There are a few types of katana made for practicing martial arts, and Iaito is one of them. Bokken and Shinai are wooden and bamboo practice katana, but a steel one is called Iaito. It’s an unsharpened katana with a dull blade and a rounded tip, usually made of either steel or aluminum.
Iaito katana is most commonly used by Iaido practitioners (martial art focused on the art of drawing the blade from the scabbard), but steel swords can be a great training tool for any Japanese sword martial art. Steel swords provide you with a completely different feel in your hands than wooden ones, and it’s the closest thing to a real katana you can get. You definitely don’t want any accidents while training either for yourself or for others around you, so if you intend to do any kind of sword practice make sure you always do it with an Iaito.
There are some quite expensive Iaito swords on the market, and there are also cheaper ones that sell for around $50. While wooden swords can often be purchased for even less than $10, steel ones are typically a bit more expensive. In fact they can cost about the same amount of money as normal sharpened katana swords do, due to the fact that they are often forged in the same way. Also the fixtures and the handle can be of the same quality, meaning the price is fairly even. Higher end Iaito swords can even cost several hundred dollars, and are usually hand-made works of art popular with collectors.
In any case, when buying an Iaito sword make sure it’s durable enough to withstand most blows and parrying if you intend to do that kind of training. Typically they aren’t designed for repeated striking and hitting, so keep that in mind. If you try to cut anything with an Iaito you’ll be disappointed at best; make sure you don’t hurt yourself as these katana don’t have the same durability as battle-ready ones and they may even break on harder impact.
Drawing the sword from the saya (scabbard) and putting it back in doesn’t require a high-quality katana, so for beginner practitioners I don’t recommend spending a lot of money on one. If you’re really serious about practicing Iaido or other type of swordsmanship you can always get a better quality sword later on.