Recently, there has been an increase in inquiries from out-of-state individuals looking to explore investment properties in Billings. I want to start by pointing out that if you apply the rental law standards from your previous state, you may miss some important details.

Rental rates in Billings vary by research agency. According to Zumper, the average rent as of August 2026 is $1,276 (zumper.com), while RentCafe reports a higher average of $1,498 (rentcafe.com). Some surveys indicate that a one-bedroom unit averages around $1,020, and a two-bedroom unit is about $1,270. The recent market shows a 5% decrease on a monthly basis and a 2% decline compared to the previous year.

According to Montana's rental laws, House Bill 463 (HB 463), passed in 2023, prevents cities and counties from implementing rent control ordinances (hemlane.com). Landlords have the discretion to adjust rents in line with market rates at the time of lease renewal or after proper notice. If you previously lived in a state with rent control, this aspect may be unfamiliar, so it's good to keep it in mind.

A notable feature is that starting in 2026, Montana will implement a new tiered property tax system. For properties used for primary residence or long-term rentals, the tax rate is 0.76% for properties valued up to $378,000, and 0.90% for the next tier (montanapropertyguide.com). In contrast, second homes or short-term rental properties are subject to a flat rate of 1.9%, so it's important to calculate the tax burden based on whether you plan to rent long-term or operate short-term.

The lending conditions follow national standards. Investment property loans require a down payment between 15% and 25%, and a minimum credit score of 620, although a score above 740 is needed to secure favorable interest rates. Interest rates are often set 0.5 to 0.75 percentage points higher than those for primary residences (fanniemae.com, freddiemac.com). Banks typically recognize only about 75% of expected rental income as qualifying income, and a rent schedule from the lease agreement or appraisal is required as evidence.

In areas like Billings, where rental prices are not low compared to purchase prices, it seems realistic to calculate both the 1% rule and cap rate to compare the profitability of listings. Additionally, when factoring in landlord insurance, management fees of 8% to 12% for property management, and maintenance costs of about 1% of property value annually, you can determine the actual net income.

At the time of sale, consider using a 1031 exchange to reinvest in like-kind properties and defer capital gains taxes (irs.gov). Tax laws and rental regulations can vary by county, so be sure to verify based on the property address.

Looking at school districts, some areas west of Billings have high ratings, leading to consistent inquiries from Korean families looking to reside there. However, while school ratings can be referenced from GreatSchools or state education department data, boundaries change frequently, so it's advisable to check the assigned school for the specific address before purchasing.

It's also wise to decide on a management approach in advance. Billings properties are spread out between urban and suburban areas, and many investors opt to hire local management companies rather than manage properties directly. Even though you may pay an 8% to 12% fee, considering the challenges of remote maintenance and tenant interactions during winter, this often appears to be a reasonable choice.

There are definitely aspects of Montana that can be easily overlooked when judged by out-of-state standards. In particular, the newly introduced tiered property tax system differs from the single-rate structures commonly seen in other states, and recent market trends show that many have missed this detail when budgeting, leading to recalculations. This article does not constitute investment or legal advice, and I recommend consulting real estate and accounting professionals before entering into any contracts.