Investor Blogs Best States to Buy Rental Property Investment in 2020 by Eman Hamed July 11, 2020July 9, 2020 by Eman Hamed July 11, 2020July 9, 2020 Buying rental property is one of – if not the – most popular ways of investing in real estate. It’s a stable and secure strategy that can provide a lucrative return on investment. However, owning a successful rental property business is all about finding deals in great locations. In the US housing market, median property prices, rent prices, and demand for rentals differ from state to state. Therefore, the profit you’ll earn as an investor will also differ depending on which state your rental property is located. That’s why it’s important to know the best states to buy rental property where you should focus your property search. Luckily, there are lots of statistics and real estate data available to help you identify the best places to own rental property in 2020. Investors can get their hands on such information from real estate investor websites including Mashvisor. Our data comes from reliable sources like Zillow, MLS, and Airbnb. After analyzing this big data, we provide predictive analytics for both the traditional and Airbnb rental strategies. This helps you determine the optimal strategy to make the highest return possible from your rental property investment wherever it’s located. To learn about our product and data methodology, click here. In this article, we review the best states to invest in real estate according to our most recent data. And because we know that each investor has different criteria when it comes to choosing a real estate market to invest in, we’ve organized the list into 4 categories. Below, you’ll discover the best rental markets in terms of affordability, property tax, traditional rental property income, and Airbnb rental income. This makes it easier to pick a location based on your preferred criteria. Related: How to Choose a Real Estate Market to Invest In Best States to Buy Rental Property – Affordability The first category or factor that investors base their decision on when it comes to where to invest in real estate is property prices. Whether you’re buying your first rental property or want to add a new rental to your portfolio, you definitely have a budget that you’re sticking to. That’s a smart thing to do because it helps you filter out states and cities where properties are prices above what you can afford. So, here’s a list of the 10 cheapest states to buy a house in the US right now. These are the best states to buy rental property where prices are below the national median in 2020. #1 Iowa Median Property Price: $229,561 Price Per Square Foot: $148 Traditional Rental Income: $1,118 Airbnb Rental Income: $2,238 Airbnb Occupancy Rate: 47% Average Airbnb Daily Rate: $155 Price to Rent Ratio: 17 Average Days on Market: 106 #2 West Virginia Median Property Price: $233,210 Price Per Square Foot: $189 Traditional Rental Income: $1,098 Airbnb Rental Income: $2,123 Airbnb Occupancy Rate: 50% Average Airbnb Daily Rate: $177 Price to Rent Ratio: 18 Average Days on Market: 125 #3 North Dakota Median Property Price: $241,311 Price Per Square Foot: $121 Traditional Rental Income: $1,272 Airbnb Rental Income: $1,897 Airbnb Occupancy Rate: 56% Average Airbnb Daily Rate: $107 Price to Rent Ratio: 16 Average Days on Market: 80 #4 Ohio Median Property Price: $246,031 Price Per Square Foot: $132 Traditional Rental Income: $1,204 Airbnb Rental Income: $2,245 Airbnb Occupancy Rate: 54% Average Airbnb Daily Rate: $138 Price to Rent Ratio: 17 Average Days on Market: 68 #5 Indiana Median Property Price: $252,683 Price Per Square Foot: $118 Traditional Rental Income: $1,128 Airbnb Rental Income: $2,195 Airbnb Occupancy Rate: 55% Average Airbnb Daily Rate: $140 Price to Rent Ratio: 18 Average Days on Market: 81 #6 Mississippi Median Property Price: $267,413 Price Per Square Foot: $124 Traditional Rental Income: $1,212 Airbnb Rental Income: $1,856 Airbnb Occupancy Rate: 52% Average Airbnb Daily Rate: $128 Price to Rent Ratio: 18 Average Days on Market: 120 #7 Kentucky Median Property Price: $269,246 Price Per Square Foot: $203 Traditional Rental Income: $1,142 Airbnb Rental Income: $2,013 Airbnb Occupancy Rate: 48% Average Airbnb Daily Rate: $160 Price to Rent Ratio: 19 Average Days on Market: 99 #8 Arkansas Median Property Price: $269,944 Price Per Square Foot: $144 Traditional Rental Income: $1,117 Airbnb Rental Income: $2,108 Airbnb Occupancy Rate: 53% Average Airbnb Daily Rate: $130 Price to Rent Ratio: 20 Average Days on Market: 114 #9 Missouri Median Property Price: $275,194 Price Per Square Foot: $715 Traditional Rental Income: $1,200 Airbnb Rental Income: $2,064 Airbnb Occupancy Rate: 50% Average Airbnb Daily Rate: $125 Price to Rent Ratio: 19 Average Days on Market: 107 #10 Nebraska Median Property Price: $278,955 Price Per Square Foot: $139 Traditional Rental Income: $1,144 Airbnb Rental Income: $2,470 Airbnb Occupancy Rate: 56% Average Airbnb Daily Rate: $121 Price to Rent Ratio: 20 Average Days on Market: 76 Use Mashvisor’s Property Finder tool to find rental properties for sale within your budget in your market of choice! Best States to Buy Rental Property – Property Tax When investing in rental properties, it’s important to know all costs you’re paying for including property taxes. Property taxes can have a considerable impact on renal property cash flow, which is why you need to know how much your property tax rate. However, property tax rates vary significantly from state to state. Therefore, depending on where you’re investing, property taxes can either be a small inconvenience or a major burden on your rental property investment. Some investors favor buying rental property out of state if property taxes are too high in their own state. Here are the best states to buy rental property with the lowest property tax rates according to WalletHub: Related: 10 States with No Property Tax in 2020 #1 Hawaii Effective Property Tax Rate: 0.27% Median Property Price: $927,247 Price Per Square Foot: $675 Traditional Rental Income: $2,161 Airbnb Rental Income: $4,288 Airbnb Occupancy Rate: 59% Average Airbnb Daily Rate: $218 Price to Rent Ratio: 36 Average Days on Market: 135 #2 Alabama Effective Property Tax Rate: 0.42% Median Property Price: $302,768 Price Per Square Foot: $148 Traditional Rental Income: $1,174 Airbnb Rental Income: $2,615 Airbnb Occupancy Rate: 52% Average Airbnb Daily Rate: $174 Price to Rent Ratio: 25 Average Days on Market: 104 #3 Colorado Effective Property Tax Rate: 0.53% Median Property Price: $589,983 Price Per Square Foot: $556 Traditional Rental Income: $1,935 Airbnb Rental Income: $2,764 Airbnb Occupancy Rate: 57% Average Airbnb Daily Rate: $207 Price to Rent Ratio: 25 Average Days on Market: 98 #4 Louisiana Effective Property Tax Rate: 0.53% Median Property Price: $293,925 Price Per Square Foot: $144 Traditional Rental Income: $1,332 Airbnb Rental Income: $2,253 Airbnb Occupancy Rate: 45% Average Airbnb Daily Rate: $177 Price to Rent Ratio: 18 Average Days on Market: 131 #5 District of Colombia Effective Property Tax Rate: 0.55% Median Property Price: $729,436 Price Per Square Foot: $541 Traditional Rental Income: $2,602 Airbnb Rental Income: $2,503 Airbnb Occupancy Rate: 52% Average Airbnb Daily Rate: $144 Price to Rent Ratio: 23 Average Days on Market: 72 #6 Delaware Effective Property Tax Rate: 0.56% Median Property Price: $395,199 Price Per Square Foot: $246 Traditional Rental Income: $1,544 Airbnb Rental Income: $2,172 Airbnb Occupancy Rate: 47% Average Airbnb Daily Rate: $235 Price to Rent Ratio: 21 Average Days on Market: 192 #7 South Carolina Effective Property Tax Rate: 0.57% Median Property Price: $355,665 Price Per Square Foot: $322 Traditional Rental Income: $1,333 Airbnb Rental Income: $2,317 Airbnb Occupancy Rate: 51% Average Airbnb Daily Rate: $190 Price to Rent Ratio: 22 Average Days on Market: 121 #8 West Virginia Effective Property Tax Rate: 0.59% Median Property Price: $233,210 Price Per Square Foot: $189 Traditional Rental Income: $1,098 Airbnb Rental Income: $2,123 Airbnb Occupancy Rate: 50% Average Airbnb Daily Rate: $177 Price to Rent Ratio: 18 Average Days on Market: 125 #9 Wyoming Effective Property Tax Rate: 0.61% Median Property Price: $684,125 Price Per Square Foot: $331 Traditional Rental Income: $1,533 Airbnb Rental Income: $2,477 Airbnb Occupancy Rate: 46% Average Airbnb Daily Rate: $208 Price to Rent Ratio: 37 Average Days on Market: 134 #10 Arkansas Effective Property Tax Rate: 0.63% Median Property Price: $269,944 Price Per Square Foot: $144 Traditional Rental Income: $1,117 Airbnb Rental Income: $2,108 Airbnb Occupancy Rate: 53% Average Airbnb Daily Rate: $130 Price to Rent Ratio: 20 Average Days on Market: 114 Best States to Buy Rental Property – Traditional Rental Income It’s important for real estate investors to look at statistics regarding rental prices to find the best places to buy rental property in 2020. This is because the best real estate markets are those where rent prices are growing at a stable rate. This allows owners of long-term rental properties to make a high monthly rental income that covers their costs and leaves positive cash flow. However, keep in mind that states with a high rental property income typically have a steep median price. Most residents can’t afford to buy and this increases the rental demand which, in turn, increases rent prices. Just make sure to run a real estate market analysis before investing in these best states to buy rental property for high rental income: Related: 15 Cities Where Rental Prices are Growing in 2020 #1 California Traditional Rental Income: $2,640 Median Property Price: $761,542 Price per Square Foot: $414 Price to Rent Ratio: 14 Average Days on Market: 79 #2 District of Colombia Traditional Rental Income: $2,602 Median Property Price: $729,436 Price per Square Foot: $541 Price to Rent Ratio: 23 Average Days on Market: 72 #3 Connecticut Traditional Rental Income: $2,336 Median Property Price: $504,736 Price per Square Foot: $219 Price to Rent Ratio: 18 Average Days on Market: 105 #4 New York Traditional Rental Income: $2,271 Median Property Price: $618,157 Price per Square Foot: $300 Price to Rent Ratio: 22 Average Days on Market: 137 #5 Hawaii Traditional Rental Income: $2,161 Median Property Price: $927,247 Price per Square Foot: $675 Price to Rent Ratio: 36 Average Days on Market: 135 #6 New Jersey Traditional Rental Income: $2,097 Median Property Price: $444,609 Price per Square Foot: $356 Price to Rent Ratio: 18 Average Days on Market: 108 #7 Massachusetts Traditional Rental Income: $2,082 Median Property Price: $670,119 Price per Square Foot: $362 Price to Rent Ratio: 27 Average Days on Market: 97 #8 Colorado Traditional Rental Income: $1,935 Median Property Price: $589,983 Price per Square Foot: $556 Price to Rent Ratio: 25 Average Days on Market: 98 #9 New Hampshire Traditional Rental Income: $1,889 Median Property Price: $436,355 Price per Square Foot: $209 Price to Rent Ratio: 19 Average Days on Market: 99 #10 Florida Traditional Rental Income: $1,858 Median Property Price: $464,078 Price per Square Foot: $270 Price to Rent Ratio: 21 Average Days on Market: 131 Find a Profitable Traditional Rental Property Best States to Buy Rental Property – Airbnb Rental Income Is renting out on Airbnb your preferred strategy for making money in real estate? If so, you need to know the best places to buy vacation rental property in 2020. And the best way to determine the profitability of an Airbnb investment is, again, the rental income. In the US, Airbnb rentals can generate higher rental income than traditional rentals in the same location. Still, certain locations are more attractive to tourists and vacationers, making them better than others for investing in short-term rental properties. Here are the best states to buy rental property for Airbnb investing in the US. Remember to check and comply with the Airbnb regulations in your state of choice. #1 Hawaii Airbnb Rental Income: $4,288 Median Property Price: $927,247 Price per Square Foot: $675 Airbnb Occupancy Rate: 59% Average Airbnb Daily Rate: $218 #2 California Airbnb Rental Income: $3,663 Median Property Price: $761,542 Price per Square Foot: $414 Airbnb Occupancy Rate: 58% Average Airbnb Daily Rate: $205 #3 Connecticut Airbnb Rental Income: $3,123 Median Property Price: $504,736 Price per Square Foot: $219 Airbnb Occupancy Rate: 51% Average Airbnb Daily Rate: $187 #4 Rhode Island Airbnb Rental Income: $3,028 Median Property Price: $559,739 Price per Square Foot: $286 Airbnb Occupancy Rate: 51% Average Airbnb Daily Rate: $196 #5 Massachusetts Airbnb Rental Income: $2,969 Median Property Price: $670,119 Price per Square Foot: $362 Airbnb Occupancy Rate: 55% Average Airbnb Daily Rate: $218 #6 New Hampshire Airbnb Rental Income: $2,823 Median Property Price: $436,355 Price per Square Foot: $209 Airbnb Occupancy Rate: 49% Average Airbnb Daily Rate: $209 #7 New York Airbnb Rental Income: $2,816 Median Property Price: $618,157 Price per Square Foot: $300 Airbnb Occupancy Rate: 49% Average Airbnb Daily Rate: $204 #8 Colorado Airbnb Rental Income: $2,764 Median Property Price: $589,983 Price per Square Foot: $556 Airbnb Occupancy Rate: 57% Average Airbnb Daily Rate: $207 #9 Vermont Airbnb Rental Income: $2,718 Median Property Price: $364,075 Price per Square Foot: $170 Airbnb Occupancy Rate: 52% Average Airbnb Daily Rate: $252 #10 Virginia Airbnb Rental Income: $2,702 Median Property Price: $396,867 Price per Square Foot: $236 Airbnb Occupancy Rate: 53% Average Airbnb Daily Rate: $191 What’s the Next Step? After covering the best states to buy rental property, it’s now up to you to do your due diligence before actually making a purchase. You need to research the market to decide which city and neighborhood you should buy. For example, while a certain state is generally affordable, prices in some cities might be above the state median. In addition, crime rates, walk scores, and the local economy are factors that affect the value of properties in cities and neighborhoods. Make sure to study those trends in your market of choice to decide if it’s a good place to buy investment property. Furthermore, even if you’re investing in one of the best places in the United States to buy rental property, it doesn’t mean that any property on the market is worth investing in. There are properties that are ideal and some that are not in every state, city, and neighborhood. You should talk to local real estate agents for information on the property you’re eyeing and run a rental property analysis using data to get an estimation of your potential ROI. Mashvisor’s Rental Property Calculator will help you in this step! Mashvisor’s Rental Property Calculator As you can see, Mashvisor provides a complete analysis of any rental property in the US housing market. The analysis will come with pre-calculated data based on rental comps in the area. It’ll provide you with information regarding the property and estimations of its rental income, expenses, cash flow, cash on cash return, cap rate, and occupancy rate. Moreover, these numbers are provided for both the traditional and Airbnb rental strategy to show you the optimal way to rent out your property. Ready to start your search in the best states to buy rental property? Start Your 7-Day Free Trial with Mashvisor Now! Start Your Investment Property Search! START FREE TRIAL AirbnbLocationProperty PricesRental IncomeTraditional 0 FacebookTwitterGoogle +PinterestLinkedin Eman Hamed Eman is a Content Writer at Mashvisor. With a focus on market reports, she enjoys researching the state of the real estate market in different cities across the US. Eman also writes about trends, forecasts, and tips for beginner investors to gain the confidence and knowledge they need to make wise decisions. Previous Post How to Deal with Tenant Complaints: A Property Manager’s Guide Next Post Should I Get My Real Estate License as an Investor? Related Posts How to Invest in Real Estate: 10 Ways for 2020 7 Best Ways to Find Off Market Properties in 2020 Making Money in Real Estate: Beginner-Level Investments Starting a Real Estate Business 101: Can I Afford a Rental Property? 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