Best And Worst States To Own A Rental Property
Owning rental property is a very common way to build wealth. However, choosing the right location can make or break your success as a landlord and investor.
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If you want to own rentals that are profitable and will appreciate at a respectable rate, check out this list of the best places to own a rental property. We’ll also list some of the worst places so you’ll know which states to avoid.
Generally, you want to invest in places that are experiencing a combination of growth, property appreciation and rental rates that make sense for the purchase price, i.e., a low price-to-rent ratio. It also helps if landlord-friendly laws make managing properties easier and more cost-effective.
1. Best: Ohio
Average home price: $227,542
1-year value change: +7.4%
Ohio presents a great opportunity for investing because many regions in the state are experiencing job growth, infrastructure improvement, positive positive net migration, property appreciation and increasing market rent rates, all of which are creating a great environment for real estate investors.
Some cities for potential landlords to consider include:
Columbus
Cleveland
Cincinnati
Dayton
2. Best: Missouri
Average home price: $247,255
1-year Value Change: +5.0%
Missouri, another affordable state in the Midwest, is a great option due to its central location and affordable housing market. Plus, the state’s diverse economy, low property taxes and landlord-friendly regulations make it very appealing for real estate investors.
Some cities for potential landlords to consider include:
Kansas City
St. Louis
Springfield
Columbia
3. Best: Indiana
Average home value: $241,778
1-year value change: +5.7%
Indiana boasts many affordable residential markets that have a great intersection between affordability and safety, along with plenty of metropolitan with complimentary suburban zones. The state’s population grew by almost 30,000 in 2023, has some of the lowest mean property taxes in the nation and a very reasonable cost of living.
Some cities for potential landlords to consider include:
Indianapolis
Fort Wayne
Bloomington
Lafayette
4. Best: Mississippi
Average home value: $179,749
1-year value change: +2.6%
According to U.S. Census Bureau reports the southern states ” accounted for 87% of the nation’s growth in 2023, adding over 1.4 million residents for a total population of 130,125,290.” Mississip was one of 11 states that also added new residents in this recent population boon. Mississippi is an excellent place to get home well under the $200,000 and even $100,000 price points.
Some cities for potential landlords to consider include:
Jackson
Gulfport
Hattiesburg
Biloxi
5. Best: South Carolina
Average home value: $296,251
1-year value change: +4.3%
South Carolina’s population increased by 1.7% in 2023, placing it at the top of the list for population growth in the U.S.. The state is experiencing growth in many job sectors like healthcare and advanced manufacturing.
Some cities for potential landlords to consider include:
Charleston
Greenville
Columbia
Myrtle Beach
Spartanburg
Sam Dolciné invests in out-of-state real estate, has a background in property management and hosts a podcast called Black Real Estate Dialogue. He says, “The Midwest offers great real estate investment opportunities, including homes for $100,000 or less.”
He explains, “Cities like Dayton, Ohio, Kansas City, Missouri and Indianapolis, Indiana offer reasonable prices, strong rents and economies that are heading in the right direction.”
There are many reasons why a state would be less than ideal for rental ownership. Some of these reasons include a high price-to-rent ratio, not friendly to landlords or declining population and property values. Here are a few states that make that list for one reason or another:
1. Worst: California
Not landlord friendly
Many areas with high price-to-rent ratios
Population decline
Higher-priced properties
2. Worst: Oregon
Home prices are dropping
Statewide rent control
Declining property values
Population decline
3. Worst: New York
Not landlord friendly
Many areas with high price-to-rent ratios
Population decline
Higher-priced properties
4. Worst: Vermont
Not landlord friendly
Fourth highest property taxes in the nation
Declining property values
5. Worst: Washington D.C
Not landlord friendly
Second highest property taxes in the nation
Declining property values
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This article originally appeared on GOBankingRates.com: Best And Worst States To Own A Rental Property
