St. Louis, Missouri offers one of the best combinations of affordability, cash flow, and long-term investment potential in the Midwest. Known for its rich history, healthcare sector, and diverse neighborhoods, St. Louis is a prime city for beginners to start earning rental income. This guide provides insights into top rental strategies, legal requirements, and local market trends to help new investors succeed in the St. Louis real estate market.
Why Invest in Rental Property in St. Louis?
- Low Property Prices: St. Louis has some of the most affordable housing in the country, with plenty of properties under $150,000.
- High Rental Yields: Gross rental returns can exceed 10%, especially in value-oriented neighborhoods.
- Growing Tenant Base: Over 50% of residents are renters, driven by students, healthcare workers, and young professionals.
- Multiple Investment Options: From historic homes to multi-unit properties, St. Louis has a wide range of inventory suitable for both long-term and short-term rentals.
Top Strategies to Generate Rental Income in St. Louis
1. Long-Term Residential Rentals
Buy-and-hold investing works well in St. Louis. Neighborhoods like Bevo Mill, Dutchtown, and Walnut Park offer low property prices and consistent rental demand from working families and singles.
2. Section 8 / Affordable Housing Rentals
The Housing Authority of St. Louis City (HASLC) administers the Housing Choice Voucher Program. Participating landlords receive guaranteed rent payments and access to a wide tenant pool.
3. Student Housing
St. Louis is home to several colleges including Washington University, Saint Louis University, and Harris-Stowe State University. Rentals near Midtown and the Central West End perform well with student tenants, particularly in shared housing setups.
4. Duplex & Multi-Family House Hacking
Live in one unit and rent out the others. Areas like Tower Grove South and Shaw are great for purchasing 2–4 unit properties to reduce housing costs and earn rental income simultaneously.
5. Mid-Term Rentals
Furnished rentals for traveling nurses, interns, and business travelers work well near hospitals like Barnes-Jewish and St. Louis Children’s Hospital. These properties offer premium returns with less turnover than STRs.
Legal & Licensing Requirements for Landlords in St. Louis
- Occupancy Permits: Required for each rental unit. The City must inspect and issue an occupancy permit before new tenants move in.
- Landlord Business License: Required for anyone renting property in St. Louis City. Apply annually through the License Collector’s Office.
- Rental Inspection: City inspectors will check for code compliance, fire safety, and habitability.
- Short-Term Rentals (STRs): Must obtain a separate STR permit. STRs are only permitted in certain zoning districts and are subject to regulation and local sales taxes.
- Lead Paint Compliance: Required for buildings constructed before 1978 — landlords must provide lead disclosures and maintain safe conditions.
Estimated Monthly Costs for St. Louis Rental Properties
| Expense Type | Monthly Estimate |
|---|---|
| Property Taxes | $150 – $500 |
| Landlord Insurance | $50 – $120 |
| Maintenance & Repairs | $100 – $250 |
| Property Management (optional) | 8% – 12% of gross rent |
| Business License | $50 – $200/year |
Top Neighborhoods for Rental Investment in St. Louis
- Dutchtown: One of the most affordable areas with strong rental demand and improving infrastructure.
- Bevo Mill: Great for long-term single-family rentals and duplexes.
- Tower Grove South: Popular with young professionals and families, great for house hacking and multi-family rentals.
- Central West End: High-end rental market with access to hospitals and universities — ideal for mid-term and student housing.
- North Hampton: Up-and-coming area with good appreciation potential and low entry cost.
Tax Benefits for St. Louis Landlords
Rental income is taxable at both the federal and Missouri state level. However, landlords can take advantage of many deductions:
- Mortgage interest and property taxes
- Depreciation of building and improvements
- Maintenance, repairs, and utilities
- Management fees, insurance, and legal expenses
- Advertising and tenant screening costs
Landlords operating STRs must also register for Missouri state sales tax and St. Louis local lodging tax collection and filing.
Tips to Maximize Rental Income in St. Louis
- Invest in Duplexes: St. Louis has a large inventory of 2–4 unit properties ideal for first-time investors.
- Screen Tenants Thoroughly: Use background, income, and credit checks to reduce risk of eviction and loss.
- Stay Up-to-Date with Inspections: Keep units code-compliant to avoid permit delays and penalties.
- Target Emerging Areas: Neighborhoods undergoing revitalization offer better appreciation and long-term returns.
Conclusion
St. Louis is a real estate investor’s dream — offering high yields, affordable properties, and a diversified tenant pool. Whether you’re starting with a duplex in Bevo Mill or a student rental near SLU, St. Louis provides the flexibility and affordability to build lasting rental income. With proper licensing, maintenance, and tenant screening, you can achieve long-term financial success in the Gateway City.
Need help with licensing, Section 8 setup, or tax compliance for your Missouri rentals?
Reach out to PEAK Business Consultancy Services — your reliable partner for real estate income success in St. Louis, MO.
