Let’s cut right to it: Buying property in a state with affordable housing prices can make it easier to get your real estate business started.
Did you know that in today’s digital era, you can invest virtually in other states? It’s true!
But what are the cheapest states to buy a house?
More importantly, what makes them so affordable?
Here are the 10 cheapest places to buy a property in the US, and the factors real estate investors should consider when making these decisions.
The 10 Cheapest Places to Buy an Investment Property
Here are the 10 cheapest states to invest in currently.
1. West Virginia
West Virginia consistently has some of the lowest median home sale prices and lowest average home values in the United States.
Recent measurements have average home prices in the state clocking in between $150,000 and $170,000.
However, prices have been steadily trending upward.
This growth is very promising for investors looking for strong returns. Located in the Appalachian Mountains, West Virginia is known for its natural beauty and charming small towns.
2. Iowa
There are many states in the Midwest that offer excellent bang for your buck, and Iowa is no exception.
The state has a very low cost of living index and lower-than-average median home prices despite a relatively strong local job market.
The property landscape in Iowa is widely varied, with thriving urban centers like Des Moines as well as rural agricultural centers.
3. Mississippi
Mississippi comes in just behind West Virginia when it comes to median home prices, which means investors can easily find properties under $200,000 here.
The state also has one of the lowest cost-of-living indexes in the US.
There’s a lot to love about this southern gem, including proximity to the Gulf of Mexico and plenty of beautiful state parks.
4. Alabama
Alabama is another southern state with low median home prices and a low cost of living, making it an attractive option for investors.
This state also has some of the lowest property taxes in the US, which helps push the cost of homeownership down even further.
Alabama has multiple major cities, including Birmingham, Montgomery, and Mobile, as well as plenty of small towns with potential.
5. Oklahoma
Known for ranching and oil production, this centrally-located state also has plenty of potential for investors.
With below-average home prices and a very low cost of living, it’s one of the most affordable places to purchase property in the country.
However, cities like Oklahoma City and Tulsa are thriving thanks to strong job markets and burgeoning cultural scenes, so there’s plenty of potential for long-term growth when investing here.
6. Ohio
If you’re looking to invest in a state with dense urban areas, a diverse economy, and low home prices, Ohio might be the right choice for you.
The state became known as a manufacturing powerhouse in the 19th century, and cities like Columbus, Cleveland, and Cincinnati are all still thriving.
Although Ohio has a slightly higher cost of living than some of the other states on this list, the median home sale price remains far lower than average.
7. Arkansas
This centrally-located state gives real estate investors plenty of bang for their buck.
Arkansas has a lower-than-average median home sale value combined with a manageable cost of living and relatively low property taxes.
Both the Little Rock and Fayetteville metro areas are growing, with young professionals drawn to the state’s reliable agricultural industry and accessible natural beauty.
8. Louisiana
Like many other southern states, Louisiana boasts a low cost of living combined with low median home prices.
It’s also home to New Orleans, which is one of the most unique cities in the United States.
Extreme weather can be a challenge in some parts of the state, which could result in higher insurance prices.
However, Louisiana has one of the lowest property tax rates in the US, which can offset these costs.
9. Indiana
This Midwestern state offers something for everyone, whether you’re looking for big-city properties in Indianapolis or small-town options throughout the rest of the state.
Indiana has an established economy with both agricultural and manufacturing jobs, but median home prices have remained consistently below the national average for the last several years.
10. Kentucky
Kentucky’s low median home costs make it an exciting choice for investors looking to build up a portfolio.
Cities like Louisville and Lexington have slightly more expensive home costs than some of the other locations on this list, but they also have the potential for strong returns as the population grows.
Kentucky is also home to many small towns with excellent access to nature and even interesting historic properties.
What Factors Should Real Estate Investors Consider?
- Median home sold price: I’ve learned that the median home sold price is one of the clearest indications of an area’s real estate market. Looking at the median home sold price over time for a specific location can help you identify trends and determine which way the market is moving.
- Median household income: An area’s median household income is also an important factor to consider, as it is indicative of the area’s buying power. As the median household income of a state rises, property prices often rise along with it.
- Cost of living index: A cost of living index measures the average cost of basic expenses in an area, including general housing, food, transportation, and utility costs. Areas with a high cost of living index are more expensive to live in, and residents often find their budgets stretched thinner.
- Housing index: A housing index works similarly to the cost of living index, but focuses entirely on single-family homes. Looking at the housing index will provide a wealth of data about housing price trends in a specific area to help you identify how prices stack up.
- Taxes: Some states and cities have higher property taxes than others. This will affect the total amount that property owners pay. Check out our guide to property taxes here.
The Bottom Line: Cheapest States to Buy an Investment Property
Getting started with your first real estate investment can be a challenge. Buying an investment property in a state with relatively low home prices can be an effective way to get your portfolio off the ground.
If you’re unsure where to look when making your first purchases, these 10 states are a great place to start, especially in today’s digital age.
Looking to specifically buy a rental property? Check out our guide to the best places to buy a rental property.
