Invest in Real Estate in the 5 Most Landlord Friendly States

Before buying an investment property, a real estate investor has to check whether or not the market is landlord friendly. Failing to do your due diligence will make you wish you can go back in time and invest elsewhere. 

This topic is important to both new and experienced real estate investors since no one really talks about the issue of checking if a rental property is in a landlord friendly state. The return on investment is great, the cap rate is high, but the state rental laws are harsh on landlords?! Well, that’s why we bring you the most landlord friendly states in 2018.

When it comes to owning a rental property, not all states have equal rental laws. Each state has its own rental legislation. We advise you to take the time to research landlord laws including how evictions and lease agreements are handled.

What Do We Mean Exactly by “Landlord Friendly States”?

Invest in Real Estate in the 5 Most Landlord Friendly States

When we talk about landlord friendly states, the term is used to describe cities and counties within a state’s border that are more friendly to landlords over tenants when it comes to matters related to owning a rental property and renting it out. As you are looking for the best places to buy real estate, keep in mind that some states do not have the best laws and regulations for landlords.

Becoming a landlord is not an easy task, especially if you invest in the least landlord friendly states. Real estate investors should be extra careful when investing in tenant friendly cities. Because in these cities, laws are in favor of the tenant. For example, in cities in California and New York, if a renter is without hot water, they can legally withhold rent until the problem is fixed.

When conducting real estate market research, investors often overlook the local landlord-tenant law. Many states swing in favor of the tenant with tenant friendly laws. That’s why it is critical to be aware of the local rental laws wherever you are considering investing.

Related: The Best Places in California to Buy an Investment Property in 2018

What makes a state landlord friendly?

From eviction laws to rent control, every state has variances in how they handle these situations. In the most landlord friendly states, rental laws swing in favor of the landlord, which makes them the best places to buy real estate. Our advice to current and future landlords: Take the time to research local rental laws and all possible roadblocks and restricting laws. The following list is an example of laws in landlord friendly states. To look at it differently, let us consider an easier question as well: What makes a state unfriendly to landlords?

1- Eviction process. In some states, it can take up to 6 months to evict a tenant that does not pay rent. In landlord friendly states, the eviction process is quick with low tolerance for tenants who do not pay rent.

2- Tenant rights. Sometimes, tenant rights go so far beyond necessity that they put landlords at financial risk. In landlord friendly states, tenant rights are fair for both parties.

3- Rent control. In some states, rent is controlled and cannot be increased despite the yearly increase in taxes, insurance, and utilities. You ideally want to be a landlord where there is no rent control.

4- Registrations and licenses. Some states go further and require landlords to have special registrations and certifications in order to own income producing rental property. Landlord friendly states do not require you to jump through extra hoops.

The 5 Most Landlord Friendly States

As mentioned earlier, the most landlord friendly states in the US favor landlords over tenants. If you are thinking about owning a rental property, then you will want to consider these 5 landlord friendly states.

1- Arizona

Eviction in Arizona is fast and easy. Arizona’s non-compliance laws allow landlords to terminate a lease in 10 days if they find false information on the application for tenancy. According to Mashvisor’s rental property calculator, here are some of the best cities to invest in real estate in Arizona.

  • Scottsdale

Traditional rental income: $3,552

Traditional cash on cash return: 2.6%

Median property price: $877,651

  • Mesa

Airbnb rental income: $1,470

Traditional rental income: $1,450

Airbnb cash on cash return: 1.02%

Traditional cash on cash return: 1.86%

Median property price: $305,455

Remember, all of the cash on cash return values on this list are averages for the city. Using a tool like Mashvisor’s Property Finder will allow you to find investment properties with much higher values.

Do you have a free Mashvisor account? Use our Property Finder to find lucrative investment properties that match your criteria in a matter of minutes!

2- Texas

Texas rental laws allow landlords to quickly evict their tenants when the lease is violated. Even more, state laws allow landlords and tenants to agree on repairs at the cost of the tenant. Invest in Texas in these cities for a high return on investment.

  • San Angelo

Traditional rental income: $1,422

Traditional cash on cash return: 1.57%

Median property price: $347,559

  • Plano

Airbnb rental income: $2,960

Traditional rental income: $1,885

Airbnb cash on cash return: 3.97%

Traditional cash on cash return: 1.77%

Median property price: $328,430

3- Indiana

Indiana rental laws offer landlords 45 days to withhold a security deposit to make sure the property wasn’t damaged by the tenant. Check out these neighborhoods in Indianapolis to invest in Indiana real estate.

  • Fountain Square, Indianapolis

Airbnb rental income: $2,150

Traditional rental income: $917

Airbnb cash on cash return: 5.29%

Traditional cash on cash return: 1.13%

Median property price: $242,819

  • Mapleton-Fall Creek, Indianapolis

Airbnb rental income: $2,291

Traditional rental income: $969

Airbnb cash on cash return: 6.16%

Traditional cash on cash return: 1.62%

Median property price: $215,214

4- Florida

Florida’s loose rental laws make it attractive for rental property investors. There are no laws regarding rent control and security deposits can be unlimited. Florida real estate is quite expensive but is definitely worth considering. Plus, you can always find cheaper real estate using Mashvisor’s heatmap.

Related: The 7 Best Places to Buy a Vacation Home in Florida

  • Key West

Airbnb rental income: $8,366

Traditional rental income: $4,158

Airbnb cash on cash return: 7.03%

Traditional cash on cash return: 3.55%

Median property price: $870,842

5- Colorado

Finally on the list of the most landlord friendly states comes Colorado. Despite being an expensive state to invest in, it is an amazing place to become a landlord. Evictions are quick, and landlords are not required to provide tenants with a property visit notice. These are the best cities to invest in Colorado real estate.

  • Colorado Springs

Airbnb rental income: $2,640

Traditional rental income: $1,445

Airbnb cash on cash return: 4.03%

Traditional cash on cash return: 1.64%

Median property price: $379,914

Related: The Market Is Hot for a Colorado Springs Investment Property

  • Denver

Airbnb rental income: $3,511

Traditional rental income: $1,935

Airbnb cash on cash return: 3.93%

Traditional cash on cash return: 1.8%

Median property price: $476,418

Start looking for investment properties in any of the above cities or neighborhoods now with Mashvisor. To start your 14-day free trial and subscribe to our services with a 20% discount after, click here.

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