Rental Property in Kentucky: What the Numbers Actually Look Like

Kentucky is not a hurricane state, and it is correctly absent from the list of 19 states plus DC that use hurricane deductibles. It has no coast, no wind pool, and no named-storm mechanics.

What it does have is severe convective storm exposure — hail, straight-line wind and tornado, including the December 2021 western Kentucky outbreak — and in response, the major carriers writing here have largely replaced the traditional flat $1,000 wind deductible with a separate percentage of the Coverage A dwelling limit.

Be precise about what that is, because the distinction matters for how you shop:

This is carrier underwriting practice, not Kentucky law. There is no mandatory-offer statute here of the kind Florida and Louisiana have. No regulation prescribes a menu of allowable percentages, no statute caps how often the deductible applies, and no disclosure form is required to be signed. It varies by carrier and by county, and a Kentucky homeowner has to read the declarations page to find out what they bought. Nobody is obliged to walk you through it.

The practical consequence for a landlord is a number, not a principle. At 1% on a $300,000 dwelling limit that is $3,000 on a hail claim while the flat deductible — still governing fire, theft and water — remains $1,000. At 2% it is $6,000. In the highest-risk western Kentucky counties some carriers write 3% or even 5%. Section 3 works out that this article's example property produces $9,238.75 of net operating income a year, so a 5% deductible is 1.62 years of everything the property earns, due while the rent has stopped.

A note before you start: this is general educational information about how rental property arithmetic works in Kentucky. It is not investment, tax, insurance, or legal advice, and it is not a recommendation about any property. Kentucky insurance is priced per structure and per county, and property tax is administered county by county — both counties in this data carry rates above the statewide figure. Talk to a Kentucky CPA about tax treatment, a licensed Kentucky insurance agent about a real quote, and a Kentucky attorney about anything contractual.

1. What a rental costs to buy here

The Kentucky statewide median home price is $279,900.

Kentucky's transfer tax is 0.10% ($0.50 per $500 of consideration), and it is customarily paid by the seller — the lowest transfer tax rate in this series alongside Virginia's. There is no mortgage recording tax, no documentary stamp on the note, and no intangible tax, so the Kentucky buyer has no state transaction tax of their own.

Kentucky is an attorney closing state. Closing costs run 2% to 5%; this article uses a 3.5% midpoint.

On the $279,900 statewide median at 25% down:

• Down payment: $279,900 x 0.25 = $69,975
• Loan amount: $209,925
• Closing costs: $279,900 x 3.5% = $9,796.50
• Buyer transfer tax: $0 (customarily the seller's)
• Total cash in: $79,771.50

The appreciation figure, and how much weight it can bear

Kentucky's most recent published appreciation figure is +4.66% a year — the highest of the seven Southern states in this series, and roughly twenty-two times Oklahoma's 0.21%. On this house that is about $13,043 a year.

Section 3 computes an annual cash loss of $7,520.93. So on the last published print, appreciation exceeds the cash loss by roughly $5,522 on this property.

That is a real and unusual position, and it deserves to be stated carefully rather than used as a punchline in either direction:

• It is not cash. It does not pay the mortgage, it does not pay the $6,000 deductible, and you cannot spend it without selling or refinancing.
• It is a backward-looking published figure, not a forecast. Nothing obliges next year to look like last year.
• It is before selling costs, which on a residential sale routinely run 6% to 8% and would consume roughly five months of that appreciation.
• And it means an honest Kentucky pro-forma has a second engine that an Oklahoma or Louisiana pro-forma simply does not. That changes what "this loses money monthly" means, without changing that it loses money monthly.

If you are going to buy a negative-cash-flow rental anywhere in the South on these numbers, Kentucky is the state where that decision has the most defensible arithmetic behind it. It is still a decision to fund a monthly loss out of other income for years, and you should price it as one.

The homestead exemption, and why it matters less here

Kentucky's homestead exemption is not a broad ad-valorem exemption available to all owner-occupants the way Florida's or Texas's is. It is restricted to homeowners aged 65 or older, or classified as totally disabled by a public or private retirement system. For the 2025-2026 assessment years it is $49,100, deducted from assessed value before tax is computed, up from $46,350 for 2023-2024. The Kentucky Constitution (Section 170) requires the Department of Revenue to recalculate it every two years for inflation. Homeowners apply through their county Property Valuation Administrator.

A rental gets none of it — but neither does an owner-occupant under 65. So the "seller's tax bill understates yours" trap that is severe in Arkansas and Louisiana is much weaker in Kentucky, unless the seller happens to be over 65. Still compute the tax from the purchase price at the county rate, but the gap you are correcting for is usually small or zero.

2. The two expenses that decide whether it works

Property tax: the state figure understates both major metros

Kentucky's statewide effective property tax rate is recorded here as 0.75%, and sources cluster tightly:

• Tax Foundation: 0.74%
• WalletHub: 0.75%
• propertytaxrates.org: 0.77% (statewide average across 120 counties)

The range is 0.74% to 0.77%, and 0.75% is the midpoint. On the $279,900 example: $279,900 x 0.75% = $2,099.25 a year, or $174.94 a month.

Both counties in our data run above that figure. Fayette County (Lexington) is 0.83% and Jefferson County (Louisville) is 0.86% — 11% and 15% above the state rate respectively. Kentucky has 120 counties and the state average is pulled down by rural ones. If you are buying in Lexington or Louisville, model the county rate; the difference is $252 to $307 a year on the median house.

Insurance: mid-range for the region, with real source disagreement

The reference figure is $3,950 a year at $300,000 of dwelling coverage with a $1,000 typical all-perils deductible.

Sources disagree meaningfully:

• NerdWallet: $3,950 (which NerdWallet itself notes is 52% above their cited national average)
• Insurance.com: $3,326
• Insure.com: $3,314
• ValuePenguin: $3,158

The spread is roughly $3,158 to $3,950 — about 25% — and the figure used here is at the top of it. That is the conservative choice, and Section 3's numbers would improve if the lower reads are closer to right for your address.

At $3,950, the premium is $329.17 a month — 1.88 times the property tax bill, 18.81% of the $21,000 of gross rent in Section 3's example, and 39.2% of all operating expenses combined.

Take the identical $279,900 house at the identical rent and tax rate, and change only the premium:

Note something specific: both county averages are well below every statewide read. Fayette at $2,353 is 40% below the $3,950 figure. That is a strong signal that the statewide average is being lifted by the western and rural counties with the heaviest convective-storm exposure, and that a Lexington or Louisville buyer should expect materially better than the state number. Insurance alone is worth 0.57 points of cap rate and $133.08 a month across that range — slightly less than a full point of mortgage rate, which Section 3 puts at about $1,692 a year or $141 a month.

Kentucky's premium trend is +3% year over year.

A rental is not insured on a homeowners form. You need a landlord policy — a dwelling fire form with loss-of-rents coverage — priced for the specific address.

The wind and hail deductible: a market shift, precisely described

This is the part of a Kentucky policy most likely to be misunderstood, and the misunderstanding runs in both directions.

What is true: Kentucky's major carriers have largely moved from a flat wind deductible to a separate wind/hail deductible stated as a percentage of the Coverage A dwelling limit. The flat deductible — typically $1,000 — still governs fire, theft and water losses. The percentage governs wind and hail.

What is not true: that any Kentucky statute requires, caps, or structures this. There is no mandatory-offer law here of the kind Florida and Louisiana have. No prescribed menu of percentages. No signed disclosure form. No statutory once-per-season limitation. It is carrier underwriting practice, it varies by carrier and by county, and the only way to know what you have is to read the declarations page.

That precision cuts two ways, and both matter to a buyer:

1. You have no statutory protection. In Louisiana an insurer generally cannot raise your named-storm deductible after the policy has been in force three years, and you face only one deductible per season. Kentucky offers neither guarantee. Nothing in Kentucky law stops a carrier from moving your percentage at renewal.
2. You have room to shop. Because no statute fixes the structure, carriers differ from one another in Kentucky more than they can in a mandatory-offer state. The percentage is a negotiable and comparable term. Ask each quoting carrier what percentage they apply and what a lower one costs.

1% is the typical setting — the low end of the 1% to 2% range Kentucky market sources consistently describe as most common. On a $300,000 dwelling limit:

• 1% = $3,000 (typical)
• 2% = $6,000
• 3% = $9,000 (some western Kentucky counties)
• 5% = $15,000 (highest-risk western Kentucky territories)

Kentucky construction runs about $210 per square foot to rebuild, so a 1,430 square foot house has a replacement cost near $300,000.

Section 3 works out that this rental produces $9,238.75 of net operating income in a good year:

• A 1% deductible ($3,000) is 32.5% of a full year's NOI
• A 2% deductible ($6,000) is 64.9% of NOI
• A 3% deductible ($9,000) is 97.4% of NOI — one claim costs a full year's earnings
• A 5% deductible ($15,000) is 162.4% of NOI — 1.62 years

You cannot pass any of it to a tenant. It is not a lease obligation and it is not billable. And because there is no once-per-season statutory limit here, two qualifying events in one year means two deductibles.

Geography matters more than the state average suggests. Western Kentucky is where the 3% and 5% percentages live, and it is also where the December 2021 outbreak hit. If you are buying west of roughly Bowling Green, do not assume the 1% typical setting applies to you. Get the actual quote.

Roof settlement: Kentucky's matching rule, and its real limits

This is one of the more interesting legal points in the series, because Kentucky genuinely has a matching rule and it genuinely does not work the way you would hope.

The rule. Under 806 KAR 12:095 Section 9(1)(b), when a loss requires replacement of items and the replacement does not reasonably match in quality, colour and size, the insurer must replace all items in the area to conform to a reasonably uniform appearance, interior and exterior, with the insured bearing no cost beyond the deductible. The Kentucky Department of Insurance reinforced that reading in Advisory Opinion 2023-08.

On paper that is a strong protection — it is exactly the rule that says a carrier cannot patch six squares of hail-damaged shingles on a roof whose colour is discontinued and call it settled.

The limit, stated openly. Kentucky courts have declined to apply the regulation in private litigation. In Woods Apts., LLC v. United States Fire Ins. Co., 2013 U.S. Dist. LEXIS 105582 (W.D. Ky. 2013), the court found full roof and siding replacement unduly burdensome on an insurer that had agreed only to repair the damaged portions. Note that the plaintiff there was an apartment owner — a landlord, on exactly this question.

So the honest summary is: 806 KAR 12:095 is a strong lever with the Department of Insurance and a weaker one in court. If a Kentucky carrier tries to patch-settle a roof, a complaint to the Department is a genuinely useful step and the advisory opinion is on your side. Planning to litigate it is a different proposition.

Separately, no Kentucky law fixes whether a roof settles at replacement cost or actual cash value. Roof age and the attached endorsement decide it; replacement cost is standard on newer roofs, with ACV or a payment schedule common past roughly 15 years. Nationally, in March 2026 the Federal Housing Finance Agency relaxed Fannie Mae and Freddie Mac requirements so ACV roof coverage can satisfy a lender rather than replacement cost being required.

Mitigation money, including one benefit nobody else in this series has

Kentucky HB 256 (2024) requires insurers to do two things, both effective March 1, 2026:

1. Offer actuarially justified premium discounts on homes meeting the IBHS FORTIFIED standard.
2. Offer an optional rider covering the cost of upgrading to a FORTIFIED roof after storm damage.

That second one is unusual and worth pausing on. Most states' mitigation programs pay you to harden a roof before a loss. This rider covers the upgrade cost at the moment of replacement — so when hail takes your ordinary roof, the rider funds the difference to rebuild it FORTIFIED rather than in-kind. For a landlord in a repeat-hail state that is a compounding benefit: the claim you were going to file anyway leaves the asset more insurable than it was. Ask for it by name.

Strengthen Kentucky Homes, funded at $5 million, pays grants of up to $10,000 for FORTIFIED Roof retrofits.

3. A full worked example

The property. A single-family house at the Kentucky statewide median of $279,900.

The rent — read this carefully. This site does not carry rent data. The $1,750 a month used below is an assumption chosen to be plausible for a house at that price. It is not a market observation. Pull three to five real comparable listings for the specific neighborhood and substitute the actual number.

The other assumptions:

• Vacancy: 8% of gross rent (roughly one month of turnover a year)
• Property management: 10% of collected rent
• Repairs and maintenance: 5% of gross scheduled rent
• Capital reserve: 5% of gross scheduled rent
• Financing: 25% down, 30-year fixed at 7.00% — the rate is an assumption, not a quote
• No HOA

Step 1 — income

• Gross scheduled rent: $1,750 x 12 = $21,000
• Vacancy loss: $21,000 x 8% = $1,680
• Effective gross income: $21,000 - $1,680 = $19,320

Step 2 — operating expenses

Management is charged on rent actually collected, not scheduled rent:

• Management: $19,320 x 10% = $1,932
• Property tax: $279,900 x 0.75% = $2,099.25
• Insurance: $3,950
• Maintenance: $21,000 x 5% = $1,050
• Capital reserve: $21,000 x 5% = $1,050
• Total operating expenses: $10,081.25

Expense ratio: $10,081.25 / $19,320 = 52.18% of collected rent — inside the 35% to 55% band most rentals land in, near its top.

Step 3 — net operating income and cap rate

• NOI = $19,320 - $10,081.25 = $9,238.75
• Cap rate = $9,238.75 / $279,900 = 3.30%

The mortgage is deliberately absent from that figure. Cap rate exists to compare properties independently of how they are financed; putting debt service into it is the most common error in this exercise, and it makes two identical houses look like different investments because one buyer put more down.

Step 4 — debt service and cash flow

Loan: $279,900 x 75% = $209,925. At 7.00% over 30 years, principal and interest is $1,396.64 a month, or $16,759.68 a year.

• Annual cash flow = $9,238.75 - $16,759.68 = -$7,520.93
• Monthly cash flow = -$626.74
• Debt service coverage ratio = $9,238.75 / $16,759.68 = 0.55

Step 5 — cash-on-cash return

• Cash invested: $79,771.50 (Section 1)
• Cash-on-cash = -$7,520.93 / $79,771.50 = -9.43%

Rate sensitivity, since 7.00% was an assumption

• At 6.50%: P&I $1,326.87/mo, annual cash flow -$6,683.69
• At 7.00%: P&I $1,396.64/mo, annual cash flow -$7,520.93
• At 7.50%: P&I $1,467.83/mo, annual cash flow -$8,375.21

A full point of rate is worth about $1,692 a year.

The simplest version of the same finding

Add up the three bills a lender escrows:

• Principal and interest: $1,396.64
• Property tax: $2,099.25 / 12 = $174.94
• Insurance: $3,950 / 12 = $329.17
• Total: $1,900.75 a month

Against $1,750 of assumed rent, that is -$150.75 a month before vacancy, management, or a single repair. Substitute Fayette County's $2,353 premium (a monthly $196.08) and the shortfall narrows to -$17.66 — which is the clearest possible illustration of why you should not underwrite a Lexington property off a statewide insurance average.

4. The expenses people leave out

Vacancy, management, and capital reserves do not arrive as invoices. Nobody bills you for the month the house sits empty, or for the roof you will need in nine years, or — if you self-manage — for your own weekends. So they fall out of the mental model, and the property looks better than it is.

Here is the same house with those three removed and everything else identical:

The three omissions are worth $4,662 a year of net operating income — $1,680 of vacancy, $1,932 of management, $1,050 of reserve. They flatter the cap rate by 1.67 percentage points and hide 62% of the annual loss.

There is a Kentucky-specific reason this matters more than the numbers alone suggest. Section 1 showed that Kentucky's appreciation figure of $13,043 a year exceeds the true annual cash loss of $7,520.93. Run the numbers the wrong way — with the left-hand column's -$2,858.93 — and the appreciation covers the loss 4.6 times over, which is the kind of margin that makes a buyer stop checking. Run them correctly and it covers the loss 1.7 times, before any selling cost. The omission does not just flatter the return; it flatters the safety margin on the one argument that actually supports buying here.

The left column's expense ratio is 33.81%, below the 35% floor of the range most rentals land in. That is the tell.

Vacancy. Eight percent is roughly one month a year, which is what a single clean turnover costs between move-out and the next tenant's first full month. Setting it to zero assumes the house is never empty, including between tenants.

Management. Set it to zero and the return is paying you for your own labor rather than for the property. Self-managing this house saves $1,932 a year, lifting NOI to $11,170.75 and the cap rate to 3.99%, with cash flow improving to -$465.74 a month. Real saving; does not fix the deal; stops being free the moment you stop being available.

Capital reserves. Roofs, HVAC, water heaters, and flooring have known lives, and in Kentucky the roof clock is set partly by hail and partly by carrier underwriting. The 5%-of-rent convention above gives you $1,050 a year — which funds a 1% deductible of $3,000 in under three years, but a western Kentucky 5% deductible of $15,000 in fourteen. Size the reserve against your actual deductible percentage, not against a convention.

A harsher and equally common convention is 1% of purchase price a year for maintenance and 1% for capital, which here is $2,799 each. Run that way: total operating expenses $13,579.25, expense ratio 70.29%, NOI $5,740.75, cap rate 2.05%, cash flow -$918.24 a month, cash-on-cash -13.81%, DSCR 0.34.

So the honest cap-rate range for this property is 2.05% to 3.30% depending on which reserve convention you choose. Choose one deliberately.

What would actually have to be true

The rent this property needs. For cash flow to reach zero at this price and this financing, gross scheduled rent must reach about $31,330.95 a year, or $2,610.91 a month — 0.93% of purchase price per month. The assumed $1,750 rent is 0.63% of price.

The price this rent supports. Hold rent at $1,750 and solve for the price at which cash flow reaches zero with 25% down: about $168,277, roughly 60% of the statewide median.

The down payment this price needs. Keep the $279,900 price and the $1,750 rent and solve for the loan the NOI can service: about $115,721 — which means roughly $164,179 down, or 59% of the price.

Note how much of that demand comes from the insurance line being the conservative $3,950 rather than a Lexington-level $2,353. Run the breakeven at the Fayette premium and the required rent falls by roughly $137 a month.

5. What actually varies by county here

Kentucky has the flattest county spread of the seven Southern states in this series, and that is itself the finding: there is no dramatic intra-state arbitrage to hunt for between the two major metros.

• Fayette County (Lexington): effective rate 0.83%, insurance $2,353, median price $350,000
• Jefferson County (Louisville): effective rate 0.86%, insurance $2,973, median price $275,000
• Statewide: 0.75%, $3,950, $279,900

Take the identical $279,900 house at $1,750 rent and apply each county's actual tax rate and average premium:

Both metro counties beat the statewide figure, which is the opposite of what happens in most states in this series and is entirely an insurance effect: their premiums are 40% and 25% below the state average, more than offsetting tax rates 11% and 15% above it. The NOI gap between Fayette and Jefferson is $703.97 a year, or 0.25 points of cap rate — genuinely small.

Now run each county at its own median price and a rent scaled to it:

• Fayette County at $350,000 with an assumed $2,000 rent, 0.83% tax and $2,353 insurance: loan $262,500, P&I $1,746.42, cash in $99,750, tax $2,905, total opex $9,866, expense ratio 44.68%, NOI $12,214, cap rate 3.49%, cash flow -$728.59 a month, cash-on-cash -8.76%, DSCR 0.58.
• Jefferson County at $275,000 with an assumed $1,700 rent, 0.86% tax and $2,973 insurance: loan $206,250, P&I $1,372.19, cash in $78,375, tax $2,365, total opex $9,254.80, expense ratio 49.31%, NOI $9,513.20, cap rate 3.46%, cash flow -$579.42 a month, cash-on-cash -8.87%, DSCR 0.58.

Those two are strikingly close — 3.49% versus 3.46% cap rate, -8.76% versus -8.87% cash-on-cash, an identical 0.58 DSCR — despite Lexington's median being 27% higher. Fayette needs $21,375 more cash and loses $149.17 more a month, for essentially the same return on capital. In Kentucky, at least between the two major metros, the choice is a market-selection and tenant-quality decision rather than an arithmetic one.

What the county averages do not tell you is the deductible percentage, and in Kentucky that is where the real geographic variation lives. Section 2 explains that the typical setting is 1%, but that some western Kentucky carriers write 3% or 5%. Neither Fayette nor Jefferson is in that territory. If you are buying in the western counties, the county-average premium is the least of the differences — get the declarations page and read the percentage.

Kentucky does at least have a backstop, which Arkansas and Oklahoma do not. The Kentucky FAIR Plan Reinsurance Association has operated continuously since 1968, writing Dwelling Fire, Homeowner, Commercial Property and Farm policies for applicants who, through a licensed producer, have exhausted the voluntary market. Two caveats: applications must be submitted by a licensed producer and are subject to the Plan's own underwriting, so acceptance is not automatic — and as with any FAIR plan, coverage is narrower and generally more expensive than a voluntary policy. It is a backstop, not a shopping option. But it exists, and in this series that is worth something.

6. Financing a rental is not financing a home

These are the standard mechanisms across the mortgage market. Any specific rate or overlay is your lender's, not this article's.

Down payment. Conventional financing on a non-owner-occupied one-unit property generally requires more equity than an owner-occupied purchase — 20% is usually the floor and 25% the common expectation, which is why this article models 25%. FHA and VA are not available for a property you do not occupy. The genuine exception is house hacking: a two-to-four-unit property you live in one unit of qualifies for owner-occupied programs.

Rate. Investment-property loans price above owner-occupied loans. Fannie Mae and Freddie Mac apply loan-level price adjustments for investment occupancy that scale with loan-to-value and credit score; lenders pass those through as rate or points. The 7.00% modeled above is an assumption. Get a real quote.

Reserves. Lenders typically require post-closing reserves — months of principal, interest, taxes, and insurance held in liquid assets — scaling with the number of financed properties you own. In Kentucky, size your own reserve against the wind/hail deductible percentage on your actual policy, which ranges from $3,000 at 1% to $15,000 at a western Kentucky 5%. And because Kentucky has no statutory once-per-season limitation, size it for the possibility of two events in a year.

Rental income counting. Lenders credit a portion of market or lease rent toward qualifying, not all of it. Ask what percentage yours uses and whether they need an appraiser's rent schedule.

DSCR loans. A debt service coverage ratio loan qualifies the property rather than the borrower, comparing property income to debt service and largely skipping personal income documentation. The trade is a higher rate, a larger down payment, frequent prepayment penalties, and a minimum DSCR — commonly stated at or above 1.0 and often above 1.2.

Look at Section 3. This property's DSCR is 0.55, and even with vacancy, management, and reserves stripped out it is 0.83. It does not qualify at 75% loan-to-value on either reading.

Insurance is a closing condition. A four-point inspection (roof, electrical, plumbing, HVAC) is routinely required to bind coverage. Get a bindable landlord quote for the specific address, with the roof age disclosed, during your inspection period — and read the wind/hail deductible percentage off it before you waive contingencies.

7. What to check before you buy in this state

Insurance, and read the percentage.

1. Get a bindable landlord policy quote for the specific address — not a homeowners quote, and not a statewide average that both county figures in this data fall well below.
2. Read the wind/hail deductible percentage off the declarations page and multiply it into dollars against the dwelling limit. There is no Kentucky disclosure form requiring anyone to walk you through it. That figure is your minimum cash reserve.
3. Shop the percentage across carriers. Because this is underwriting practice rather than statute, Kentucky carriers differ from one another more than they can in a mandatory-offer state. Ask each what percentage they apply and what a lower one costs in premium.
4. Understand that Kentucky offers no statutory protection against the percentage being raised at renewal and no once-per-season limitation. Two qualifying events in one year means two deductibles.
5. If the property is in western Kentucky, ask specifically whether you are in a 3% or 5% territory. Do not assume the 1% typical setting.
6. Ask whether the roof settles at replacement cost, actual cash value, or on a payment schedule, and get the roof age in writing.
7. Ask for the HB 256 FORTIFIED roof-upgrade rider by name. Effective March 1, 2026, insurers must offer an optional rider covering the cost of upgrading to a FORTIFIED roof after storm damage — so a claim you were going to file anyway leaves the asset more insurable. Almost nobody asks.
8. Confirm the FORTIFIED premium discount HB 256 also requires, and look at Strengthen Kentucky Homes, which pays up to $10,000 for a FORTIFIED Roof retrofit out of a $5 million fund.
9. Confirm the policy carries loss of rents coverage and find out how many months it pays.
10. If a carrier tries to patch-settle a roof on mismatched shingles, know that 806 KAR 12:095 Section 9(1)(b) and Advisory Opinion 2023-08 are on your side with the Department of Insurance — and that Kentucky courts have declined to apply the regulation in private litigation. Complain to the Department first.

Property tax, from the purchase price and the county rate.

1. Use the county rate, not the 0.75% state figure. Fayette is 0.83% and Jefferson is 0.86% — 11% and 15% higher.
2. Recompute the tax from the purchase price. Kentucky's homestead exemption applies only to owners 65+ or totally disabled, so unless the seller was in that category the gap between their bill and yours is small.

The rent, from the market.

1. Pull three to five genuine comparable rentals for the specific neighborhood and note how long they sat.
2. Divide monthly rent by purchase price. Section 4's breakeven for this example was 0.93%.
3. Be honest about how much weight you are putting on the +4.66% appreciation figure. It is the highest in this series and it does exceed the annual cash loss — but it is unrealized, backward-looking, before 6% to 8% of selling costs, and it does not pay a $6,000 deductible.

The law, from the statute rather than from an article.

1. Do not take eviction timelines, notice periods, security-deposit handling, or late-fee rules from a blog — including this one. Kentucky's version of the Uniform Residential Landlord and Tenant Act sits at KRS 383.505 to 383.715, and its scope of application is one of the first things to establish for your specific property rather than assume — ask a Kentucky attorney whether it governs where you are buying, and read the statute yourself at the Legislative Research Commission's own site, https://apps.legislature.ky.gov/law/statutes/. Security-deposit handling in particular carries specific requirements that are easy and expensive to get wrong.
2. Check the city and county separately: rental registration, inspection requirements, and short-term rental restrictions are local.

The money and the tax treatment.

1. Size your cash reserves against the wind/hail deductible in dollars, not against a month of mortgage payments.
2. Ask a Kentucky CPA how the property will be taxed, including depreciation, passive activity loss rules, Kentucky state income tax treatment of rental income, any applicable local occupational or net profits taxes, and treatment on sale.

What to do next

Every figure above came from a data file or was computed in front of you. Re-run all of it with your own numbers.

The Kentucky rental analysis calculator does exactly the work in Sections 3 and 4 — enter your price, your real local rent, and your own vacancy, management, and reserve assumptions, and it produces NOI, cap rate, cash flow, cash-on-cash, and DSCR. Given Section 4, watch the expense ratio: below 35% means something has been left out.

Because both Kentucky county averages sit well below every statewide read, use the Kentucky insurance premium estimator rather than the $3,950 state figure — and to convert the 1%, 2%, 3% and 5% wind/hail deductibles into actual dollars against a specific dwelling limit.

The Kentucky mortgage payment calculator gives you the principal and interest figure for the rate you are actually quoted, which Section 3 shows is worth about $1,692 a year per point.

This article is general educational information about rental property arithmetic in Kentucky, based on figures current as of August 2026. It is not investment, tax, insurance, or legal advice. The rent figures in the worked examples are stated assumptions, not market data. Insurance premiums, property tax assessments, and mortgage rates change and vary by property and by county. Consult a Kentucky CPA, a licensed Kentucky insurance agent, and a Kentucky attorney before buying.