Build Rentals. Collect Income.
Paducah has more renters looking for housing than there are units available. That is not a temporary trend — it is a real shortage that has been building for years. If you build a rental property here right now, it will rent.
McCracken County
Kentucky Housing Corp, 2024
Well below national average
HUD Rental Market Data, 2026
Paducah market
LoopNet Apartment Market Data, 2026
Trailing 12 months
Zillow Market Report, 2026
What Does It Actually Cost to Build a Duplex in Paducah?
All numbers are based on a standard two-unit duplex (3BR/2BA per unit) using 2026 market pricing and real subcontractor quotes — not a rough estimate based on square footage. Final cost is confirmed during the paid planning phase before a contract is signed.
What You Are Paying For
| Hard construction cost (3BR/2BA, 2 units) | $410,000–$500,000 |
| MCM management fee (12%) | $49,000–$60,000 |
| Total project cost to investor | $460,000–$560,000 |
| Land (separate purchase) | ~$40,000 |
| IRS depreciable amount | $420,000–$520,000 |
Final cost confirmed during paid planning phase — real quotes, not estimates
What You Can Expect to Earn
| Rent per unit per month (3BR/2BA) | $1,500/mo |
| Total rent both units, full year | $36,000 |
| Vacancy allowance | 5% |
| Operating costs (taxes, insurance, mgmt) | 30% of collected rent |
| Net income after expenses (annual) | $23,940/yr |
| Estimated rent & value growth per year | 2.5%/yr |
10-Year Outlook — Pay Cash (Recommended)
| Year | Annual Rent | Annual Income | Property Value | Your Equity |
|---|---|---|---|---|
| Year 1 | $36,000 | $23,940 | $512,000 | $512,000 |
| Year 3 | $37,822 | $25,152 | $538,000 | $538,000 |
| Year 5 | $39,737 | $26,425 | $566,000 | $566,000 |
| Year 7 | $41,749 | $27,763 | $594,000 | $594,000 |
| Year 10 | $44,959 | $29,898 | $640,000 | ~$640,000 |
100% Bonus Depreciation Is Back
The One Big Beautiful Bill Act, signed July 2025, permanently restored the ability to write off 100% of certain assets in the first year for qualifying properties placed in service after January 19, 2025. For high-income investors, this can mean Year 1 federal tax savings that approach or exceed the original down payment.
Year 1 (cost segregation)
Year 1 (cost segregation)
Year 1 (active RE investor)
Tax scenarios are illustrative. Consult a qualified tax professional before making any investment decision. Active real estate investor status has strict documentation requirements.
How We Work
Most construction problems are not bad luck — they happen because nobody planned carefully before the first shovel hit the ground. We do all of the hard planning work upfront, before a contract is signed. That is how your investment stays protected.
Preconstruction
Real subcontractor quotes, line-by-line budget, project schedule, and long-lead materials ordered before anything is agreed to. The planning fee is credited toward the construction contract if the project moves forward.
Contract & Mobilization
Construction contract signed, permits filed, materials ordered. Investor gets login access to JobTread — view the schedule, budget, invoices, and job-site photos in real time.
Construction
Weekly written updates covering schedule and budget. All changes are written, priced, and approved before any work proceeds. Nothing gets added to the bill without the investor's written sign-off.
Handoff at Certificate of Occupancy
Final inspection walkthrough, warranties, subcontractor documentation, and as-built plans handed over. We can connect investors with vetted property management companies in the Paducah area.
What Can Go Wrong — and How We Handle It
Every investor asks the same question: what happens when something goes sideways? Here is the honest answer for each scenario.
| Risk | How MCM Handles It |
|---|---|
| Cost overruns | Budget is built from real subcontractor quotes before the contract is signed. All changes are written, priced, and approved before work proceeds. |
| Schedule delays | A realistic schedule is set in preconstruction. Progress is tracked weekly through JobTread. We build in buffer time rather than promising an optimistic date we cannot keep. |
| Quality problems | Accountable project management with a defined decision-maker on site. A workmanship warranty is included. |
| Subcontractor problems | Five years of working relationships with Western Kentucky trades. We use a vetted preferred subcontractor list — not whoever shows up cheapest on a cold bid. |
| Trouble renting | A 4% vacancy rate and a 3,800-unit shortage create strong demand. Conservative rent projections are used in all numbers shown here. |
| Interest rate changes | Outside our control. We address it by using conservative assumptions in all financial projections and keeping the investor's options open to refinance when rates improve. |
Core Contract Terms at a Glance
Contract Type
Cost-plus with fixed management fee. All subcontractor and material costs passed through at actual cost — no hidden markups.
Management Fee
12% of the documented project cost. Fixed at contract signing — does not increase if material prices rise mid-project.
Timeline
8–12 months from ground-break to certificate of occupancy for a standard two-unit duplex.
Change Orders
Written and signed before any work proceeds. No verbal commitments, no surprise charges at the end.
Reporting
Weekly updates via JobTread with schedule, budget, invoices, and job-site photos. Performance bonding available on projects that require it.
Optional Equity
Profit-sharing or partial ownership available on a project-by-project basis when it makes sense for both sides.
Build, Stabilize, Exchange
Building a rental property is not just a cash flow play. With the right exit strategy, it becomes a tax-deferred compounding machine. The 1031 exchange allows investors to sell a property and roll 100% of the proceeds — including what would have been capital gains taxes — into a larger asset. Done in sequence, this strategy can multiply an investor's portfolio without ever writing a check to the IRS along the way.
Single Duplex
Test the process before committing to a larger project
Build
Duplex constructed over 8–12 months. All-in cost: $460K–$560K (no land).
Stabilize
Lease both units. Hold for 12+ months post-CO to establish investment intent and rental history.
Sell
List as income-producing property. Estimated sale value: $560,000–$620,000 based on current Paducah market.
Exchange
Identify replacement property within 45 days. Close within 180 days. Roll full proceeds into a larger asset — tax deferred.
6-Unit Portfolio Block
Build multiple duplexes, sell as a commercial portfolio
Build 3 Duplexes (6 Units)
Build simultaneously or in sequence over 18–24 months. Total all-in cost: $1.38M–$1.68M (no land).
Stabilize as a Portfolio
Lease all 6 units. Combined net income: ~$71,820/yr. Hold 12+ months post-CO on the final unit.
Sell as One Commercial Asset
6+ units cross into commercial multi-family territory. Estimated portfolio sale: $1.2M–$1.3M at 5.5–6.0% cap rate — a 15–25% premium vs. selling individually.
Exchange into a Larger Asset
Roll full proceeds into an apartment complex, commercial property, or the next portfolio build. Tax deferred.
The Portfolio Premium — Why 6 Units Is Worth More Than 3 × 2
| 3 duplexes sold individually | ~$957K–$1.1M | Retail buyer pool · Cap rate: 6.5–7.5% |
| Same 6 units sold as one portfolio | ~$1.2M–$1.3M | Commercial buyer pool · Cap rate: 5.5–6.0% |
| Portfolio premium | ~$150K–$300K | Same income, more value · Cap rate: — |
When you sell 6+ units as a single asset, you move from the retail buyer pool into the commercial multi-family market. Commercial buyers apply lower cap rates to stabilized income — meaning they pay more per dollar of rent. The same $71,820/yr in net income is worth significantly more as a portfolio than as three separate duplexes. Cap rate compression is a market condition and is not guaranteed. Consult a licensed commercial real estate broker for a current valuation.
Download the Full Investment Booklet
Detailed financial projections, two financing scenarios (pay cash vs. 25% down), the full 10-year outlook, tax analysis, and risk management breakdown — all in one document.
Tell Us About Your Project
The most useful conversation we can have is not about a booklet. It is about a specific lot, a specific investor, and a specific timeline. Fill this out and we will be in touch within one business day.
Your information is kept confidential and used only to prepare for our conversation.
(270) 816-4959 | ryan@morreauconstruction.com
Important Disclosures: All financial figures are illustrative projections based on current Paducah market data and are not a guarantee of future performance. Actual results depend on market conditions, rental performance, interest rates, and tax law. Construction cost ranges shown are based on current Western Kentucky subcontractor pricing and will be confirmed with real quotes during the paid planning phase before any contract is signed. Morreau Construction Management is not a tax advisor, CPA, or financial planner. All tax scenarios should be reviewed with a qualified tax professional before making any investment decision. Active real estate investor status has strict documentation requirements and is audit-sensitive. Accelerated depreciation can trigger recapture taxes when the property is sold outside a 1031 exchange. 1031 Exchange: A 1031 exchange requires the use of a qualified intermediary (QI) — MCM does not serve as a QI and cannot provide 1031 exchange services. The investor must identify a replacement property within 45 calendar days of closing the relinquished property and must close on the replacement property within 180 calendar days. Failure to meet either deadline results in full recognition of capital gains. The IRS does not specify a minimum hold period, but properties held for less than 12 months are at elevated audit risk for failing to meet the "held for investment" requirement. Depreciation recapture (Section 1250) applies at a maximum 25% rate when the property is eventually sold outside a 1031 exchange. Portfolio cap rate compression is a market condition and is not guaranteed. Consult a licensed Kentucky real estate attorney and a qualified CPA before executing any agreement or 1031 exchange strategy.