Rental Property in Alaska: What the Numbers Actually Look Like

Alaska inverts the pattern that governs most of this series. In Florida, Louisiana, and Oklahoma, insurance is the line that decides whether a rental works. In Alaska it barely registers: $1,418 a year at $300,000 of dwelling coverage, one of the three or four cheapest figures in the United States, and only 5.6% of gross rent on the property worked through below.

The property tax bill is $4,667.62. That is 3.3 times the insurance premium and 42.7% of the entire operating expense line.

So if you take one thing from this article: in Alaska, price the property tax before you price anything else — and price it against the specific borough, because Alaska's internal spread runs from roughly 0.01% in the Kusilvak Census Area to about 1.32% in Anchorage, with large parts of the unorganized borough levying no property tax at all.

There is a second thing, and it does not show up in any premium: Alaska is the most earthquake-active state in the country, and every standard homeowners policy excludes earthquake damage. Section 2 puts a number on that.

A note before you start: this is general educational information about how rental property arithmetic works in Alaska. It is not investment, tax, insurance, or legal advice, and it is not a recommendation about any property. Talk to an Alaska CPA about tax treatment, a licensed Alaska insurance agent about a real quote, and an Alaska real estate attorney about anything contractual.

1. What a rental costs to buy here

The statewide median sale price is $420,506 (Redfin, May 2026, up 2.6% year over year — a closed-sale median, not a smoothed index). Independent reads cluster nearby: Houzeo at $399,800 and Innago at roughly $408,100 in January 2026.

Borough medians diverge less than in most states:

• Anchorage Municipality: $454,000, effective property tax rate 1.22%, average insurance $1,204
• Matanuska-Susitna Borough: $414,000, effective property tax rate 0.99%

The cash you actually need

Alaska has no state real estate transfer tax. That is a genuine saving against most of the East Coast, and it is confirmed rather than assumed. The one caveat: individual municipalities can impose their own — the City and Borough of Juneau does — so it is a local ordinance question, not a statewide rate.

• Closing costs: 3% to 6%. Rocket Mortgage puts the Alaska buyer average near 4%. This article uses a 4.5% midpoint.

On the $420,506 statewide median at 25% down:

• Down payment: $420,506 x 0.25 = $105,126.50
• Loan amount: $315,379.50
• Closing costs: $420,506 x 4.5% = $18,922.77
• Total cash in: $124,049.27

On price growth, Alaska is currently one of the strongest markets in the country. FHFA's purchase-only index has Alaska at +5.5% year over year through Q1 2026 — the second-highest of any state that quarter, corroborated independently by NAHB's coverage of the same report. That is a real tailwind, and it is also the only part of this article's arithmetic that is not under your control.

2. The two expenses that decide whether it works

Property tax: the expense that matters here

WalletHub puts Alaska's effective property tax rate at 1.11%. Cross-checks disagree more than usual: the Tax Foundation reads 0.94%, SmartAsset 1.06%, and TaxByCounty a much lower 0.77%. The spread is roughly 0.77% to 1.16%, and the reason is structural rather than methodological — huge parts of Alaska's unorganized borough levy no property tax at all, so any "statewide average" is really an average across taxed properties in organized boroughs.

On the $420,506 example at 1.11%: $420,506 x 1.11% = $4,667.62 a year, or $388.97 a month.

That is 18.5% of gross rent before anything else happens, and it is the single largest operating expense in the analysis.

There is one piece of good news for an Alaska landlord specifically, and it is unusual. Alaska has no general homestead exemption for owner-occupants. State law (AS 29.45.030) mandates a Senior Citizen and Disabled Veteran exemption on the first $150,000 of assessed value, and every taxing municipality must grant it — but a working-age owner-occupant gets nothing statewide. In most states, converting a home to a rental strips an exemption and steps the tax bill up. In Alaska, for most owners, there is no exemption to lose. The tax figure you see is close to the tax figure you will pay.

The exception is exactly the one you would expect: if the seller is a qualifying senior or disabled veteran, their bill reflects a $150,000 exemption you will not inherit. Recompute the tax from the assessed value and the borough's mill rate, not from the seller's bill.

Insurance: cheap, and cheap for a real reason

The reference figure is $1,418 a year at $300,000 of dwelling coverage with a $1,000 all-perils deductible — the midpoint of Insurance.com's $1,492 and Insurify's $1,344 on the same coverage basis. Insure.com's Anchorage-specific figure of $1,373 lands almost exactly on that midpoint, which is a useful check given Anchorage holds roughly 40% of the state's population.

That is $118.17 a month and only 13.0% of the operating expense line. Alaska is cheap because the perils that drive premium elsewhere are mostly absent: no hurricanes, minimal hail, limited wildland-urban interface. Insurify projects +2% for 2026 against a national +4%, and far below the 20%-plus increases recorded in 2025 in Minnesota, Colorado, Iowa, Nebraska, Oklahoma, and South Carolina.

Here is what a low premium is worth. Take the identical house at the identical rent and change only the insurance premium:

The entire published range of Alaska insurance figures is worth about 0.07 points of cap rate. Compare that with property tax, where moving from Mat-Su's 0.99% to Anchorage's 1.22% on the same house is worth 0.23 points — more than three times as much. Insurance is not the lever in this state.

The earthquake deductible, and why it is a landlord's problem specifically

Alaska is not on the Insurance Information Institute's list of nineteen states plus D.C. that use hurricane or windstorm deductibles, and there is no Alaska analogue to the percentage wind-hail deductible the Plains hail states have adopted. An Alaska homeowners policy carries one flat all-perils deductible and nothing else. That is genuinely the whole story of the declarations page.

It is not the whole story of the risk. Alaska is the most earthquake-active state in the country, and earthquake damage is excluded from every standard homeowners policy in the United States. Coverage is bought as a separate endorsement or a standalone policy — reported at roughly $116 a year as an endorsement in Alaska — and it carries its own percentage deductible, typically 10% to 25% of the dwelling limit.

On a $300,000 dwelling limit:

• 10% = $30,000
• 15% = $45,000
• 25% = $75,000

Now put those against the property. Section 3 works out that this rental produces $12,259.98 of net operating income in a good year:

• A 10% earthquake deductible is 245% of a full year's NOI
• A 15% deductible is 367% of a full year's NOI
• A 25% deductible is 612% of a full year's NOI

You cannot pass any of it to a tenant. It is not a lease obligation, it is not billable, and it does not wait for rent to accumulate. Meanwhile the building is likely uninhabitable, so rent stops at the same moment the deductible comes due — which is what loss-of-rents coverage exists for, and why you should confirm your landlord policy carries it and how many months it pays.

The choice this creates is a real one, and it is not obvious. Buying earthquake coverage costs roughly $116 a year and gives you a $30,000-to-$75,000 retention. Not buying it costs nothing and gives you a 100% retention. Neither answer is wrong for every owner. What is wrong is not knowing which one you picked.

There is no state backstop if the market declines you. This is confirmed, not assumed: Alaska operates no FAIR plan, no windstorm pool, and no state-run insurer of last resort, and it is not a PIPSO member state. A homeowner declined by the admitted market has two options — the surplus-lines market, which is typically costlier and often written on an actual-cash-value rather than replacement-cost basis, or making the risk acceptable through mitigation. This matters less in Alaska than it would in a wildfire or coastal state, because the admitted market here is not under catastrophe-driven withdrawal pressure. It matters a great deal for individually hard-to-place risks, which in Alaska means remote off-road-system properties.

Roof settlement. No Alaska law fixes whether a roof claim settles at replacement cost or actual cash value. Alaska does have a genuine matching rule — 3 AAC 26.090(l) requires an adjuster settling on a replacement-cost basis to replace non-matching materials so the result has a reasonably uniform appearance, at no cost to the insured beyond the deductible. Read that precondition carefully, because it is the whole game: if the carrier has moved the roof to an actual-cash-value endorsement, the matching rule is not what is protecting you. Alaska's roof pressure is snow load, ice damming, and wind rather than hail, so condition matters more than a bright-line age cutoff — but carriers still commonly settle older roof claims at ACV. One related trap worth naming: policies generally cover the damage an ice dam causes, not the cost of removing the ice dam.

Rebuild cost. Alaska construction runs about $265 per square foot, within a published band of $215 to $315. A 1,600 square foot house has a replacement cost near $424,000, and at 1,800 square feet near $477,000 — both well above a $300,000 dwelling limit. That is a coverage-adequacy problem, not a premium problem, and it is the one place in Alaska where being cheap to insure can quietly mean being badly insured.

3. A full worked example

The property. A single-family house at the Alaska statewide median of $420,506.

The rent — read this carefully. This site does not carry rent data. The $2,100 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, because Section 4 shows how sensitive the answer is to it.

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, no earthquake policy, and no snow-removal contract. All three are real Alaska line items; add them to your own run

Step 1 — income

• Gross scheduled rent: $2,100 x 12 = $25,200
• Vacancy loss: $25,200 x 8% = $2,016
• Effective gross income: $25,200 - $2,016 = $23,184

Step 2 — operating expenses

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

• Management: $23,184 x 10% = $2,318.40
• Property tax: $420,506 x 1.11% = $4,667.62
• Insurance: $1,418
• Maintenance: $25,200 x 5% = $1,260
• Capital reserve: $25,200 x 5% = $1,260
• Total operating expenses: $10,924.02

Expense ratio: $10,924.02 / $23,184 = 47.12% of collected rent — comfortably inside the 35% to 55% band most rentals land in. Property tax alone is 42.73% of that entire expense line; insurance is 12.98%.

Step 3 — net operating income and cap rate

• NOI = $23,184 - $10,924.02 = $12,259.98
• Cap rate = $12,259.98 / $420,506 = 2.92%

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 whole 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: $420,506 x 75% = $315,379.50. At 7.00% over 30 years, principal and interest is $2,098.23 a month, or $25,178.76 a year.

• Annual cash flow = $12,259.98 - $25,178.76 = -$12,918.78
• Monthly cash flow = -$1,076.56
• Debt service coverage ratio = $12,259.98 / $25,178.76 = 0.49

Step 5 — cash-on-cash return

• Cash invested: $124,049.27 (Section 1)
• Cash-on-cash = -$12,918.78 / $124,049.27 = -10.41%

Rate sensitivity, since 7.00% was an assumption

• At 6.50%: P&I $1,993.41/mo, annual cash flow -$11,660.94
• At 7.00%: P&I $2,098.23/mo, annual cash flow -$12,918.78
• At 7.50%: P&I $2,205.18/mo, annual cash flow -$14,202.18

A full point of rate is worth about $2,541.24 a year. The property tax bill is worth nearly double that.

The simplest version of the same finding

Add up the four bills a lender escrows:

• Principal and interest: $2,098.23
• Property tax: $4,667.62 / 12 = $388.97
• Insurance: $1,418 / 12 = $118.17
• Total: $2,605.36 a month

Against $2,100 of assumed rent, that is -$505.36 a month before vacancy, management, or a single repair. The naive "does the rent cover the mortgage" check already fails, and $388.97 of the reason is the tax line.

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 $5,594.40 a year — $2,016 of vacancy, $2,318.40 of management, $1,260 of reserve. They flatter the cap rate by 1.33 percentage points and hide 43% of the annual loss.

Notice what else the left-hand column does: it drops the expense ratio to 29.15%, below the 35% to 55% range most rentals land in. That number is a warning light. Any time an analysis comes in under 35%, something is missing — and here you can see exactly what.

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. Alaska has a further wrinkle worth pricing: military rotations at JBER and Fort Wainwright, and seasonal resource-industry employment, make some Alaska rental submarkets turn over on a schedule rather than at random.

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 $2,318.40 a year, lifting NOI to $14,578.38 and the cap rate to 3.47%, with cash flow improving to -$883.36 a month. It is a real saving. It does not fix the deal, and self-managing an Alaska property from out of state in February is not the same job as self-managing one in Phoenix.

Capital reserves. Roofs, HVAC, water heaters, and flooring have known lives, and Alaska's freeze-thaw, snow load, and ice damming shorten several of them. The 5%-of-rent convention used above is one option. A harsher and equally common convention is 1% of purchase price a year for maintenance and 1% for capital, which here is $4,205.06 each. Run that way: total operating expenses $16,814.14, expense ratio 72.52%, NOI $6,369.86, cap rate 1.51%, cash flow -$1,567.41 a month, DSCR 0.25.

So the honest cap-rate range for this property is 1.51% to 2.92% 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 $42,945.60 a year, or $3,578.80 a month — 0.85% of purchase price per month. The assumed $2,100 rent is 0.50% of price, or 59% of what the property needs.

The price this rent supports. Hold rent at $2,100 and solve for the price at which cash flow reaches zero with 25% down: about $238,493, roughly 57% of the statewide median.

The down payment this price needs. Keep the $420,506 price and the $2,100 rent and solve for the loan the NOI can service: about $153,564 — which means roughly $266,942 down, or 63% of the price. At that point you have bought a 2.92% cap rate mostly with cash.

None of that is an Alaska failing. It is what 7% money does to a leveraged single-family rental anywhere, and it is why the DSCR line in Section 6 says what it says.

5. What actually varies by borough here

Alaska uses boroughs and census areas rather than counties, and the two we carry detail for bracket most of the state's population:

Take the identical $420,506 house at $2,100 rent and apply each borough's actual tax rate, holding insurance at the state average:

A $967.16 a year swing in NOI between Mat-Su and Anchorage on the same house at the same rent, and 0.23 percentage points of cap rate. That is a bigger effect than the entire published range of Alaska insurance figures, which was worth 0.07 points.

Now run each at its own real median price, which is where the second consideration lives:

• Anchorage at $454,000 with a $2,200 assumed rent, 1.22% tax and its own $1,204 average insurance: NOI $12,476.40, cap rate 2.75%, cash flow -$1,225.65 a month, cash-on-cash -10.98%.
• Matanuska-Susitna at $414,000 with a $2,000 assumed rent and 0.99% tax: NOI $11,955.40, cap rate 2.89%, cash flow -$1,069.48 a month, cash-on-cash -10.51%.

Anchorage's higher rent does not rescue it, because the loan is 10% larger and the tax rate is 23% higher.

Three further borough-level facts to check for a specific address, none of which is in a statewide average:

Whether the property is taxed at all. Alaska is the only state where this is a real question. Property in the unorganized borough outside any city may carry no property tax. That is not a loophole to chase — it usually correlates with no municipal services, no road-system access, and an insurance placement problem — but it is a genuine structural feature of this market that no effective-rate average captures.

Road-system access. Off-road-system properties are the specific risk class Section 2's missing residual market bites hardest. Confirm insurability before you confirm anything else.

The borough's own assessment cycle and appeal window. Alaska boroughs administer their own assessments on their own calendars. A purchase can trigger a reassessment, and the appeal deadline is local.

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.

Alaska's conforming loan limit is the national maximum. Every Alaska borough and census area carries a one-unit conforming limit of $1,249,125 — 150% of the $832,750 national baseline — because the Housing and Economic Recovery Act of 2008 treats Alaska, Hawaii, Guam, and the U.S. Virgin Islands as high-cost areas by statute, regardless of local home prices. At a $420,506 median, essentially no Alaska single-family purchase is a jumbo loan. That is a genuine and underappreciated financing advantage in this state.

Alaska Housing Finance Corporation programs will not help you here. AHFC's First Home Limited (TEP) and First Home products both require the borrower to occupy the property as a primary residence. They are worth knowing about if you are house hacking a duplex; they are not available for a pure rental.

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 Alaska you want those reserves regardless of the lender's requirement, because if you carry earthquake coverage, Section 2's deductible is a five-figure cash event that arrives at the same moment rent stops.

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 0.49, and even with vacancy, management, and reserves stripped out it is 0.71. It does not qualify at 75% loan-to-value. The DSCR underwriting is telling you the same thing the cash flow line is.

Appraisal and insurability, in that order. Alaska appraisals in thin markets can be slow and comparable-poor, particularly outside Anchorage and the Mat-Su. And because there is no FAIR plan, a property the admitted market declines is a property a lender may not be able to close on. Confirm a bindable landlord policy exists before you spend money on inspections.

7. What to check before you buy in this state

Property tax, from the assessment rather than the listing.

1. Get the borough's current assessed value and mill rate and recompute the tax yourself. Do not underwrite from the seller's bill.
2. Confirm whether the seller holds the senior or disabled-veteran exemption under AS 29.45.030. If they do, $150,000 of assessed value comes back onto the roll when you buy.
3. Check for city taxes on top of borough taxes, and for local service-area assessments (road service areas, fire service areas) that appear on the bill but not in any effective-rate average.

Insurance, and the peril that is not on the policy.

1. Get a bindable landlord policy quote for the specific address — a dwelling fire form with loss-of-rents coverage, not a homeowners quote and not a statewide average.
2. Decide explicitly about earthquake coverage, and if you buy it, read the deductible as a dollar figure against the dwelling limit. Section 2's range is $30,000 to $75,000 on $300,000. Write the number down; it is your minimum cash reserve.
3. Get the roof age in writing and ask whether the roof settles at replacement cost or actual cash value, and whether the policy has a roof payment schedule.
4. Ask about ice dam coverage specifically — the damage is usually covered, the removal usually is not.
5. Confirm the dwelling limit against replacement cost, not against purchase price. At $265 per square foot, a 1,600 square foot house is near $424,000 to rebuild.
6. If the property is off the road system or in a remote area, confirm insurability before anything else. There is no FAIR plan to fall back on.
7. Get a flood quote separately. No property policy anywhere covers flood, and Alaska's riverine and ice-jam flooding is real.

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 0.85%. Knowing where you sit against that tells you immediately whether you are buying cash flow or betting on appreciation — and Alaska's last published appreciation figure was +5.5%, the second-highest in the country, so that bet is at least a live one here.

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. Alaska residential tenancies are governed by the Alaska Uniform Residential Landlord and Tenant Act, AS 34.03. Read it at the Alaska State Legislature's own site, https://www.akleg.gov/, or have an Alaska real estate attorney walk you through it. The Alaska Department of Law also publishes consumer guidance at https://law.alaska.gov/. Security-deposit handling in particular carries specific notice and account requirements that are easy to get wrong and expensive to get wrong.
2. Check the municipality separately: rental registration, inspection requirements, and short-term rental restrictions are local, and Anchorage and Juneau have both legislated in this area.

The money and the tax treatment.

1. Size your cash reserves against the earthquake deductible in dollars if you carry that coverage, not against a month of mortgage payments.
2. Ask an Alaska CPA how the property will be taxed, including depreciation, passive activity loss rules, and treatment on sale. Alaska has no state income tax, which changes that conversation but does not remove it — the federal treatment is where most of the answer lives.

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 Alaska 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. It also warns you when you have left out the expenses Section 4 is about, rather than letting them pass silently.

The Alaska insurance premium estimator will get you closer to a real figure for a specific dwelling limit than the $1,418 statewide average — and, more usefully in this state, it will show you what a dwelling limit sized to a $265-per-square-foot rebuild actually costs.

The Alaska mortgage payment calculator gives you the principal and interest figure for the rate you are actually quoted, which Section 3 shows is worth about $2,541 a year per point.

This article is general educational information about rental property arithmetic in Alaska, 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. Consult an Alaska CPA, a licensed Alaska insurance agent, and an Alaska real estate attorney before buying.