South Dakota Rental Portfolio Guide
What you need to know before building or growing a rental portfolio in South Dakota — property tax burden, state income tax, security-deposit rule, source-of-income law, and the metros that actually cash-flow after accounting for local taxes.
Tax burden on South Dakota rentals
Property tax
1.17%
effective rate on median home value
At 1.17% effective, the property tax burden is above the national median (rank 34 of 51). Bake the full annual tax bill into every underwrite; a 2% effective rate on a $400K home is $8,000 a year that has to come out of rent before mortgage.
State income tax
None
top marginal rate
No state income tax means rental income and gains from sales flow through your federal return without a state surcharge. This is a structural tailwind for long-term portfolio compounding, especially if you plan to sell into gains later.
Security deposit rule
State law caps security deposits at 1 month' rent (with the qualifier noted below). Charging above the cap exposes the landlord to statutory damages in most states, so build lease templates that respect this ceiling from day one.
Note: may exceed if agreed in writing before payment
Deposit rules change; verify current statute before drafting a lease.
Best cash-flow markets in South Dakota
Modeled monthly cash flow on a median-priced single-family purchase at 20% down, 30-year fixed, using South Dakota’s 1.17% effective property tax rate plus 25% of rent for insurance, maintenance, vacancy and management.
| Market | Median price | Median rent | Annual property tax | CF / month |
|---|---|---|---|---|
| Aberdeen, SD | $242,610 | $1,000 | $2,839 | $-758 |
| Pierre, SD | $299,658 | $1,383 | $3,506 | $-826 |
| Mitchell, SD | $262,408 | $961 | $3,070 | $-911 |
| Sioux Falls, SD | $342,936 | $1,309 | $4,012 | $-1,150 |
| Brookings, SD | $325,868 | $1,157 | $3,813 | $-1,158 |
| Watertown, SD | $343,680 | $1,257 | $4,021 | $-1,194 |
State median across the metros: $312,763 home, $1,207 rent, $-1,154/mo modeled cash flow.
Track your South Dakota rental portfolio
The Pro Portfolio Tracker rolls up every property in your portfolio, auto-revalues them monthly against local price data, and flags DSCR risk and equity milestones. Each South Dakota property carries the state-specific tax burden shown above through to the cash flow calculation.
Property tax rate: Tax Foundation. Security deposit rule: state statute. Verify current law before making decisions — statutes change and this page is a planning reference, not legal or tax advice.