Low cost failover options for virtual machines

Whereas VMWare charges for this, Hyper-V offers Hyper-V replica.  Using 2012 R2 or later, you can use a replica onsite and one offsite (first introduced in 2012, it only allowed ONE replica, on or offsite).

The Free Hyper-V server can be used as your replica host.  You DO need additional Windows licenses though - and you MUST buy Volume or retail - OEM licenses cannot be moved so there can be no redundancy (well, you could with the right combination of hardware and software (Data Center for example), but for the sake of ease and a small environment, assume you can't).

Hyper-V Replica can keep replicated systems in a crash-consistent state within 30 seconds of each other (depending on bandwidth and the amount of changed data)  And you can be less frequent if you like (most systems I manage are set to 5 minute intervals).

It's important to understand that servers like domain controllers, Exchange Servers, and SQL servers are not supported as replica systems.  HOWEVER, that's primarily because they have their own methods of high-availability and in environments where you have MORE THAN ONE of each of those systems, it can cause data loss/corruption depending on how and when things fail over.  In Single system (of each of those systems) environments (while Microsoft likely won't say this) there should not be a problem and I wouldn't hesitate to use it.

Also, I strongly recommend using Altaro for backups - it's affordable and has a continuous data protection option that can be an added level of insurance for things like this.

A NAS can be gotten from 400-800$ depending on storage options (check QNAP, Synology).
RAID on local disks can be useful to prevent problems with disks.
VM Failover will only work if you have multiple systems and the VM's & data are stored on some external medium.

So first specify what you want (functional....) then investigate technical support needed to implement it.

What noci is implying is CLUSTERING.  Clustering is expensive but can provide for near zero (even zero) downtime.  If you can accept 20-60 minutes of downtime and a crash consistent state, then Replica is NOT clustering and is FAR less expensive.

Thank you for the replies, this is great information. Regarding the cost of clustering, if I'm able to purchase a NAS device (QNAP etc.) for around $1000, then utilize a couple refurbished servers the cost seems like it would be "affordable". What other cost am I overlooking? I assume I can do this with Hyper-V (I know it can be done with VMware, but I assume the cost would be significantly higher?).
Thanks again!

Clustering is built in to Windows - no extra charge since 2012.

You need SAN not NAS for clustering last I checked.  The drives had to be local for cluster - iSCSI for example.

Scratch that, newer versions of Windows Clusters can apparently do NAS shares.  IDEALLY using SMB 3.0.  

Do you REALLY need Clustering though.  Would Replica be enough?

Of course, you could do both.

QNAP is MSFT certified for iSCSI already for years.....
You will need some network adapters and preferably 1Gbps , and a 1Gbps capable switch.  (it would be recomended to get a managed switched that is VLAN capable).
Be sure to use cat 6 cabling though (or better) NOT 5e...

So it sounds like I should determine whether or not I want to cluster to use (Hyper-V?) replica... Any strong feelings on why I should go with one over the other... My budget is around $3500-$4000.

Clustering is more complex.  Yes, higher availability but what are the odds of a hardware failure?  And what will it cost to be down for 30-60 minutes?

You don't say if the budget includes software, but assuming it's starting with nothing and your labor is covered elsewhere, consider:

Replica Plan:
Used Server with 2 TB RAID 10 Storage and 32 GB of RAM will probably run you $750-1000 for a decent used server.  EACH.  So that's $1.5-2K on hardware.

Windows Server License in EITHER scenario (to cover proper failover of 2 servers) is two Windows Server licenses (1 per physical server.  Either server can host 2 VMs at any time). That's $1800 for Windows Server licenses.  with NO CALs. (though they are fairly cheap at about $40/per user).

Right there, that eats your budget on replica.  But it's in budget and no single point of failure (well, network switch I guess... but that's EASILY replaced in a pinch).

Cluster Plan:
Two servers again, but with less storage.  300 GB mirrored would be fine.  Even 146 GB mirrored.  So used, you could be looking at $1000 for a couple of decent systems.

QNAP would add $1000 and you're right at the same point as the replica plan.

BUT, you only have storage on one set of disks.  That gets corrupt or the NAS has a power failure and you're down.  Probably for hours or days unless you have some nearby source of NAS power supplies.

High Availability is only High Availability when everything is redundant.  Your storage is not in a cluster at that budget.

NAS runs RAID sets either RAID 1, RAID 5, 6 or 10... and doesn;t support a storage cluster.

I though Windows Server could mirror disks..., can it mirror iSCSI to local disk? then the QNAP /NAS can doe part of a mirror pair as well as serve out shared storage.

iSCSI drives should appear as local disks.  If they appear as local disks, you can mirror.  But that requires TWO iSCSI targets - TWO QNAPs (or similar).  Which now increases the price by $1K

Depending on how much time you are willing to invest in learning/maintaining a replica or clustered environment, you may want to consider other solutions.  One that I have deployed in several customer environment is a Datto appliance.  A Datto box is essentially a NAS for storage with agents deployed to protected systems whether they be physical or virtual machines.  Snapshots of protected devices are taken as frequently as every 15 minutes.  Backups are replicated to Datto's "cloud" for disaster recovery purposes.  Protected systems can be virtualized almost instantly either on the Datto appliance, or in the cloud.

In one instance, a customer had an SBS2008 box fail, it was their domain controller, file server and mail server.  I was able to log into the Datto appliance via the web interface and spin up a virtualized version of the server that was less than 10 minutes old right away for them.  Down time was minimal, less than 10 minutes.  After we repaired the server, which was done in a relaxed, no stress manner, we were able to restore the live, virtualized version of the server back to hardware quite easily with the help of Datto support.

There is an initial purchase cost for the Datto appliance, and a monthly charge for off-site storage and support, but I think a Datto soluton (most of the time) represents good value.