Why Fly-Over States are Ideal for Building a Rental Portfolio
In the world of real estate investing, the term “fly-over states” often comes with a hint of dismissal. These are the heartland states many people skip over on their way to the bustling coasts. But savvy real estate investors know something others don’t: fly-over states like Kansas, Indiana, Iowa, and Missouri offer incredible opportunities to build a lucrative rental portfolio.
While the coastal cities may dazzle with sky-high prices and cutthroat competition, the Midwest and central U.S. boast affordable housing markets, strong rental demand, and attractive cash flow potential—a winning combination for any investor. In fact, these so-called “fly-over” regions are becoming some of the best-kept secrets in the real estate world.
If you’re serious about growing your rental portfolio and maximizing returns, it’s time to give these states a closer look. In this post, we’ll break down why fly-over states are ideal for building a rental portfolio, highlight their key benefits, and share actionable tips to help you get started. Let’s dive in and discover why investing in these underrated markets might be the smartest move you’ll ever make.
What Are Fly-Over States?
Before diving into why fly-over states are such a smart investment, let’s clarify what this term actually means.
“Fly-over states” typically refer to the central states of the U.S.—the ones that most travelers literally fly over when traveling from coast to coast. These include states like Kansas, Nebraska, Iowa, Missouri, Indiana, and Ohio. While they may not boast the same glitzy reputation as coastal hubs like New York or Los Angeles, these heartland states offer something even more valuable to real estate investors: affordability, stability, and strong returns.
The nickname “fly-over” can sound dismissive, but in truth, these states are home to thriving communities and vibrant economies. They’re often overlooked simply because they aren’t major tourist destinations or global business centers. Yet, that’s exactly what makes them such promising real estate markets—fewer investors means less competition and more opportunities to build a profitable rental portfolio.
What’s more, many of these states offer a unique blend of small-town charm and economic growth, driven by key industries like agriculture, manufacturing, logistics, and healthcare. This economic diversity makes them resilient during market downturns—a huge advantage for anyone looking to build a long-term rental strategy.
Lower Property Prices & Entry Costs
One of the most compelling reasons to invest in fly-over states is the lower property prices and affordable entry costs compared to the coasts.
In states like Iowa, Indiana, and Missouri, you’ll find median home prices significantly below the national average. According to data from Redfin, the average home price in coastal markets like California and New York can easily exceed $700,000. In contrast, median home prices in fly-over states often hover around $200,000—or even less in some areas.
This dramatic difference in property values gives investors a huge advantage:
✅ Lower down payments: Stretch your investment dollars further and acquire more properties faster.
✅ More cash flow: Lower monthly mortgage payments mean better cash-on-cash returns.
✅ Easier diversification: With more affordable properties, you can spread your investments across different neighborhoods or even multiple states—minimizing risk and maximizing potential.
For example, a single-family home in Des Moines, Iowa, might cost $180,000—compared to over $1 million for a similar home in Los Angeles. That price difference isn’t just about buying power—it’s about sustainable, scalable growth.
Additionally, fly-over states often come with lower property taxes, insurance costs, and operational expenses. This affordability is a critical factor for investors who want to build a rental portfolio that generates positive cash flow right from the start.
If you’re feeling priced out of the traditional “hot markets,” fly-over states can be your ticket to getting in the game—and staying profitable for years to come.
Strong Rental Demand & Positive Cash Flow
When it comes to rental property investing, cash flow is king. And that’s exactly what makes fly-over states so appealing: strong rental demand that fuels steady, positive cash flow.
Unlike the volatile rental markets in big coastal cities, many fly-over states are home to stable economies driven by essential industries like agriculture, healthcare, education, and logistics. These industries create consistent job opportunities, which translates to a reliable tenant pool. In cities like Des Moines, Kansas City, and Indianapolis, you’ll find a healthy mix of blue-collar and white-collar renters looking for affordable housing.
Here’s why this matters:
📈 Steady rental income: Lower homeownership rates in some fly-over states mean more people choose to rent long-term.
💵 Higher cash flow margins: Lower property costs and steady demand create opportunities for $500–$700/month in positive cash flow—a dream compared to the break-even (or worse!) returns in coastal metros.
🏠 Low vacancy rates: Fly-over cities like Cincinnati and Omaha often boast vacancy rates below the national average, meaning fewer gaps in rental income.
For example, a well-maintained duplex in Indianapolis might rent for $1,200–$1,400 per unit, even if the mortgage is only $700. That’s a significant monthly cash flow cushion that can build up your reserves and fund future investments.
Ultimately, fly-over states combine lower acquisition costs with dependable rental demand, giving you the perfect formula for building a thriving rental portfolio—without the rollercoaster of hot markets.
High Cap Rates & Better ROI
For rental property investors, cap rates and ROI (return on investment) are more than just numbers—they’re the heartbeat of a successful portfolio. And in fly-over states, these numbers often shine brighter than in coastal or Sunbelt markets.
So, what exactly is a cap rate? It’s a simple way to measure how much income a property generates compared to its cost. Higher cap rates usually mean better cash flow and lower risk. In hot coastal markets, typical cap rates hover around 3–5%, reflecting expensive prices and tight margins. But in many fly-over states, you can find cap rates between 6–10%—a game-changer for your investment strategy.
Here’s why these numbers matter:
💰 Higher returns on every dollar you invest—you get more income from your rental than you would in pricier markets.
🏦 Faster portfolio growth—stronger cash flow lets you reinvest faster and build wealth more efficiently.
🌟 Safer investments—higher cap rates cushion you against market fluctuations and economic shifts.
Let’s consider a real-world example:
An investor purchases a duplex in Kansas City for $200,000, renting out both units for a total of $2,200/month. After expenses, the net operating income might be around $18,000/year, giving you a 9% cap rate. Compare that to a similar property in Los Angeles that might barely crack 4%, and you’ll see why the Midwest is such a fertile ground for investors.
Want to learn more about how to calculate cap rates and why they matter? Check out this in-depth explainer from Investopedia: Cap Rate Calculation & How It Works.
Bottom line: fly-over states deliver better ROI potential and higher cash-on-cash returns than crowded coastal markets—making them ideal for investors who want to maximize their rental portfolio’s profitability.
Economic Stability & Market Predictability
Beyond affordability and high cap rates, one of the biggest advantages of investing in fly-over states is economic stability and predictable market trends.
Unlike the boom-and-bust cycles often seen in high-cost coastal cities, fly-over states typically have more diverse economies that are less dependent on tourism and luxury industries. In cities like Des Moines, Omaha, and Wichita, job markets are driven by agriculture, manufacturing, education, and healthcare—sectors that provide consistent employment even in uncertain times.
This economic stability translates to steady rental demand and predictable rent growth—a huge benefit for investors who want to build wealth without worrying about wild swings in market values.
Consider these advantages:
🌟 Resilient job markets—local economies are bolstered by industries that keep humming along during economic downturns.
🏠 Less volatile housing markets—home prices in fly-over states tend to rise at a steady pace, rather than the sharp spikes and crashes of coastal markets.
💼 Consistent rent growth—rents in these areas typically track with inflation and wage growth, helping you keep your portfolio performing over the long term.
For example, during the last major economic downturn, markets like Cleveland and Kansas City experienced smaller home price declines than coastal markets like San Francisco or Miami. That stability is priceless for investors seeking reliable returns.
If you want to learn more about how economic diversity impacts real estate stability, check out this Urban Land Institute report on regional resilience: How Economic Diversity Builds Market Stability.
Ultimately, investing in fly-over states isn’t just about saving money up front—it’s about building a portfolio that can weather any economic storm, while delivering reliable rental income for years to come.
Community & Landlord-Friendly Laws
Another major reason fly-over states are so attractive for rental property investors is the community feel and landlord-friendly regulations that support long-term investing.
Unlike some high-cost coastal markets where local regulations heavily favor tenants, many fly-over states have balanced, fair landlord-tenant laws. This means it’s easier to manage your properties and protect your investment. For example:
🚀 Easier eviction processes – If a tenant stops paying rent, the eviction process in states like Indiana and Missouri is often quicker and less costly compared to states with strict tenant protections like California or New York.
💡 Fewer rent control restrictions – Most fly-over states don’t have rent control policies, so landlords can adjust rents to match market trends and cover rising expenses.
Beyond legal considerations, many fly-over cities and towns have a strong sense of community. Smaller cities and suburban areas often feature tight-knit neighborhoods where landlords and tenants can build personal connections. This community focus can lead to:
✅ Long-term tenants who treat your property with respect
✅ Lower tenant turnover – which means less stress and lower costs for you as an investor
✅ Word-of-mouth referrals – a great way to fill vacancies faster
A good property manager can help you navigate local laws and keep your tenants happy. But in fly-over states, you’ll likely find that your investment goes further simply because the environment is so much more supportive for landlords.
In short, fly-over states offer a unique blend of friendly communities and investor-friendly policies—giving you the perfect foundation to build a rental portfolio that thrives.
Opportunities for Portfolio Diversification
Smart investors know that diversification is key to long-term success—and fly-over states offer an incredible opportunity to diversify your real estate portfolio.
Instead of putting all your eggs in the high-priced, competitive baskets of coastal cities, consider spreading your investments into these more affordable, lower-risk markets. Adding properties in fly-over states to your portfolio can:
✅ Reduce overall risk – If the market in one region experiences a downturn, your fly-over state properties can help stabilize your income.
✅ Balance appreciation with cash flow – Coastal cities may offer more appreciation over time, but fly-over states offer steady cash flow. Having both in your portfolio creates a powerful wealth-building strategy.
✅ Expand into emerging markets – Many fly-over cities are growing rapidly as people look for lower-cost housing and better quality of life—creating new opportunities for investors.
For example, you might own a few properties in a high-growth Sunbelt city like Austin, and then complement those investments with a few cash-flowing rentals in Des Moines or Indianapolis. This blended approach maximizes your overall returns while reducing exposure to any single market’s ups and downs.
For a great overview of how to diversify your real estate portfolio across different markets, check out this article from BiggerPockets: The Power of Real Estate Diversification.
Ultimately, investing in fly-over states is about more than just affordability—it’s about creating a resilient, balanced portfolio that can weather economic changes and help you achieve your long-term financial goals.
Challenges & Considerations
Of course, no real estate investment comes without challenges—and fly-over states are no exception. As you explore these markets, it’s important to be realistic about potential obstacles and proactively plan for them.
Here are some of the key considerations:
🌍 Distance for Out-of-State Investors – If you’re investing from a coastal city, managing properties in fly-over states can feel daunting. However, working with a local property management company can bridge the distance and keep your investments running smoothly.
🛠️ Limited Property Management Resources in Rural Areas – While major cities like Kansas City or Indianapolis have established networks of property managers and contractors, more rural areas might have fewer options. It’s critical to vet your team carefully and build strong local relationships.
📉 Slower Appreciation – Unlike coastal markets where home values can skyrocket, fly-over states typically see slower, steady appreciation. But remember—these markets are prized for their cash flow stability, not necessarily for quick appreciation.
Despite these challenges, investors who take the time to understand the unique rhythms of fly-over markets can unlock tremendous opportunities. The key is to do your homework and work with local experts who know the ins and outs of their communities.
For a closer look at the challenges and how to overcome them, check out this practical guide from REtipster: Investing Out of State: Key Risks & Tips.
With the right approach and mindset, investing in fly-over states can be a strategic, long-term move—one that balances risk and reward, and supports your growth as a rental property investor.
Conclusion
As we’ve explored, fly-over states like Iowa, Missouri, Indiana, and Ohio offer incredible opportunities for real estate investors looking to build a resilient, profitable rental portfolio. From affordable property prices and higher cash flow to stable economies and supportive communities, these often-overlooked markets can give you a powerful edge in a competitive real estate world.
While investing in fly-over states isn’t without its challenges—like distance or slower appreciation—the benefits far outweigh the hurdles for those willing to take a closer look. By leveraging the lower entry costs, strong rental demand, and landlord-friendly regulations of these markets, you can diversify your investments and create a portfolio that stands the test of time.
If you’re ready to explore rental property opportunities in fly-over states, our property management team is here to help. We understand the unique dynamics of these markets and can help you find, manage, and grow your rental investments with confidence.
👉 Reach out to us today to learn how we can help you unlock the full potential of fly-over state investing. Your next big opportunity might be closer—and more affordable—than you think!
