11 Best States to Buy Rental Property in 2024

Choosing the right market is a crucial first step toward buying a rental property, as there are all kinds of local economic factors impacting the long-term outlook of your investment. In this guide, we’ll share the best states to invest in real estate, states to avoid, and what to look for in a market!

What Is Rental Property Investing?

Rental property investing is the process of buying a property and renting it out (or selling it) for a profit. This profit may come in the form of monthly cash flow, “passive” income, tax savings, or property appreciation, depending on your investing strategy and long-term goals.

An investor will often renovate a rental property to increase its value and charge higher rents, but these projects require time and money. You can skip the legwork by investing in turnkey rentals instead. Rent to Retirement has recently renovated, move-in-ready rental properties for sale!

What Makes a State “Good” for Buying Rental Properties?

1. Population Growth

Population growth indicates that a state or market is a desirable or affordable place to live. As more people migrate to a market, the demand for housing increases.

2. A Strong Economy

A strong economy produces high-quality tenants with stable incomes. Look for states and cities that have high job growth and employment rates.

3. Rental Market Demand 

Rental demand is determined by several factors, including population growth, cost of living, and housing affordability. When demand is high, landlords can charge higher rents and select tenants from a wider pool of applicants.

4. High Occupancy Rates 

Vacancy can be devastating for an investor, especially if you’re relying on consistent rental income to pay your mortgage or bills. A higher occupancy rate widens your tenant pool and lowers your risk for extended vacancies.

5. Market Performance

Your long-term profitability depends on the trajectory of your rental market. Choose a market with a history of property appreciation, steady population growth, and future job opportunities.

6. Housing Laws and Regulations

Landlord-tenant laws vary from state to state, impacting your ability to own and manage certain types of properties, raise rents, and evict tenants. Landlord-friendly states make it easier for investors to profit and achieve their investing goals, while tenant-friendly states are often more favorable to renters.

7. Tax Implications

Taxes can quickly eat into your rental property’s cash flow. States with no state income tax, low property taxes, or certain tax incentives will help you keep operating expenses low and make you more profitable.

Choosing the right market is difficult, let alone finding a great rental property within that market. Fortunately, Rent to Retirement has turnkey properties in some of the best states to buy real estate!

11 Best States for Rental Property Investing

If you want to enjoy steady rental income, tax benefits, or property appreciation, choose a market that is friendly to investors. Here are 11 of the best states to buy rental property!

1. Texas

Despite its high property taxes, Texas is one of just nine states without income tax, allowing investors to hold on to more of their cash flow (if they live there). The Lone Star State also boasts a strong economy with steady population growth, a booming job market, and one of the highest renter-homeowner ratios in the nation.

Pros of Buying Rental Property in Texas

• Population growth
• Strong job market
• High rental demand
• Landlord-friendly laws
• No property tax

Is the Texas housing market the new real estate hotspot?

2. Florida

Like Texas, Florida has no personal income tax, and its property tax rate of 0.80% falls comfortably below the national average. Buy-and-hold investors are rewarded with strong returns, as Florida housing prices have increased by a nation-high 67% since 2020. What’s more, Florida is a landlord-friendly state with no limits on rent, security deposits, or late fees.

Pros of Buying Rental Property in Florida

• High rental demand
• Low property taxes
• Landlord-friendly laws
• High appreciation
• No income tax

Check out our full write-up on the Florida housing market!

3. Alabama

Alabama is one of the most affordable states to buy real estate, thanks to its below-average median home price and a 0.41% property tax rate that is second to only Hawaii. Housing laws are landlord-friendly, with no rent control and a speedy eviction process for nonpayment and lease violations.

Pros of Buying Rental Property in Alabama

• Landlord-friendly laws
• Lower housing prices
• Low property taxes

4. Missouri

With the seventh-lowest median home price in the nation, Missouri is yet another affordable state for buying rental properties. The state’s below-average effective property tax rate of 0.88% helps investors keep their expenses in check, while its housing laws are favorable to landlords.

Pros of Buying Rental Property in Missouri

• Population growth
• Low property taxes
• Landlord-friendly laws

Want to Invest in the Best Rental States?

5. Georgia

Georgia is one of the fastest-growing states in the country, offering high rental demand and long-term gains for investors. While property taxes hover just below the national average, home appreciation has outpaced the nation over the last four years.

Pros of Buying Rental Property in Georgia

• Population growth
• High rental demand
• High appreciation

6. Kentucky

Kentucky has the fifth-lowest median home price in the United States, giving investors a low barrier to entry. Meanwhile, the state’s low cost of living has led to steady population growth and one of the nation’s strongest job markets. Kentucky is also landlord-friendly, with no limits on rent, security deposits, or late fees.

Pros of Buying Rental Property in Kentucky

• Lower housing prices
• High appreciation
• Low cost of living
• Landlord-friendly laws

7. Indiana

Much like Kentucky, Indiana boasts a strong economy and low cost of living. The state’s affordable home prices, low price-to-rent ratio, and low average property tax rate of 0.75% make it an appealing destination for investors.

Pros of Buying Rental Property in Indiana

• Strong economy
• Lower cost of living
• Low property taxes

Learn more about the Indiana housing market!

8. South Carolina

South Carolina is one of the fastest-growing states in the country, and it’s easy to see why. The state offers a unique blend of affordable home prices and high appreciation, while its property tax rate of 0.52% is the fifth-lowest in the nation.

Pros of Buying Rental Property in South Carolina

• High job growth
• High appreciation
• Lower housing prices
• Low property taxes

9. Idaho

Despite above-average home prices, Idaho’s growing population, high employment rates, and low crime rates allow landlords to benefit from high-quality tenants. Not to mention, home prices have risen significantly since 2020, signaling long-term returns for investors.

Pros of Buying Rental Property in Idaho

• High appreciation
• High employment rates
• Low crime rates
• Population growth

10. Colorado

Colorado has long been a hotspot for real estate investors, thanks to its high rent prices, rental demand, and the nation’s third-lowest property tax rate of 0.48%. Landlords are not bound to rent or security deposit limits and may start the eviction process following a three-day notice to pay or quit.

Pros of Buying Rental Property in Colorado

• Higher median household income
• Higher rental demand
• Low property taxes
• Landlord-friendly laws

11. Arizona

Arizona boasts strong long-term and vacation rental markets, high job growth, and a low effective property tax rate of just 0.62%. Meanwhile, Arizona rental properties command above-average rent prices, and home prices have appreciated by 59.9% since 2020.

Pros of Buying Rental Property in Arizona

• Low property taxes
• Strong vacation markets
• High rent prices
• High job growth

Worst States to Buy Rental Property (States to Avoid!)

Before buying a rental property, carefully weigh the pros and cons of investing in that market. Typically, you will want to avoid areas that have low rental demand, tenant-friendly laws, poor economic or job market growth, low (or negative) population growth, and high crime rates.

While every state has good and bad rental markets, many landlords find the following states unfavorable:

• Alaska
• Hawaii
• New Mexico
• New York
• Oregon
• Rhode Island
• South Dakota
• Vermont

Buy Turnkey Rentals in the Best States for Real Estate       

Looking for the perfect property in a strong market? With turnkey real estate, you’ll be able to charge higher rents, keep your expenses low, and, most importantly, own an appreciating asset.

Rent to Retirement has turnkey properties for sale in some of the best states for real estate. Let’s find your next investment property!

Best States to Invest in Real Estate FAQs

Where Is the Best State to Invest in Real Estate?

The best states to buy rental property include Texas, Florida, Alabama, Missouri, Georgia, Kentucky, Indiana, South Carolina, Idaho, Colorado, and Arizona. Many of these states have low home prices, high appreciation, and landlord-friendly housing laws.

What State Has the Best Resale Value for Homes?

Hawaii and California are the states with the highest average home values at $986,887 and $806,674, respectively. Despite tenant-friendly housing laws, these states are two of the most valuable housing markets in the United States. That being said, many landlords refuse to invest in both due to extremely high prices and the tenant-friendly laws.

What State Has the Lowest Property Taxes? 

Hawaii has the nation’s lowest effective property tax rate at 0.27%. Alabama and Colorado have the second and third-lowest property tax rates at 0.41% and 0.48%, respectively.