Billings is the largest city in Montana and the regional anchor for an enormous geographic area — the medical, retail, energy services, and logistics hub for Eastern Montana, the Bakken oil region of North Dakota, and parts of Wyoming. The 2.34% cap rate at a $400,000 median price keeps the 0.34% rent-to-price ratio close to functional. Population growth at 1%/yr is steady.
Employment is anchored by Billings Clinic (the dominant regional medical system serving Montana, Wyoming, and the Western Dakotas — one of the larger US rural-anchor medical systems, with continuing capacity expansion), St. Vincent Healthcare (the competing major regional medical system), the broader healthcare ecosystem, the energy-services economy (Billings is the corporate and logistics hub for the Bakken oil shale operations to the east and the broader Rocky Mountain energy sector — refining, services, supply), ExxonMobil and Phillips 66 refineries in Billings (the Billings refinery complex is meaningful for Montana fuel supply and employment), the broader Yellowstone County government, Montana State University Billings, and the Federal Reserve Bank of Minneapolis Helena Branch operations. Submarkets stratify cleanly: the historic West End and Heights area is walkable urban-historic with strong appreciation; Hilands and the broader West Billings extend with newer construction and premium suburban-school zones; Lockwood east is the more workforce-rental area; the broader Yellowstone County extends with rural-edge construction.
Montana has no state sales tax but does have a state income tax (graduated, top rate near 5.9%). Property tax at 0.74% is on the higher end for the Mountain West, and Yellowstone County's reassessment cycle is multi-year — meaningful for newer buyers in fast-appreciating cycles. Insurance is reasonable but verify wildfire / wildland-interface exposure (Eastern Montana has periodic significant wildfire seasons). The structural advantages: durable Billings Clinic + healthcare employment; regional-hub role concentrates retail and services employment that wouldn't otherwise exist at this metro size; energy services provides upside in commodity-up cycles; the broader Rocky Mountain in-migration thesis continues. The structural risks: energy services employment is cyclical (Bakken activity has come back from 2020 lows but remains below 2014 peaks); rural-anchor metros are sensitive to broader regional demographic trajectories. For investors who want a Montana market with cash-flow math closer to functional than Bozeman or Missoula, Billings is the most defensible Eastern Montana option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Billings's 0.3% rent-to-price ratio is well below the 1% rule. At median prices of $400,000, the $1,360/mo rent produces only $781/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
At current rates, a 20% down conventional loan ($80K at 7%) would result in approximately $-1,347/mo cash flow — negative at median prices. Larger down payments, seller financing, or buying 15–25% below median are strategies to turn the numbers positive.
Property taxes consume 18% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Billings a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
All figures below are computed from Billings's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
At 0.74% effective rate on the $400,000 median price, the annual tax bill is $2,960 — that's below national average (-30% vs the national average of ~1.06%). Verify the actual assessed value before purchase; sale-triggered reassessments can push the bill higher than the seller's current statement.
If Billings continues appreciating at 2.6%/yr while rents grow at a conservative 3%/yr, cap rate holds roughly steady as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $400K | $1,360 | 2.3% |
| Year 1 | $410K | $1,401 | 2.4% |
| Year 2 | $421K | $1,443 | 2.4% |
| Year 3 | $432K | $1,486 | 2.4% |
| Year 4 | $443K | $1,531 | 2.4% |
| Year 5 | $455K | $1,577 | 2.4% |
Same median-priced Billings property — different capital structures. All-cash maximizes cap rate. Leverage trades cash flow for higher cash-on-cash return when the spread between cap rate and borrowing cost is positive.
| Scenario | Cash Invested | Monthly Cash Flow | Annual CF | Cash-on-Cash |
|---|---|---|---|---|
| All cash | $400K | $781 | $9,377 | 2.3% |
| 20% down conventional @ 7% | $92K | $-1,347 | $-16,159 | -17.6% |
| 25% down DSCR @ 8.5% | $116K | $-1,526 | $-18,307 | -15.8% |
Properties don't always trade at the median. Lower-priced units typically offer higher cap rates but harder operations; higher-priced properties tend to compress cap rates while attracting better tenants. All-cash assumptions below:
| Tier | Price | Rent/Mo | NOI/Yr | Cap Rate | Monthly CF |
|---|---|---|---|---|---|
| Below median (~75% price) | $300K | $1,156 | $7,567 | 2.5% | $631 |
| At median | $400K | $1,360 | $8,365 | 2.1% | $697 |
| Above median (~125% price) | $500K | $1,564 | $9,164 | 1.8% | $764 |
Cap rate is just one piece. Real estate returns come from four sources: cash flow, appreciation, principal paydown, and tax benefits. Assuming 20% down conventional financing at 7% and a 5-year hold at Billings's historical appreciation rate of 2.6%:
On a $80K down payment, that's a -2.5% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Automated checks against the underlying data — surface only the risks that actually apply to Billings, not generic boilerplate:
Pre-filled with Billings medians. Adjust to match a specific property.
Factor in financing to see your actual return on invested capital in Billings.
Billings, MT has a population of 121,000 and has been growing at 1% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $400,000 paired with median rents of $1,360/mo produces an estimated cap rate of 2.34%.
Property taxes at 0.74% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 4.8% is impressively low, indicating tight rental supply and strong tenant demand — favorable for landlords.
At a price-to-income ratio of 7.0x, homes cost about 7.0 times the local median income of $56,800. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. Home values have appreciated at roughly 2.6% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: At current median prices, Billings is challenging for pure cash flow investing. Consider BRRRR strategies with below-market purchases, or look at neighboring metros with stronger price-to-rent ratios.