Cheapest States to Buy Rental Property: Affordable Markets for Investors

Low entry prices don't guarantee good investments, but they do lower the barrier to entry. For new investors building their first portfolio or experienced operators seeking volume, certain states offer rental properties at prices that seem impossible compared to coastal markets.

Here's where you can still buy rental properties for under $200,000—and sometimes under $100,000—while generating actual rental income.

What "Cheapest" Really Means

Price alone is meaningless without context. A $75,000 property with $15,000 in annual expenses and $9,000 in rent isn't cheaper than a $400,000 property with $30,000 in expenses and $40,000 in rent.

When evaluating affordable states, consider:

Total Entry Cost: Purchase price + closing costs + immediate repairs [Operating Expenses](/blog/net-operating-income-guide): Property tax + insurance + maintenance + management Rental Demand: Vacancy rates + time to lease + tenant quality Total Return: Cash flow + appreciation + tax benefits

The states below balance low acquisition costs with reasonable operating expenses and genuine rental demand.

Top 10 Cheapest States for Rental Property

1. West Virginia

Median Home Price: $145,000
Median Rental Price: $650-850/month
Property Tax Rate: 0.49% (2nd lowest nationally)
Average Insurance: $800-1,200/year

West Virginia offers the lowest entry prices in America, but rental demand is concentrated in specific markets. The state's population has declined, but certain areas maintain stability.

Best Markets:

• Morgantown: Home to West Virginia University; student rental demand keeps vacancy low
• Charleston: State capital with government and healthcare employment
• Huntington: Marshall University provides rental base

What Works: Properties near universities or major employers. Single-family homes in working-class neighborhoods rent to long-term blue-collar tenants.

What Doesn't: Rural properties with no employment base or extreme isolation. Even at $40,000, they won't rent.

Investor Profile: Experienced investors comfortable with higher-touch management and slower appreciation. Not ideal for passive or first-time investors.

2. Mississippi

Median Home Price: $170,000
Median Rental Price: $850-1,100/month
Property Tax Rate: 0.52%
Average Insurance: $1,200-1,800/year

Mississippi combines low prices with southern hospitality and landlord-friendly laws. The Gulf Coast and Jackson metro offer the most investor activity.

Best Markets:

• Gulfport-Biloxi: Tourism and casino employment drive rental demand
• Jackson: State capital and largest metro; healthcare and government jobs
• Hattiesburg: University town with stable student and professional rental market
• Tupelo: Manufacturing hub with rising investment interest

Strengths: Properties under $150,000 are common. Property taxes remain low. [Eviction process](/blog/how-to-handle-eviction) is efficient (30-45 days typically).

Challenges: [Hurricane insurance](/blog/hurricane-insurance-guide) on Gulf Coast properties can run $2,500-4,000/year. Some neighborhoods have high crime requiring careful selection.

Investor Profile: Works for buy-and-hold investors seeking cash flow over appreciation. Good for building portfolio volume quickly.

3. Arkansas

Median Home Price: $180,000
Median Rental Price: $950-1,250/month
Property Tax Rate: 0.57%
Average Insurance: $1,100-1,600/year

Arkansas delivers exceptional investor fundamentals: low prices, reasonable rents, fast evictions (14-day notice to vacate), and landlord-protective laws.

Best Markets:

• Little Rock: Capital city; healthcare and government employment
• Fayetteville-Bentonville: Northwest Arkansas boom driven by Walmart, Tyson; prices higher but appreciation strong
• Fort Smith: Manufacturing and logistics hub; very affordable
• Jonesboro: College town with agricultural economy

Strengths: Can acquire quality single-family rentals for $120,000-$180,000. [Property management](/blog/property-management-complete-guide) costs are low ($75-100/month). Tenant pool is stable.

Why It Works: Arkansas never experienced the housing bubble extremes. Prices stayed rational, and locals are accustomed to renting long-term.

Investor Profile: Perfect for first-time investors or those building scaled portfolios. Low drama, predictable returns.

4. Oklahoma

Median Home Price: $185,000
Median Rental Price: $1,000-1,350/month
Property Tax Rate: 0.74%
Average Insurance: $1,400-2,200/year

Oklahoma's energy sector creates boom-bust perception, but economic diversification has stabilized major metros. Prices remain affordable despite growth.

Best Markets:

• Oklahoma City: Capital and largest metro; aerospace, healthcare, government
• Tulsa: Energy, aerospace, healthcare; strong rental demand
• Edmond: OKC suburb; excellent schools drive family rentals
• Norman: University of Oklahoma; student housing opportunities

Strengths: Can find single-family homes $140,000-$220,000 that rent for $1,200-1,600. Property taxes are reasonable. Landlord-tenant law is balanced.

Considerations: Tornado insurance adds $300-600/year. Energy sector still influences economy, though less than historically.

Investor Profile: Good for investors wanting growth potential alongside cash flow. Market hasn't been discovered by institutional capital yet.

5. Ohio

Median Home Price: $210,000
Median Rental Price: $1,000-1,400/month
Property Tax Rate: 1.41% (higher, but stable)
Average Insurance: $900-1,400/year

Ohio is investor heaven for Rust Belt plays. Multiple cities offer sub-$150,000 entry points with genuine rental economies.

Best Markets:

• Cleveland: Healthcare and biotech; gentrifying neighborhoods offer upside
• Columbus: State capital and Ohio State University; strongest growth in state
• Cincinnati: Fortune 500 headquarters (P&G, Kroger); stable rental demand
• Toledo: Industrial base; extreme affordability under $150,000
• Dayton: Wright-Patterson AFB; cash flow focused
• Akron: University and healthcare; cheap entry prices

Strengths: Depth of markets allows surgical selection. Can build diversified Ohio-only portfolio across multiple cities.

Challenges: Property taxes are higher (1.0-1.8% depending on county). Some neighborhoods have significant crime; local knowledge is essential.

Investor Profile: Perfect for out-of-state investors building volume. Established property management industry and investor-friendly infrastructure.

6. Indiana

Median Home Price: $215,000
Median Rental Price: $1,100-1,500/month
Property Tax Rate: 0.81%
Average Insurance: $950-1,300/year

Indiana flies under the radar but delivers consistent returns. Manufacturing, logistics, healthcare, and education create diverse employment.

Best Markets:

• Indianapolis: Capital and largest metro; strong across all property types
• Fort Wayne: Manufacturing hub; excellent cash flow market
• Evansville: Southern Indiana; affordable with stable demand
• South Bend: Notre Dame University and industrial base
• Lafayette: Purdue University; student and professional rental market

Strengths: Landlord-tenant law heavily favors property owners. Eviction process is fast (30-45 days). Properties under $180,000 are common and rent well.

Why Indiana Works: Practical Midwest culture means tenants often rent long-term (3-5+ years). Turnover costs stay low.

Investor Profile: Conservative investors seeking stability over excitement. Good first-state for building track record.

7. Alabama

Median Home Price: $220,000
Median Rental Price: $1,100-1,450/month
Property Tax Rate: 0.33% (lowest nationally!)
Average Insurance: $1,300-1,900/year

Alabama's ultra-low property taxes create cash flow advantages. Medical research, aerospace, and manufacturing drive employment in major metros.

Best Markets:

• Birmingham: Largest metro; healthcare and banking hub
• Huntsville: Rocket City; NASA and defense contractors; highest prices but strong appreciation
• Mobile: Port city; maritime and aerospace industries
• Montgomery: State capital; government employment
• Tuscaloosa: University of Alabama; student housing market

Strengths: Property taxes are negligible (0.25-0.45% typically). This saves $1,500-3,000/year compared to high-tax states, directly boosting cash flow.

Considerations: Some areas have tornado risk increasing insurance costs. Market knowledge is crucial for neighborhood selection.

Investor Profile: Investors prioritizing cash flow and long-term holds. Low carrying costs make it easier to weather vacancies.

8. Kentucky

Median Home Price: $210,000
Median Rental Price: $1,050-1,400/month
Property Tax Rate: 0.80%
Average Insurance: $1,100-1,500/year

Kentucky offers southern charm with reasonable prices. Louisville and Lexington anchor the rental market with diverse economies.

Best Markets:

• Louisville: Largest metro; UPS Worldport hub, bourbon tourism, healthcare
• Lexington: Horse capital; University of Kentucky, healthcare, tech
• Bowling Green: Manufacturing (GM Corvette plant); Western Kentucky University
• Covington/Newport: Cincinnati suburbs; cheaper than Ohio side

Strengths: Bourbon tourism is creating unexpected economic growth. Properties in emerging neighborhoods appreciate while cash flowing.

Unique Factor: Kentucky has no reciprocal tax agreements with neighbors, creating arbitrage opportunities for investors in border cities.

Investor Profile: Balanced investors wanting cash flow plus moderate appreciation. Good for those who value culture and livability.

9. Missouri

Median Home Price: $230,000
Median Rental Price: $1,100-1,500/month
Property Tax Rate: 0.91%
Average Insurance: $1,200-1,700/year

Missouri splits between Kansas City (west) and St. Louis (east), offering two distinct markets under one landlord-tenant code.

Best Markets:

• Kansas City: Logistics, healthcare, tech; Google Fiber attracts professionals
• St. Louis: Healthcare dominance (BJC, Mercy); affordable entry points
• Springfield: Bass Pro headquarters; university and healthcare economy
• Columbia: University of Missouri; college town premium

Strengths: Can acquire quality homes $150,000-$220,000 in both major metros. Property taxes are reasonable. Landlord laws favor owners.

Strategic Advantage: Two major metros mean if one market softens, you have exposure to different economic drivers.

Investor Profile: Investors building multi-market portfolios within single-state legal framework. Scales efficiently.

10. Tennessee

Median Home Price: $310,000 (state), $200,000-250,000 (secondary markets)
Median Rental Price: $1,200-1,650/month
Property Tax Rate: 0.56%
Average Insurance: $1,200-1,700/year

Tennessee's major metros (Nashville, Memphis) have different pricing tiers. Memphis offers cheap entry, while Chattanooga and Knoxville balance affordability and growth.

Best Markets:

• Memphis: Logistics capital; cheapest entry ($140,000-200,000)
• Chattanooga: Tech and outdoor recreation; gentrifying rapidly
• Knoxville: University of Tennessee; stable rental demand
• Clarksville: Fort Campbell military base; guaranteed tenant flow

Strengths: No [state income tax](/blog/states-with-no-income-tax-investing) attracts businesses and residents from high-tax states. This migration supports rental demand and property values.

Nashville Exception: Prices have appreciated beyond "cheap" ($400,000+ median), but surrounding counties (Murfreesboro, Smyrna) still offer entry points under $280,000.

Investor Profile: Investors wanting growth state exposure without paying California or Texas prices. Memphis for cash flow, Chattanooga/Knoxville for balanced approach.

Honorable Mentions

Iowa: Median $195,000, but limited to university towns and Des Moines metro for rental demand.

Kansas: Affordable ($210,000 median), but population is flat; stick to Wichita and Kansas City suburbs.

Louisiana: Cheap entry ($220,000), but insurance costs (hurricanes, flood) can destroy cash flow in southern regions.

Michigan: Detroit offers $50,000-100,000 properties, but requires extreme expertise. Grand Rapids and Ann Arbor are safer at $230,000-280,000.

Hidden Costs in Cheap States

Low purchase prices can hide expensive operating realities:

Property Taxes Aren't Always Low

Ohio (1.41%), Kansas (1.33%), and Michigan (1.36%) have high effective rates. A $150,000 property in Ohio pays $2,100/year in taxes; in Alabama, $495/year. That's $1,600/year less cash flow.

Insurance Surprises

• Tornado zones (Oklahoma, Kansas, Alabama): +$300-600/year
• Hurricane zones (Gulf Coast Mississippi, Louisiana): +$800-2,500/year
• Flood plains: +$500-2,000/year (FEMA zones)
• Older homes: +$200-400/year for increased risk

Maintenance Intensity

Cheap often means old. A 1960s-1980s housing stock requires:

• HVAC replacement every 12-15 years ($5,000-8,000)
• Roof replacement every 18-22 years ($8,000-15,000)
• Plumbing issues (cast iron, galvanized pipes) ($3,000-12,000)
• Electrical upgrades (knob-and-tube, inadequate service) ($2,000-8,000)

Budget 1.5-2% of property value annually for maintenance in older properties, not the standard 1%.

Management Availability

Rural or small markets may lack quality property management. Self-managing from out-of-state is possible but time-intensive.

Expect to pay:

• Major metros: 8-10% of rent + leasing fees
• Secondary markets: 10-12% of rent + leasing fees
• Small towns: Flat $100-150/month (harder to find quality)

Investment Strategies for Cheap Markets

Volume Play

Affordable prices allow building larger portfolios faster:

• Buy 5 properties at $150,000 each ($750,000) vs. 1 at $750,000
• Diversification across neighborhoods reduces concentration risk
• More doors = more rent checks = smoother income

BRRRR Acceleration

Low prices mean smaller renovation budgets and faster capital recycling:

• Buy distressed property: $85,000
• Renovate: $25,000
• Appraisal: $145,000
• Refinance 75% LTV: $108,750
• Capital recovered: $108,750 - $110,000 = -$1,250 (nearly all back)
• Repeat every 4-6 months vs. 12-18 months in expensive markets

House Hacking Entry

Low prices make multi-family owner-occupant purchases accessible:

• FHA loan on $180,000 duplex: $6,300 down (3.5%)
• Live in one unit, rent the other for $900
• Your housing: covered or heavily subsidized
• Build equity while learning landlording with training wheels

Market Timing Advantage

Cheap markets haven't experienced the speculation of expensive markets. This means:

• Less price volatility during downturns
• Smaller corrections when markets adjust
• Rents stay stable (people always need affordable housing)
• You're buying fundamentals, not hype

Due Diligence in Affordable Markets

Don't skip steps because prices are low:

Crime Data: Check city-data.com, neighborhoodscout.com, and local police reports. Crime drastically impacts tenant quality and turnover.

Employment Trends: Review BLS.gov data for metro employment growth, unemployment rates, and wage trends. Declining employment = declining rents.

School Ratings: Even if you're not targeting families, school quality correlates with neighborhood stability. Use GreatSchools.org ratings.

Flood Zones: FEMA flood maps show risk. Zone X is safe; Zone A requires flood insurance ($500-2,000/year extra).

Environmental: Check EPA databases for nearby superfund sites, industrial contamination, or former industrial uses.

Title Search: In distressed markets, clouded titles are more common. Always buy title insurance and review commitment carefully.

When Cheap Is Too Cheap

Avoid properties that seem impossibly affordable:

$30,000 houses in Detroit/Gary/East St. Louis: These are in war zones. You'll never find quality tenants, and property will deteriorate faster than you can repair it.

Rural properties far from employment: A $60,000 house in rural Mississippi with no jobs within 30 miles won't rent at any price.

Superfund proximity: Cheap for a reason. Environmental contamination tanks values and creates health liability.

Structural nightmares: Foundation issues, extensive termite damage, or mold remediation can cost more than purchase price. Get inspections.

Tax Advantages of Affordable Markets

Lower prices create unique tax benefits:

Faster Depreciation Recovery: A $150,000 property depreciates $5,455/year (27.5-year schedule). If it cash flows $3,000/year, depreciation creates $2,455 paper loss offsetting other income.

[Bonus Depreciation](/blog/depreciation-rental-property-guide): Cost segregation on $150,000 property might identify $40,000 in accelerated depreciation. That's $15,000+ tax deduction (at 37% bracket) in year one.

Lower Property Taxes = Higher NOI: Comparing two properties with same rent but different taxes:

• Property A: $150,000, $2,100/year tax (1.4%)
• Property B: $150,000, $525/year tax (0.35%)
• Tax difference: $1,575/year = 13% higher NOI on Property B

Bottom Line: Cheap + Smart = Wealth

The cheapest states to buy rental property offer legitimate pathways to building wealth through real estate. Success requires:

1. Choosing the right markets within cheap states (not all cities work)
2. Understanding total cost of ownership beyond purchase price
3. Building local teams (property managers, contractors, agents who know the territory)
4. Being patient for the right deals instead of forcing purchases
5. Managing conservatively with proper reserves and realistic projections

Low entry prices mean you can start with less capital, make mistakes without catastrophic consequences, and build a portfolio that generates real cash flow. Just remember: cheap is a starting point, not a strategy. Combine affordability with fundamentals, and you'll build sustainable rental income.

Related Articles

• [[Rental Property Depreciation](/blog/depreciation-real-estate-guide) Guide: How to Maximize Your Tax Deductions in 2026](/blog/depreciation-rental-property-guide)
• Property Taxes Explained: How They Work and How to Reduce Them
• [Complete Guide to [Rental Property Tax Deductions](/blog/rental-property-accounting-guide) for Landlords (2026)](/blog/rental-property-tax-deductions)