Best States to Buy Rental Property
Mar 1, 2023
Despite a rapid increase in interest rates in the Summer of 2022, rental property acquisition is still a very popular form of investment that's accessible for most "middle class" Americans. 41% of all rental properties in the US are owned by "mom and pop" style investors. In other words, individuals and not corporations. That should be welcome news to prospective real estate investors.
Once you decide whether rent estate investing is the right option for you, the next step is to decide which location is best for long-term appreciation growth and annual rent yield. We assembled this list of top rental markets, by state after evaluating multiple data sources in order to find the best markets.
Our sources included proprietary data from Attom Data, John Burns Consulting, RentHub and local MLS's (multiple listing services). We also considered census data and property tax rates variations across markets.
Why are these states the best?
Several historical statistics, trends and anecdotal data were analyzed, however these metrics were the most critical to our scoring methodology:
- Job growth and ability to sustain and generate future jobs.
- Price appreciation with historical increases in property values and rental prices.
- Average home price is a good metric to evaluate and ideally the average home value should be no lower than 50% below the national average and no higher than 50% above the national average.
- Population growth, which is a reliable measure for future housing demand.
- Healthy occupancy rates, which provide a proxy for evaluating inventory levels in a given market.
- Favorable landlord laws, which allow leniency for property owners when evicting tenants for non-payment.
- Low property taxes, which indicate a more conservative tax environment and better annual cash flow versus high tax states.
15 Best Places to Buy Rental Property (Ranked)
If you're exploring real estate investing, but don't want to invest in your local real estate market, you can't go wrong with these states. Keep in mind that you can always find a local property management company if you decide to invest outside of your home state.
15. Colorado
- Population growth rank: #6
- Job growth rank: #11
- Median home value: $561,100
- Average price per square foot: $256/sf
- Home value appreciation in 2022: 11%
- Average rent: $1,620/month
- Average rent increase year-over-year: 11%
14. Kentucky
- Population growth rank: #21
- Job growth rank: #17
- Median home value: $274,300
- Average price per square foot: $144/sf
- Home value appreciation in 2022: 9%
- Average rent: $1,082/month
- Average rent increase year-over-year: 8%
13. South Carolina
- Population growth rank: #10
- Job growth rank: #18
- Median home value price: $299,200
- Average price per square foot: $155/sf
- Home value appreciation in 2022: 13%
- Average rent: $1,170/month
- Average rent increase year-over-year: 9%
12. Idaho
- Population growth rank: #1
- Job growth rank: #15
- Median home value: $464,800
- Average price per square foot: $227/sf
- Home value appreciation in 2022: 18%
- Average rent: $1,420/month
- Average rent increase year-over-year: 14%
11. Ohio
- Population growth rank: #26
- Job growth rank: #14
- Median home value: $217,400
- Average price per square foot: $137/sf
- Home value appreciation in 2022: 7%
- Average rent: $1,210/month
- Average rent increase year-over-year: 6%
10. Arizona
- Population growth rank: #9
- Job growth rank: #12
- Median home value: $421,600
- Home value appreciation in 2022: 13%
- Average rent: $1,473/month
- Average rent increase year-over-year: 13%
9. New Mexico
- Population growth rank: #11
- Job growth rank: #19
- Median home value: $289,700
- Home value appreciation in 2022: 14%
- Average rent: $1,351/month
- Average rent increase year-over-year: 13%
8. Arkansas
- Population growth rank: #19
- Job growth rank: #16
- Median home value: $187,800
- Average price per square foot: $116/sf
- Home value appreciation in 2022: 9%
- Average rent: $960/month
- Average rent increase year-over-year: 10%
7. Utah
- Population growth rank: #1
- Job growth rank: #5
- Median home value: $452,900
- Average price per square foot: $231/sf
- Home value appreciation in 2022: 18%
- Average rent: $1,408/month
- Average rent increase year-over-year: 14%
6. Georgia
- Population growth rank: #8
- Job growth rank: #4
- Median home price: $389,400
- Average price per square foot: $170/sf
- Home value appreciation in 2022: 13%
- Average rent: $1,406/month
- Average rent increase year-over-year: 10%
5. Nevada
- Population growth rank: #5
- Job growth rank: #2
- Median home value: $459,600
- Average price per square foot: $245/sf
- Home value appreciation in 2022: 12%
- Average rent: $1,758/month
- Average rent increase year-over-year: 11%
4. Tennessee
- Population growth rank: #14
- Job growth rank: #10
- Median home value: $407,200
- Average price per square foot: $198/sf
- Home value appreciation in 2022: 14%
- Average rent: $1,380/month
- Average rent increase year-over-year: 12%
3. North Carolina
- Population growth rank: #13
- Job growth rank: #6
- Median home value: $267,523
- Home value appreciation in 2022: 15%
- Average rent: $1,448/month
- Average rent increase year-over-year: 12%
2. Florida
- Population growth rank: #7
- Job growth rank: #3
- Median home value: $447,100
- Average price per square foot: $231/sf
- Home value appreciation in 2022: 16%
- Average rent: $1,890/month
- Average rent increase year-over-year: 14%
1. Texas
- Population growth rank: #3
- Job growth rank: #1
- Median home value: $386,700
- Average price per square foot: $181/sf
- Home value appreciation in 2022: 17%
- Average rent: $1,720/month
- Average rent increase year-over-year: 16%
Resources for Getting Started
Owning rental properties is one of the best ways to build wealth and enjoy passive income. As we covered, rental laws, property taxes, population growth and home values all impact where to invest.
If you want to dive deeper, take a look at our list of best cities to buy rental properties. Here's a sneak peek:
1- Waco, TX
2- Niceville, FL
3- Greensboro, NC
SimpleShowing, is a tech-enabled real estate brokerage. If you’re considering purchasing a rental property, check out our buyer refund program, which nets investors a 1% cash rebate towards closing costs. Check out some additional resources below if you want to get started investing in rental properties as a beginner:
Rental Property Interest Rates
