Walters knows such a move would be a blow for the game north of the border but believes his old club should look after themselves.
The Light Blues currently play in the Third Division after liquidation was confirmed in the summer and they lost their status as a top-flight club.
The idea of quitting Scotland has already been mooted by Ibrox chief executive Charles Green, who is unhappy with league reconstruction plans.
Walters told Rangers' website: "Maybe Rangers should be a bit selfish, try to go into the English leagues and build up that way.
"With what has happened, it's an avenue they should look at.
"That would definitely be a more commercially viable route and, down in England, it seems as though Rangers were a bit harshly treated in some respects.
"I don't think it would be a bad thing if they tried to get in, although I understand the problems there would be in Scotland if Rangers left the game there."
The door appears to be firmly shut on a move to the Premier League, although the Conference recently appeared to be more open to the idea of Rangers joining their ranks.
Walters added: "That would be the fairest way to do it and although it would maybe take five years to get up to the Premier League, it would be a good long-term plan.
"Without a doubt, I think people would accept Rangers there. Without being harsh, money talks and Rangers have so much potential.
"I don't think it (starting at Conference level) would be a backwards step. Rangers should always be looking at the bigger picture."