10 Cheapest Places to Buy Rental Properties in 2025

With rental markets offering high returns in affordable markets, real estate investors seek new opportunities to invest in. Identifying the cheapest places to buy rental properties is a key strategy in maximizing profits with minimum upfront costs. Many investors are now making a move to secondary markets where properties remain cheap but the demand for rentals is high. Through smart investment in an affordable but profitable market, you can create diversified portfolios and take advantage of long-term property appreciation.

Here are ten of the promising and cheap rental property markets for the year ahead, selected based on key data such as median property prices, rent-to-price ratios, and annual rent growth rates. This analysis draws from recent industry reports and real estate analytics to identify high-potential areas with strong investment potential. While these insights reflect current trends, market conditions can shift rapidly, so investors are encouraged to perform due diligence and consult with professionals before making decisions.

1. Indianapolis, Indiana
2.  San Antonio, Texas
3. Charlotte, North Carolina
4. Birmingham, Alabama
5. Las Vegas, Nevada
6. Jacksonville, Florida
7. Raleigh, North Carolina
8. Phoenix, Arizona
9. Pittsburgh, Pennsylvania
10. Fort Wayne, Indiana

1. Indianapolis, Indiana

• 2.1 M - Metro Population
• $54K - Median Household Income
• $265K - Median Home Sale Price
• $1,454 - Median Rent (Monthly)

Indianapolis, Indiana, certainly cements its standing as one of the cheapest places to buy rental properties this year. With a below-average median price of $264.3K, this Midwestern city seems quite attractive for investment buyers in search of low entry costs with access to a strong rental market.

Rents across most of Indiana's largest metro areas, including Indianapolis, were upwards of 30% from June 2020 to October 2023, showing solid rental demand growth. This has also accounted for roughly 48% of new multi-family permits issued in Indiana through 2023. This further show and tell of its ongoing expansion and growing need for rentals. Indianapolis is also the fourth hottest housing market for 2024, according to Zillow, because of its consistent home value growth. One projection indicates Indianapolis home value will grow 0.7% in 2024. 

Furthermore, Indianapolis offers families access to quality education, ranking 25th in the nation for school quality. Aside from the numbers, Indianapolis is a major city that offers the best quality of life. The professional sports teams, popular music scenes, and over 200 parks and playgrounds make it an ideal place to visit for those who want to maintain a balanced lifestyle.

2. San Antonio, Texas

• 2.7 M - Metro Population
• $62K - Median Household Income
• $282K - Median Home Sale Price
• $1,425 - Median Rent (Monthly)

San Antonio, Texas has a commendable balance between affordability and high-quality job opportunities. Recently ranked as the 8th best market for real estate investors and the 2nd best for homebuilders in Emerging Trends in Real Estate by PWC, San Antonio is taking the lead as the upcoming city for investors.

In the first month of this year, the median price for a home in San Antonio reached $281,632. This is 19% below the national average. All these affordable price points make it a friendly destination especially for investors when compared to other largest cities in the country. As a matter of fact, the average home prices of San Antonio are less than 75% of the U.S. metro areas with over 1 million in population increase.

This, in turn, is partly driven by one main factor: the future population growth rates of the area. By 2040, San Antonio's population is going to increase twice as much, a trend consequently increasing demand for housing and rental opportunities.

3. Charlotte, North Carolina

• 3M - Metro Population
• $68K - Median Household Income
• $367K - Median Home Sale Price
• $1,778 - Median Rent (Monthly)

With rapid population growth and with a great economic foundation, Charlotte, North Carolina, represents a very interesting market for investors. It is expected that this city's population increase will grow almost 50% between the years of 2010 and 2030. Steady growth in population translates to increased demand for more rental property investments awaiting appreciation by investor owners.

The diversified and strong economy of Charlotte runs from banking to healthcare, energy, manufacturing, and technology. This economic strength draws a steady stream of young professionals and families, bolstering demand for rental housing. In 2024, the Charlotte real estate market maintained its strength, with house values appreciating more than 120% since 2014, thus reflecting its steady growth path.

For renters, Charlotte remains more affordable when compared with many major U.S. metros. The average monthly rent is about 10% lower than the average rent in the US. The price-to-rent ratio in Charlotte also stands at 17. This means that renting will be more within means for many residents than buying, keeping the rental market strong and stable.

4. Birmingham, Alabama

• 1.1M - Metro Population
• $42K - Median Household Income
• $244K - Median Home Sale Price
• $1,372 - Median Rent (Monthly)

Birmingham, Alabama has low property tax rates, hence reliable for good return on investment. Banking, healthcare, education, and technology are some of the diversified industries driving the economic landscape of this major city. This economic diversity attracts millennials and young professionals, driving up demand for rental housing. Over the past decade, home prices have appreciated by 78.5% and rents by 40.5%, indicative of a healthy and growing real estate market.

Probably the most attractive thing about Birmingham has to do with its relatively low barrier to entry. In April 2024, the average rent for all types and counts of bedrooms reached $1,255, which is an increase of 7% from last year. Acquiring real estate in Birmingham is quite affordable; thus, investors can enjoy a seasoned mixture of short-term rental income and long-term appreciation.

5. Las Vegas, Nevada

• 2.9M - Metro Population
• $73.7K - Median Household Income
• $460K - Median Home Sale Price
• $2,100 - Median Rent (Monthly)

Las Vegas, Nevada, typically known for its high-energy levels and an entertainment-driven economy that runs 24/7, is slowly emerging as a lucrative market for real estate investors. Major construction projects like the iconic Las Vegas Sphere and extension of the city's sports and entertainment infrastructure saw investment flows of around US$8 billion throughout 2023. Each one of these developments stipulates demand for long-term and short-term rentals.

With its attractive yields, Las Vegas pulls in a respectable 10.8% cash-on-cash return for traditional rentals. The touristy appeal of the city positions it well among top markets that yield even higher returns for short-term rental investments. Given the whole base of a robust economy on tourism within the city, this sector offers a unique opportunity to maximize profits for investors.

Demand for single-family rentals in Las Vegas remains extremely high. Combining affordability with high rental yields and further economic growth, Las Vegas remains one of the best cities to invest in 2024 in pursuit of long-term and short-term rental income.

6. Jacksonville, Florida

• 1.6M - Metro Population
• $56K - Median Household Income
• $354K - Median Home Sale Price
• $1,743 - Median Rent (Monthly)

The Jacksonville real estate market keeps on turning in impressive steady growth numbers in terms of home values and has the largest area of any city in the US. The home values of the Jacksonville metropolitan area have grown 108.85% within a period stretching from 2014 to 2024, which is higher than the growth rate of the nation by 27.31%. This consistent growth-trajectory of property values smacks of a high potential for an excellent investment with strong appreciation and rental income.

A strong job market combined with a growing population in Jacksonville adds immensely to the success of its real estate market. The population of the city has grown 24.22% over the past 12 years, at an average yearly growth rate of 2.19%.

Additionally, Jacksonville offers excellent potential for vacation rentals due to its attractive coastal location and appeal to tourism. All in all, this makes the city a very desirable choice for investors who are looking to combine traditional rentals with the possibility of short-term renting.

7. Raleigh, North Carolina

• 1.6M - Metro Population
• $84K - Median Household Income
• $437K - Median Home Price
• $1,379 - Median Rent (Monthly)  

Raleigh, North Carolina, is in the list of top fastest-growing cities in the US, offering a great combination of affordability, strong employment growth, and a growing rental market. Part of the so-called Research Triangle, Raleigh boasts a Silicon Valley-like technology scene, anchoring both major healthcare and universities attracting top-level talent and spurring economic growth.

The labor market in the city is at a great pace, with the population and the state's GDP climbing upwards. It has grown at a rate of 60+ added residents each day, making Raleigh a favorite investment destination. Its population density now standing at par with both Atlanta and Austin. As anticipated, such rapid growth fuels a demand for housing, thus making Raleigh one of the top targets of real estate investors.

The Raleigh-Cary metro is often said to be one of the most competitive rental markets in the Southeast, where tenants even compete for available properties. The competitiveness guarantees that landlords can enjoy a wide pool of reliable tenants, minimizing vacancies and maximizing rental income.

8. Phoenix, Arizona

• 4.7M - Metro Population
• $75.9K - Median Household Income
• $499K - Median Home Price
• $1,321 - Median Rent (Monthly) 

Phoenix, Arizona has been an attractive location for real estate investors for a while now and happens to be among the cheapest places to buy rental properties with long-term potential. Although rental price growth in the city has slowed down a bit, its high occupancy rate of 95.2% indicates that rental housing demand is still very strong. This makes it one of the finest steady cash-flow markets.

The appeal of Phoenix has to do with lifestyle and livability. The city boasts of its sunny weather and recreation, perfect for outdoor enthusiasts. The cost of living is also relatively low compared to other major metro areas. Median home and apartment prices hover in the area of the national average. That makes for an affordable investment environment if paired with landlord-friendly Arizona laws.

The state has straightforward and balanced landlord-tenant laws that protect the rights of both investment property owners and tenants on issues such as lease agreements, security deposits, evictions, and maintenance.

9. Pittsburgh, Pennsylvania

• 1.7M - Metro Population
• $66.2K - Median Household Income
• $236K - Median Home Price
• $1,306 - Median Rent (Monthly)

Affordability, low cost of living, and quality of life make Pittsburgh, Pennsylvania outstanding among the best places to buy rental property investment. This city boasts a median home price of $236,067, ranking 19th lowest in the country. In fact, this largely explains why such an affordable median price is attractive to property investors looking for homes that will bring long-term results with high potential.

Homeowners in Pittsburgh spend only 14.8% of their income on housing, ranked as the 2nd lowest percentage in the country. To real estate investors, this means a market where affordability brings stability, reducing tenant turnover and ensuring steady rental demand

The city real estate market is very competitive and well-supplied, listing fifth-highest per 100,000 households. The quantity of available housing lets investors find a property that fits their financial goals while still benefiting from Pittsburgh's overall affordability.

10. Fort Wayne, Indiana

• 348K - Metro Population
• $52.8K - Median Household Income
• $274.5K - Median Home Price
• $930 - Median Rent (Monthly)

Fort Wayne, Indiana is a more affordable locality with potential consistent returns for real estate investors. The median home price in Fort Wayne is about $227,322, ranking this city 13th in the lowest housing cost in the nation. Adding to that urban-suburban vibe with a flourishing riverfront and a vibrant arts community, it’s surely appealing to both renters and homeowners alike.

For Fort Wayne, one of the major highlights would entail affordability. Homeowner costs account for just 14.9 percent of median household income-tied for the third-lowest nationally. This gives rise to long-term stability for property owners and tenants alike and thus sets a very solid footing for rental demand.

Another factor adding to the appeal of this city is safety. Fort Wayne has a pretty low crime rate compared with other similar cities, which ranks 22nd. Major corporations have recently been emerging in Fort Wayne, including Google and Amazon, adding to its job growth.

Criteria for Selecting Affordable Rental Markets

When determining the 10 cheapest places to buy rental properties highlighted in this article, we relied on a strategic evaluation of several key metrics. These data-driven insights guided us to identify markets where affordability meets profitability, ensuring investors can achieve strong returns while minimizing risk.

1. Median Property Prices

One of the primary factors we assessed was median property prices. The aim was to list markets whose deep average home prices are pretty adequate, well below the national average to allow diversified access by investors with various budgets. For example, Fort Wayne, Indiana, San Antonio, and Pittsburgh were among some of the cities with lower medians, allowing for easy access for first-time and seasoned investors.

2. Rent-to-Price Ratio

We focused on places with a good rent-to-price ratio, determining how much a real estate investment might yield in positive cash flow every month. A ratio of 1% or higher is typically ideal for generating consistent passive income. From Birmingham, Alabama, to San Antonio, Texas, these markets boast great ratios, telling us about excellent opportunities for rental income against their property costs.

3. Average Annual Rent Growth Rates

Markets with consistent rent appreciation over the years were crucial in our selection. Increasing trends in rental rates indicate high demand and, most importantly, also provide a hedge against inflation. For instance, Jacksonville, Florida, and Indianapolis, Indiana, were representatives of efficient rent growth in the nation and thus indicate alluring long-term investment hotspots.

4. Gross Yield and Cash-on-Cash Return

We also factored in gross yield and cash-on-cash return, indicating the profitability of an investment. High gross yields, similar to the 10.8% return in Las Vegas, Nevada, were a strong indication of promising markets. Moreover, when cash-on-cash returns rise above 8%, as it did in cities such as Charlotte, North Carolina, it made those cities especially desirable to investors seeking both passive income and appreciation potential.

Why 2024-2025 Is a Strategic Time for Rental Investments

The years 2024 and 2025 open a special window of opportunity for real estate investing, particularly for those exploring the cheapest places to buy rental properties. While rising interest rates cooled off some of the hottest housing markets, on the other hand, it improved the rental market environment. A large portion of homebuyers who could not get affordable cost of mortgage rates are being driven toward looking into rentals, which creates an uptick in demand.

The Federal Reserve has increased the cost of borrowing in 2024 with a view to containing the inflation rate, and that makes buying homes a bit tough for many people. Many renters prefer to stay right where they are, increasing demand for rental units in both suburban and urban markets. This is getting even worse with inflation that has impacted homeownership affordability for a big part of the population. Recent data shows that the median home price in the U.S. remains well above pre-pandemic levels, meaning a rental is still more attractive to many. 

In conclusion, higher interest rates, inflationary pressures, and lingering shortages in housing supply can make the 2024-2025 period a very good time to invest in rentals. With renters increasingly looking for affordable homes in flourishing cities, real estate investors can feel confident in securing high returns while benefiting from growing rent prices and firm cash flow prospects.