Best Places to Buy Rental Property in South Dakota (2026)

South Dakota recorded 2,929 closings statewide over the last six months at a median sold price of $345,000. Only five cities in the entire state cleared 100 closings in that period. The ranking below covers 12 South Dakota markets, cheapest first. Five of them cleared 100 closings in six months. The other seven did not, and they are flagged accordingly, because a low entry price in a market that transacts eight times a month is a different asset from the same price in a market that transacts 60 times a month. What this ranking does not include. No rent estimates, no rent-to-price ratios, no cap rates, no cash-on-cash returns. We do not have verified city-level rent data for South Dakota, and with this little transaction volume, any published city rent average would be built on a sample too small to underwrite against. Verify rent for the individual property and model the return with the rental property calculator and the deal analyzer. Entry price and transaction volume are what the data supports, and that is what you get here.

South Dakota markets ranked by entry price

Only Aberdeen, Watertown, Sioux Falls, Rapid City, and Brandon cleared 100 closings in the six month window. Everything else on this list is a thin market.

1. Mitchell, $251,787 median, 64 closings

The lowest entry price in the state at 27% below the median, but only 64 closings, roughly 11 a month. That volume means a handful of sales sets the local median, so treat the $251,787 figure as indicative rather than precise. Your exit depends on a small buyer pool, and comparable sales for valuation are scarce.

2. Aberdeen, $284,900 median, 129 closings

The cheapest South Dakota market that clears the 100-closing threshold, at 17% below the state median with 129 closings, about 22 a month. That combination, lowest price among the liquid markets, is the strongest entry-cost position in the state for a buyer who is not willing to accept single-digit monthly transaction counts. A regional hub for the northeastern part of the state, which broadens the demand base beyond the city itself.

3. Pierre, $290,000 median, 48 closings

The state capital, $290,000, 16% below the state median, but only 48 closings in six months, about 8 a month. That is the thinnest market on this list. Government employment supports steady year-round housing demand, which is a genuine positive, but 8 sales a month is a serious constraint on both valuation confidence and exit speed.

4. Yankton, $305,000 median, 95 closings

$305,000 on 95 closings, about 16 a month, just under the 100-closing threshold. 12% below the state median, on the Missouri River at the Nebraska border. Moderate for South Dakota, thin by national standards.

5. Watertown, $326,950 median, 124 closings

$326,950 across 124 closings, roughly 21 a month, 5% below the state median. One of the five liquid markets. A reasonable middle position: real transaction volume, a modest discount to the state, and a diversified small-city employment base.

6. Sioux Falls, $336,500 median, 1,352 closings

The most important entry on this list by a wide margin. Sioux Falls closed 1,352 homes in six months, about 225 a month, which is roughly 46% of all South Dakota closings, and it did so at $336,500, below the state median. Nowhere else in the state offers anything close to this combination. What that volume buys you is practical: abundant comparable sales, so valuations rest on real evidence rather than approximations; a large and continuous buyer pool, so exit does not depend on timing; and enough market activity that mispriced listings can be identified against actual recent closings. For most investors evaluating South Dakota, the honest answer in this data is that Sioux Falls is the market, and everywhere else is a specialized decision requiring a specific local reason.

7. Rapid City, $370,000 median, 362 closings

The state's second real market: 362 closings, roughly 60 a month, at $370,000, which is 7% above the state median. Western South Dakota's regional hub, serving the Black Hills area. You pay above the state median and get the second best liquidity in the state, which is a defensible trade if the location fits your strategy.

8. Tea, $382,500 median, 50 closings

$382,500 on 50 closings, about 8 a month, in the Sioux Falls suburban ring. The relevant point is that you are paying $46,000 above the Sioux Falls median for a market with under 4% of its transaction volume. Suburban ring towns like this are usually a newer-construction, owner-occupant play rather than a liquidity play.

9. Sturgis, $398,000 median, 56 closings

$398,000 across 56 closings, about 9 a month, 15% above the state median. Black Hills location with a well known seasonal event economy, which affects both housing demand patterns and how a property is likely to be used. Thin volume, and specialized demand drivers that need direct verification rather than assumption.

10. Harrisburg, $399,900 median, 68 closings

$399,900 on 68 closings, roughly 11 a month, another Sioux Falls suburb. 16% above the state median, with a fraction of the metro's volume. Same profile as Tea: growth suburb pricing, limited transaction depth.

11. Brandon, $404,700 median, 105 closings

The most expensive of the five markets that cleared 100 closings, at $404,700 with 105 closings, about 18 a month. Another Sioux Falls area suburb, 17% above the state median. Its advantage over Tea and Harrisburg is that it actually clears the liquidity threshold, which matters when you need to sell.

12. Spearfish, $500,000 median, 74 closings

The most expensive market on this list at $500,000, 45% above the state median, on 74 closings, roughly 12 a month. Northern Black Hills, with a university and strong recreational appeal. High entry price and limited volume, so this is a location-driven decision, not a numbers-driven one.

How to underwrite in a thin market

South Dakota's core analytical challenge is a shortage of comparable sales. With 2,929 statewide closings across 24 cities, most local markets simply do not generate enough recent evidence for a confident valuation without careful work. That makes comp transparency the feature that matters. Run a valuation where the comparable sales are visible and adjustable, so you can see whether the estimate rests on three genuinely similar recent sales or on the nearest available substitutes from a different part of town. Condition is estimated from listing photos, which helps distinguish updated from dated when the comp set is small. Our estimates are frozen at listing and then graded against the real closing price, with the results published on our accuracy dashboard. Remember too that the statewide gap between median list and median sold price is $38,300, or 11.1%. Then build the deal yourself. The ARV calculator handles renovation exits, and the market pages give you local figures instead of a state median that mostly describes Sioux Falls. Everything is on the free tools page, no signup required, and live valuations cover 31 states.