $807 |
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 Murray's historical appreciation rate of 2.8%:
On a $35K down payment, that's a 88.7% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Murray
Automated checks against the underlying data — surface only the risks that actually apply to Murray, not generic boilerplate:
Cap Rate Calculator — Murray
Pre-filled with Murray medians. Adjust to match a specific property.
Cash-on-Cash Return — Murray
Factor in financing to see your actual return on invested capital in Murray.
Is Murray a Good Place to Invest in Rental Property?
Murray, 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 $175,000 paired with median rents of $1,140/mo produces an estimated cap rate of 5.77%.
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 3.4x, homes cost about 3.4 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: Murray presents moderate opportunities. Cap rates near 5.77% mean deals need careful sourcing — look for value-add rehabs or emerging neighborhoods where rents are climbing.