Verizon Moto E (2015) - the king of phones!

For $50 (currently $20, after $25 BestBuy rewards), you simply cannot get a more ideal phone than MOTXT1528PP:

• Global 4G/LTE (see here), works on Verizon, Sprint (see comments below), AT&T, T-Mobile (confirmed LTE) and etc.
• Great battery life with its large 2400mAh battery.
• SD card slot for more storage.
• OTG USB.
• FM radio with exceptionally good reception and sound quality, better than the best FM radios I own. And it is stereo, yes! You may plug in something into the headphone jack as an antenna and then cast audio to a Bluetooth device. I can even click the fast forward/backward buttons on my HS3000 to switch stations! Are we talking about a budget phone?
• Perfect screen size of 4.5", third generation gorilla glass, anti fingerprints.
• Hotspot works out of box, regardless what prepaid service plan you have! No need to do any hack to bypass the entitlement check.
• Loud and clear speaker at top front. 
• Non-slip frame. This frame is also easy to open to access the SD and SIM slots - no need to open the entire back cover.
• Hot swap SIM cards, unlike all Samsung and LG phones that force a reboot.
• Fast data speed (20M download), especially uploading (10M, about double of Samsung S4 and LG G2). 
• Very few blotware if any at all and all Moto "enhancements" can be easily disabled.
• More than 30 languages built in, including Korea, Japanese, Simplified and Traditional Chinese.

So what's the catch?

•  No permanent root yet, but Kingroot works as a temporary one. You just need to use Kingroot to root it after every boot. So yes you can let hotspot go through VPN. Some apps that require modifications to the system folder won't work, such as Busybox and those that need it. BTW, Kingroot 4.0 works better than 4.1. If it fails, reboot, go to settings and apps, KingRoot and clear data. Disabling Moto, Moto Actions, Moto Display and Motorola Alert may also help.
• As soon as it is connected to the Internet, it'll receive an update to 5.1 which makes it more difficult to switch to GSM mode (global mode). So you'd better ignore the "Install system update" notification - don't touch it, just ignore it. Normally you have to have a Verizon account to get an OTA update and prepaid phones almost never get any update at all, so you know how eagerly Verizon wants to patch this and why you must not take this generous offer.
• No 2100 MHz that's used for 3G in some countries such India and China.

Two alternatives:

•  Moto Luge 4G/LTE. It was on sale in BestBuy for $50 before $25 rewards. Smaller (4.3") but better looking screen, slim and adorable. Also a global phone but no LTE on T-Mobile etc. (H+ only). Totally rootable, but Android 4.4.2 has a bug with VPN and ipv6, so you need to use the "OpenVPN Settings" app if you need VPN and disable ipv6.
• LG Transpyre 4G/LTE. It is always $80 or even lower. It is not a global phone though, CDMA only. Beautiful screen. Root and VPN is the same as the Luge.

[update] Kingroot is not practical and thus this phone is not so suitable for hotspot if VPN is needed, unless you can run VPN on other devices. Brand new Luge is only $80 on ebay, the only thing missing is a fantastic FM radio.

[update] Now there is a workaround to the annoying system update.

[update] Success rate of Kingroot 4.1 is high now, almost successful every time, due to either the removal of TogicTV app (very background active), or newer rooting schemes added to KingRoot's database?