The Best States to Invest in Real Estate

Real estate investing is an excellent way to boost your cash flow and benefit from rising property values. But for a genuinely satisfying return on investment, it's essential to buy investment property in the best real estate markets.

Each state offers unique opportunities and challenges, so real estate investors must know the best states to invest in real estate. Visio Lending has kickstarted your research by listing the top 15 US states to buy investment properties in, based on a comprehensive blend of vital real estate statistics. 

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15 States to Buy Investment Property

We've done the work for you and identified the best places to buy rental properties based on all these factors. Let's dive into the best states to invest in real estate throughout the country. 

1. Idaho

Idaho, though small in population, is big in opportunities — and they are only growing. Pandemic-weary remote workers flocked to the 14th largest US state due in part to its low crime rate and affordable median home value. You have ample opportunity to find quality tenants in this pretty, laid-back region and one of the fastest-growing states in America.

Idaho's GDP has grown by over 15% in the last five years, reaching $85.7 billion in 2023. It has a surprising blend of well-diversified industries, which include car dealerships, medical care, and dairy production, as well as electric parts manufacturing and scientific research. Annual employment growth is 2.7%, and the unemployment rate is only 2.9%. 

The median home value in Idaho is a modest $434,224, which, though above the national average, is still very competitive. At the same time, Idaho residents pay rent of about $1,024, making it more affordable to rent than to buy.

However, this varies greatly across the state, with Boise rents being approximately $1,602. Though the percentage of renters is only about 28%, this number will likely rise sharply thanks to the population growth of 1.82% per year. Vacancy rates are also well below the US average at just 3.46% in the first quarter of 2023.

Idaho's real estate investment market skews heavily toward long-term residential rental properties, as vacation rentals are a lower priority. On the commercial real estate side, things are quieter, but there are good opportunities for storefronts and office buildings to help develop Idaho's growing financial services and tech support industry. However, property taxes are a bit higher than many other picks on our list at 0.89%. 

2. Missouri

Missouri's economy grew by 2% between 2021 and 2022, which is above the national rate of 1.9%. This is reflected in the property values of $235,844, which has gone up 4.2% year-over-year.

The average rental income is about $1,250, which offers an admirable return on investment, particularly given the affordable housing prices. The percentage of renters is comparable to the rest of the US at 32.4%, but they are more likely to provide steady income thanks to the many employment opportunities in the state. Unemployment is relatively low at 3.2%, and the economy has been growing steadily at around 2.1% per year since 2000. 

Missouri is also considered a landlord-friendly state, as there are no rent controls, and the eviction process is quite fast. There are tax benefits, too. Property taxes are just 0.88%, well below the US average.

3. South Carolina

South Carolina has the fastest-growing job market in the US. The many employment opportunities assure a great return on investment, particularly as home prices are only about $359,000. 

Rental income is about $1,135 a month, but paired with the incredibly low property tax rate of 0.55%, you can minimize operating expenses and maximize ROI. Vacation properties are also very popular here, offering you plentiful ways to make more money than in other states. You can also capitalize on the strong jobs market by purchasing office buildings and flex spaces for remote workers. 

4. Tennessee 

Tennessee has experienced a decent population growth of 0.9% and a healthy job growth of 1.2% every year. Home values have risen by 55.5% in the last five years, while rent is a reasonable $1,035 statewide. This makes long-term rental properties a clear winner in this affordable state with an average home value of $309,913, especially as you'll pay just 0.56% for your investment property's taxes. However, don't count out vacation rentals — many love to visit the Bluegrass state for music, caves, and more.

5. New Jersey

You can easily earn income as a property owner in New Jersey, as evidenced by the 36% of New Jersey residents who rent. While property values are pricey at $495,469, so are the rental rates of $2,500 a month. It does have some of the highest taxes in the nation at 2.26%.

Median income is tremendously high at $97,126, while an average rate of 4.9% job growth ensures your tenants will always be able to pay rent. It's also a popular vacation destination for NYC residents, making it a great choice to buy investment property with a vacation rental loan. 

6. Florida

The Sunshine State is one of the few states with no personal income tax, letting you keep more from your high-income property. The property tax rate is just a bit lower than the national average at 0.98%, and the house value is $392,000. However, this is more than made up for by the high rents of $1,790. Population growth is high at 1.91%, while job growth is strong at 3.1%. Major cities can ensure great vacation rental income thanks to their many attractions. 

7. Indiana

This Midwestern state is an excellent option for those who want to buy investment property on a budget, as the average home is valued at $228,879 — well below what you would find in places like Illinois. 

Your typical rental income will be about $1,009 per month, but this is paired with property tax rates of only 0.75%. Most Indianians pay only about half the property taxes of the national average. It's also a very landlord-friendly state, with no restrictions on security deposits or rent increases with fair warning. Job growth is steady at about 1.9% per quarter, and unemployment is reasonable at 3.6%. 

8. Texas

The Lone Star State is beloved by real estate investors because of how fast the state's population is growing — a 1.59% increase from 2021 to 2022. The job market has experienced explosive growth at 3.2%, which is well above the national average.

Home values are very affordable at $296,127, but at the same time, you can expect high cash flow from rental property, given the average rent of $1,850. It is also landlord-friendly because there are no local codes against security deposits, and many municipalities allow you to evict non-paying tenants after just three days. You'll pay 1.6% in taxes on your investment property.

9. Georgia

Cozy Georgia is known for its low overall cost of living, about 10% lower than the national average. This brings in many new residents to participate in the job market, which has a low unemployment rate of just 3.5%, and the job growth is a healthy 2.18%. Its population growth remains healthy at 1.2%.

Home values are a bit high at $319,158, while rent is a bit lower than the US average at $1,274. The property tax rate is 0.81%, which is pretty decent. Atlanta is always a proven winner, but you may also look for smaller cities like Macomb if you want to open up a quaint vacation rental property. 

10. Alabama

Alabama is one of the most landlord-friendly states. You don't need a license to operate, and you can set your own fees. You also only need to provide between 7 and 14 days of notice before evicting a non-paying tenant, which is much lower than in other states. Real estate here is quite cheap at just $221,428, but rent is higher than in Georgia at $1,400. It also has some of the lowest taxes for your property at only 0.37%. 

Job growth is steady at 1.33%, though the median household income is relatively low at $59,910. Though the population is growing slowly at only 0.5% per year, it has recently become a relatively well-competing vacation destination, especially as it remains temperate all year round. 

11. Kentucy

Thanks to its affordable houses, Kentucky is a decent contender for new real estate investors. They cost just $196,580, and the typical rent is $1,259. While its population has only been growing at a modest 0.3% per year, job growth is around 2.7% and rising. When you buy investment property in this state, you can enjoy property taxes of just 0.8% and no rent controls, which allow you to adjust to changing market conditions.

12. New Mexico

Beautiful New Mexico is famed for its beautiful vistas and arid climate, but it also has a great housing market, with property values of $291,722 and rising each year. Rents are pretty high at $1,625, but the median income is relatively low at $58,722. 

Job growth is strong at 2.5% year-over-year, though the unemployment rate is a little above the US average at 4.4%. However, you can appreciate the low property tax of 0.78% and the advantageous landlord laws, which include the right to increase rent and to charge a security deposit.

13. Colorado

Lovely Colorado has a robust job market with 2.2% growth and a high median household income of $87,598. The average home is quite pricey at $528,285, but rents are also high, at an average of $2,150.

The population is rising steadily at 1.2% per year, but this doesn't touch the very high tourism rates, especially in the winter. Both long-term rental properties and short-term rentals can do very well here. Plus, the average property tax is some of the lowest in the country at only 0.48%.

14. Arizona

Most known for the Grand Canyon, Arizona draws in residents and tourists from all over the country and beyond who want to enjoy the warm weather and stunning sights. Both vacation and long-term residential offerings have good potential. Its job market is growing at about 2.2% per year, while the population has risen quickly at a rate of 1.2% per year.

Property values are very high at $422,243, and rents are higher than the US average at $1,619. However, you can offset the high cost of property with the low tax rate of 0.51%.

15. Arkansas

Arkansas is the headquarters of numerous multinational companies, so it's no wonder that its job market has been growing by an average of 2.4% every year. Its population is growing more modestly at 0.6% per year, which can explain why its home values are a relatively low $197,411.

The rental income is still competitive, however, at $1,335. One of the biggest draws, especially for those new to real estate investing, is the property taxes of just 0.57%. It is also one of the most landlord-friendly states in the US, as there are nearly no regulations on leases. You can also evict a tenant with just three days' notice.

Comparative Analysis of the Top States

Now that we've taken a quick look at each of your options for real estate investing, let's do some comparisons. You can use the average property value and rent with our convenient rental calculators, inputting your loan agreements, fees, and taxes to see your return on investment.

Now, let's take a look at average property taxes, which can greatly impact your overall investment strategy. We've ranked our 15 state picks from lowest to highest property tax rates.

Lastly, let's consider the benefits and downsides for each state.

• Idaho – It's a fast-growing state both population- and economy-wise, but it has a low renter population.
• Missouri – It has good landlord laws and consistent economic growth, but taxes are a bit higher than in other states.
• South Carolina – It has low taxes and a strong job market, but rents are low in comparison to property prices.
• Tennessee – Home values are rising steadily, and taxes are low, but the population isn't growing very quickly.
• New Jersey – NJ has a very large percentage of renters with high incomes, but taxes are also very high.
• Florida – It has high rents, good job opportunities, and a steady population climb, but taxes are higher than elsewhere.
• Indiana – It boasts good landlord laws and cheap property, but rents are relatively low.
• Texas – It has strong growth demographically and economically, combined with low property prices and high rents. However, taxes are some of the highest on this list.
• Georgia – It has a low cost of living and good job prospects, but rent is slightly lower than the national average.
• Alabama – It has very low taxes and great landlord-friendly laws. However, the population is slow-growing, and the median income is relatively low.
• Kentucky – Kentucky is affordable, and laws are advantageous to landlords. At the same time, there has been little migration into the state, and property taxes are a little higher than in surrounding states.
• New Mexico – NM has high rents and strong job growth but also high unemployment and low income.
• Colorado – Low taxes and high rents, but property is very pricey, and it is pretty competitive.
• Arizona – Arizona is growing quickly, and taxes are low. At the same time, it's expensive to purchase, which can deter new investors.
• Arkansas – A good budget place to buy, especially as taxes are pretty low and landlords are favored by tenancy laws. However, it's not a fast-growing state, which may hinder the market. 

Future Outlook for Real Estate Investment in These States

Let's take a look forward in each of these areas with a summary of what's coming in the marketplace. 

• Idaho – The housing stock is dwindling in this state, with a 27.2% decrease in houses on the market. This, coupled with an influx of new residents, suggests that the housing market will get very competitive soon. It's best to buy now before prices go up further!

• Missouri – The housing stock in Missouri is incredibly low, with only a month's supply. As interest rates are not expected to drop, this is the best time to get involved in the market. Developers will benefit from building new properties to reduce the housing crunch. 

• South Carolina – Houses are staying on the market for a bit longer here than they were last year, while home sales have decreased by 11%. This suggests the market is slowing down, but not to worry — prices are still up and are expected to continue rising.

• Tennessee – Prices continue to increase in this area, but there is a relatively healthy housing supply of 3 months. It's important to note that recent legislation has made it more difficult to evict tenants — you must now provide a 60-day warning. 

• New Jersey – Housing inventory is very low, and the market is incredibly competitive. There have also been large investments in developing low-income housing, making this a good opportunity to provide economic options for those with smaller household incomes. 

• Florida – Sunshine State remains a seller's market, which is not expected to change in the next five years. However, climate concerns may make new renters shy away from the state, making it essential to invest in climate resiliency for your new rental.

• Indiana – Houses are very scarce in Indiana, with only a two-month supply. This will push prices higher, but it will also encourage many renters to remain in a rental property. The legislature is pushing laws that will limit security deposit amounts, which landlords should keep an eye on. 

• Texas – Housing supply has recently rebounded, making it a buyer's market. As this remains an in-demand state, there is no better time than now to get involved, especially as prices have stabilized significantly. 

• Georgia – Over 24% of homes are selling above their asking prices due to very low stock, which can make it a challenge to get involved in this market. The major boost in prices is not likely to go away anytime soon, so you should consider investing now before the market heats up even more. 

• Alabama – Other investors are starting to notice this excellent market, leading to a huge jump in prices. Don't let high interest rates scare you away — seek out a good lender company like Visio Lending and get into this market before it rises even more. 

• Kentucky – Bluegrass State is likely to remain very affordable for the long term. Prices have declined slightly over the past year thanks to a post-pandemic slump. However, do note that landlord laws are likely to swing in favor of tenants soon, with more restrictions on what you can demand upfront. 

• New Mexico – Prices are still rising in this state, so you need to act fast before they go any higher. However, rising rates have started slowing down the market, giving buyers some breathing room. Starting next year, you will need to give a written notice explaining why you are evicting a tenant, and there will be tighter restrictions on deposits.

• Colorado – This market is finally cooling down a bit, which makes it a great time to get started in your Rocky Market dream. The legislature is working to reduce discrimination in the rental industry, so be advised about what you can ask potential tenants. 

• Arizona –Grand Canyon State expects a modest price rise over the next year, but the market will remain relatively stable. You'll now need a court order to evict tenants and give them a 30-day advance notice of rent increases.

• Arkansas – Unlike other states, Arkansas is about to get even more affordable, with prices dropping slightly in the coming year. There aren't many major changes on the horizon concerning landlord rights, so you can breathe easy in that regard.

Conclusion and Key Takeaways

Each state is a little different and is growing on its own trajectory, which is why it's crucial to stay abreast of developments in your preferred state. A real estate agent can be beneficial as you perform your due diligence on your chosen real estate market. 

While this is a thorough overview, each state has its own niches and subsets, so you'll need to narrow things down further as you prepare to take on tenants. 

If you're ready to get started with real estate, you can always rely on Visio Lending. Contact us today to learn more about our no-nonsense rental loans, made just for real estate investors.