One of the most crucial aspects of real estate investing is finding the right location. Although there are ways to make money in nearly any rental market with the right strategy and access to capital, some areas are better for average investors than others. The three major factors that impact the profitability of a particular region include job growth, population growth, and affordability. Based on those factors, here are the top 9 best states for buying rental properties in 2021.
1. Florida Rental Properties
Florida has always been a great location for real estate investing because it attracts vacationers and retirees, as well as your average tenants. This offers all kinds of opportunities for investors who want to explore different strategies. According to the US Census Bureau, the state boasted a 14.6% increase in population over the past decade, which is likely to continue. Major cities like Orlando, Miami, and Jacksonville offer a variety of career opportunities, plus the lack of income tax and other business-friendly policies makes it one of the best states for investing.
2. Georgia Rental Properties
Atlanta is one of the fastest-growing cities in the south, which is leading many to make the move to the Peach State. Georgia offers the best of both worlds – urban conveniences along with affordable living. The median home value in Georgia is just under $250,000, which is a 15% increase over the past year. Plus, there are plenty of cities outside of Atlanta that are growing rapidly – such as Albany, Sandy Springs, and Alpharetta, all of which are attractive to investors.
3. Idaho Rental Properties
Idaho is a state that is often overlooked by many, but presents affordable living, job opportunities, and a high quality of life – all factors that are great for attracting tenants. According to the 2020 census, Idaho is the second-fastest-growing state in the US, after its neighbor Utah. The Gem state has become a haven for young professionals fleeing West Coast cities like San Francisco and Seattle and boasts a robust economy and low cost of living. Boise offers a good mixture of urban and suburban housing stock, plus there are a variety of smaller cities like Twin Falls and Coeur d’Alene that offer even more deals.
4. Michigan Rental Properties
Michigan is another state that offers affordable living alongside a plethora of job opportunities. West Michigan has some of the fastest-growing real estate markets in the country and features a high demand for housing and low vacancy rates. Detroit offers a variety of interesting opportunities for investors with a skyrocketing demand for single-family houses and huge tech companies like Microsoft and Google opening offices there. Plus, there are plenty of smaller towns like Ann Arbor and Grand Rapids offering stable economies and high demand as well.
5. New Mexico Rental Properties
New Mexico is one of the most unique states in the US and offers cheap living and tons of growth potential. Cities like Albuquerque, Santa Fe, and Los Alamos have seen an explosion in population growth, while the cost of living has remained stable. New Mexico has an iconic charm that is hard to match, and the city attracts retirees and young professionals looking to escape expensive cities on the coast. The average price of a home in New Mexico is just under $250,000, which is a 15.9% increase over the past year. Plus, there is an abundance of open acreage which keeps the land cheap for those who want to develop a property from scratch.
6. Alabama Rental Properties
Alabama is another state that often gets ignored but offers a strong economy and low cost of living that is attractive to renters. The state boasts a GDP of over $200 billion and a diverse economy supported by stable industries like healthcare, aerospace, and banking. But it’s also one of the most affordable states in the US with a median home price of only $170,000. Cities like Huntsville, Birmingham, and Bessemer offer great opportunities for investors, especially those looking for a low entry point.
7. Texas Rental Properties
Texas has long been a great state for real estate investing thanks to its diverse and healthy economy, consistent population growth, and low cost of living. The state has become a haven for those fleeing from coastal cities like New York and Los Angeles and want affordable living with opportunities for career advancement. The state is home to several Fortune 500 companies and colleges, as well as booming industries like healthcare, tech, and construction. Plus, it offers a diverse mix of major cities like Houston, Dallas, and Austin, as well as suburban and rural areas to suit different investing strategies.
8.North Carolina Rental Properties
North Carolina is another gem for investors because it offers affordable living as well as high demand for housing with a low inventory. The state offers mild weather, job opportunities, and an impressive infrastructure. Whether you’re looking to buy a single-family home in Charlotte or a vacation property in the Outer Banks, North Carolina has something to offer. Charlotte’s Research Triangle is attracting tons of out-of-state residents and making the city one of the fastest-growing in the country. But, the population boom has not yet caused a drastic price increase, as the median home price in the state is just under $250,000.
9. Illinois Rental Properites
Illinois is another smart bet for investors because it offers a healthy mix of opportunity and affordability. Chicago is one of the most sought-after real estate markets in the country, as it offers a strong economy supported by manufacturing, publishing, insurance, and financial services. Plus, the city features plenty of desirable suburbs, such as Naperville or Buffalo Grove, with a high demand for single-family homes. But, unlike states with a major urban center like New York or California, the cost of living is quite affordable for average investors and the median home price in the state is just over $230,000.
Final Thoughts
No matter where you invest, it’s vital to do your research and find a market that appeals to you. The best state to buy rental property is the one you’re most familiar with and offers the most opportunity for your budget. Real estate investing is far from easy, but if you are willing to put in the work, you can find great deals almost anywhere.