What is the cap rate in Louisville, KY?

The median cap rate in Louisville, KY is 5.2%. This is based on HUD Fair Market Rents and current home values.

Is Louisville a good place to buy rental property?

Louisville has a cap rate of 5.2% and estimated cash flow of -$218/month. Returns are moderate — consider the appreciation potential. Median home price is $252,789 with average 3BR rent of $1,790/month.

What is the average rent in Louisville, KY?

The HUD Fair Market Rent for a 3-bedroom in Louisville, KY is $1,790/month. This represents the estimated rent for standard-quality housing in the area.

Louisville, KY — Rental Investment Analysis

🟡MODERATE— average returns

Data: HUD FMR FY2024 + Zillow ZHVI April 2026 + Freddie Mac rates. Last updated June 2026.

Investment Summary

As of 2026, rental properties in Louisville, KY yield a 5.2% cap rate. Median home price is $252,789 with 3-bedroom rents at $1,790/month.

Louisville is a moderate market — workable but not exceptional for cash flow. Median home price sits at $252,789 — moderate by national standards, requiring a solid down payment but not out of reach. With 3-bedroom rents around $1,790/month, the 5.2% cap rate tells the story. Cash flow is deeply negative at -$218/month with standard assumptions. This market requires appreciation to justify the investment.

At 0.70% on the 1% rule, rents are low relative to purchase prices. You'd need a significant discount from asking price to make the numbers work. DSCR of 0.81 is below 1.0, meaning rental income doesn't cover the mortgage. DSCR lenders will likely decline this market at current prices.

Bottom line: Louisville offers a balance of moderate cash flow and growth potential. Good for investors who want some income while building equity over time.

Data sources: HUD Fair Market Rents (FY2024), Zillow Home Value Index (April 2026), Freddie Mac Primary Mortgage Market Survey.

Cap Rate

5.2%

Below average

Monthly Cash Flow

-$218

After all expenses

Price-to-Rent

12.0

Investor-friendly

DSCR

0.81

Fails

Key Metrics

Median Home Price: $252,789
Average Rent (3BR): $1,790/mo
Price-to-Rent Ratio: 12.0(good)
1% Rule: 0.70%(fails — need 1%+)
Cash-on-Cash Return: -5.4%
Vacancy Rate: 8.0%

Market Strength

Unemployment Rate: 4.3%(0% vs national)
Rent Growth (YoY): +2.9%(national avg)
Population Growth: +0.55% YoY

Assumptions Used

20% down, 6.52% rate, 30yr, 8% vacancy, 10% maintenance

Customize these numbers →

Property Tax Rate

0.8%

of assessed value (KY avg)

Median Income

$55,573

household (KY avg)

Rent-to-Income

38.7%

Stretched

Section 8 Max Rent

$1,790/mo

3BR voucher payment

KY Investor Climate

Landlord Friendly

7/10

State Income Tax

Has state tax

Property Tax

0.8% effective

Population Trend

+0.55% (3yr)

Population Movement (Tax Year 2021→2022)

Net Migration

-795 households

SHRINKING

Total Inflow

7,263

households moved in

Avg Income (New Residents)

$68,596

per household

Where they're coming from:

1.Bullitt, KY1,132 households · avg $47,622

2.Clark, IN670 households · avg $44,491

3.Fayette, KY560 households · avg $112,138

4.Hardin, KY506 households · avg $39,617

5.Floyd, IN442 households · avg $123,962

Where residents are leaving to:

1.Bullitt, KY1,619 households

2.Clark, IN1,072 households

3.Floyd, IN575 households

4.Hardin, KY463 households

5.Fayette, KY380 households

Net outflow may indicate weakening demand — but can mean lower prices and higher cap rates.

Best Zip Codes in Louisville for Investors

40210

Cap Rate: 15.1%Cash Flow: +$645/mo$89,255

40212

Cap Rate: 14.5%Cash Flow: +$580/mo$85,550

40211

Cap Rate: 13.8%Cash Flow: +$604/mo$97,812

All Zip Codes in Louisville

Zip	Cap Rate	Cash Flow	Home Price	Rent (3BR)	DSCR
40210	15.1%	+$645	$89,255	$1,520/mo	2.36
40212	14.5%	+$580	$85,550	$1,410/mo	2.27
40211	13.8%	+$604	$97,812	$1,540/mo	2.16
40209	11.0%	+$470	$121,295	$1,570/mo	1.73
40215	9.4%	+$347	$139,476	$1,570/mo	1.47
40208	9.3%	+$346	$140,897	$1,580/mo	1.46
40203	7.0%	+$81	$154,723	$1,370/mo	1.10
40272	6.8%	+$82	$223,921	$1,940/mo	1.07
40118	6.6%	+$39	$211,994	$1,790/mo	1.03
40229	6.1%	-$64	$252,789	$2,000/mo	0.95
40218	5.7%	-$120	$221,014	$1,670/mo	0.90
40228	5.7%	-$166	$274,032	$2,050/mo	0.89
40217	5.6%	-$158	$241,251	$1,790/mo	0.88
40258	5.6%	-$152	$228,253	$1,690/mo	0.87
40213	5.5%	-$154	$212,717	$1,560/mo	0.86
40214	5.2%	-$218	$219,686	$1,540/mo	0.81
40216	5.2%	-$216	$209,721	$1,460/mo	0.81
40204	4.8%	-$392	$286,921	$1,880/mo	0.74
40219	4.7%	-$337	$236,201	$1,530/mo	0.73
40206	4.5%	-$456	$283,074	$1,770/mo	0.70
40243	4.4%	-$554	$341,391	$2,130/mo	0.70
40242	4.4%	-$552	$330,168	$2,040/mo	0.69
40220	4.4%	-$498	$295,350	$1,820/mo	0.68
40291	4.3%	-$555	$311,108	$1,880/mo	0.66
40299	4.1%	-$667	$343,540	$2,010/mo	0.64
40223	3.8%	-$854	$391,920	$2,180/mo	0.59
40241	3.4%	-$1,042	$417,474	$2,160/mo	0.53
40202	3.3%	-$876	$341,635	$1,740/mo	0.52
40222	3.0%	-$1,108	$398,070	$1,920/mo	0.48
40245	3.0%	-$1,352	$484,165	$2,330/mo	0.48
40245	3.0%	-$1,352	$484,165	$2,330/mo	0.48
40207	2.9%	-$1,245	$432,909	$2,040/mo	0.46
40205	2.9%	-$1,136	$394,951	$1,860/mo	0.46