Where Should I Invest $200K for Cash-Flowing Rental Property in a Good School Distric

[Vanessa Li]

Hi BP Community,

I'm looking to make a rental property investment and would love your input on markets to consider.

I have $200,000 to invest, and I’m open to:

- one or two single-family home

- a duplex or small multi-unit property

(I’m not considering condos or one-unit townhomes.)

Here’s what I’m looking for in a market:

- Strong cash flow potential (top priority!)

- High rental demand – a market where it’s easy to rent out quickly

- Good neighborhood with solid public schools (for long-term tenant quality and stability)

- A market that’s not too saturated, but still has decent job growth and population growth

- Landlord-friendly state is a plus

- Ideally properties in the $300–500K range, or markets where I can use my capital efficiently

I’m based in California, so I’m 100% open to traveling to other states and cities. I’d love to hear where you’ve had success—or what markets you’d avoid.

Any insights, recent experiences, or even zip code-level tips would be much appreciated!

Thanks in advance 🙏

[Becca F.]

I agree with Nicholas and Jay's comments. I'm in the Bay Area and invest here and Indianapolis metro area. For context I did live in Indiana and rented out my home when I moved back to California. 

The example Jay gave of a $650k mid term rental with $2600 property tax, I'm pay close to $6250 on my Indiana Class A (nice suburb with great schools) current market value around $300k (I bought it in 2013 and did a cash out refi during COVID with lower rate). On my $150k Class C property, property tax is $3440. 

I'm not trying to criticize the Midwest but the property tax rates are higher even though purchase prices are lower. I think it's a fine place to invest for people who live there.  For me it's not worth it to buy there anymore, doing the slow exit. We Californians get plenty of hate on BP for investing here but we have appreciation and Proposition 13 (property taxes go up max of 2% a year) so I'm stating the opposite in the nicest way possible. 

If you absolutely cannot invest locally, my vote is for Nevada. Reno, which is closer to those who live in NorCal and Vegas which is closer to LA area. The property taxes are one of the lowest in the country. Nevada is also much more landlord friendly than CA. I looked in Reno and will look in Vegas. 

In full transparency I think would have been better off buying one high quality property in Reno or Vegas in late 2022/early 2023 than buying two Class C Indiana homes (sold one of them to cut my losses). I'm not an agent or trying to pitch a market and would only suggest a market that I would personally buy in.