Real estate is one of the most secure and profitable investments a person can make. However, many considerations have to be put into play before you decide to take the plunge. It's common for investors to overly focus on the home itself - things such as great curb appeal, solid construction, etc. But if you truly want to maximize your returns, you should target the best states to buy investment property in. These places should offer certain factors such as housing demand, prices, long-term market trends, state regulations, occupancy rates, etc. Let's go through a list of some of the most profitable US States for real estate investments. Additionally, we'll see how they fare against some of the most crucial criteria regarding profitability.
Maryland
The main thing that separates Maryland from other states is its booming economy. It greatly outperforms the national average. The most prominent industries in Maryland are as follows:
- Information technology
- Telecommunications
- Aerospace
- Defense
Jobs in each of these industries pay very well. High wages are a good sign for potential landlords. They mean that Maryland residents can afford high-quality properties, generally take good care of their rentals, and, most importantly, pay rent on times. Additionally, Maryland is extremely affordable for investing compared to some of the other best states to buy investment property in. This makes it a good area for first-time investors.
Maryland is a very landlord-friendly state. There is no rent control, and rent increases do no require notice. Although you don't have to, we would still advise you to take advantage of rent increase notices. This helps create a stronger landlord-to-tenant relationship and reduces vacancy periods. Experts from müv | Trusted Florida Movers also recommend offering to connect potential tenants with moving companies you trust or have previous experience with. This is a great way of building a solid professional relationship right off the bat.
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Arizona
The presence of Arizona on the list in 2023 should come as no surprise. Over the last couple of years (especially in 2022), this state has seen a boom in population growth. And with that increase in population came an economic boom. The economy of Arizona is still in the process of diversification, which is always a good sign for real estate investors. The most profitable sectors here are healthcare, government, and transportation.
A very important aspect of Arizona real estate is the fact that it boasts above-average real estate property appreciation. What this means is that profit is available both in the short term and the long term (in case you ever decide to sell). The most popular property type is single-family homes. This is a great indicator of tenant loyalty and responsibility.
Arizona is known for its great residential family neighborhoods.
In terms of landlord friendliness, Arizona beats even Maryland. Renters are prohibited from skipping or being late on payments. If you don't receive rent on time, you can give your tenant a five-day notice. If they don't pay within that timeframe, you can file for an eviction, Additionally, there is no rent control law.
New York
New York State is undoubtedly one of the most profitable places to invest in real estate in the whole country. In general, your aim with this state should be long-term rental properties. New York boasts a large population with continuous growth. This is mainly attributed to the amazing educational and professional opportunities. With a well-diversified economy and high wages, you should expect to see all of the aforementioned benefits (see Maryland).
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Nearly half of New York State residents are renters rather than homeowners. This makes New York the perfect market for growing real estate rental businesses.
New York is one of the best states to buy investment property in for long-term rental investments.
In terms of demographics, New York generally attracts younger people, mostly because of education opportunities and (in certain areas) proximity to New York City. This might affect your marketing and location-picking strategies. You might want to look for properties that are close to educational institutions. However, they should still offer some peace and quiet during the night. Additionally, you could install smart home technology into your property since it's greatly appreciated and increases its value.
One thing to note about New York, however, is that laws are generally tenant-friendly. Rent control and stabilization tactics and laws are in place. Lack of affordable housing has previously been an issue for New York State, so now things of that nature are a bit more regulated.
Florida
There is no reason to question why Florida is one of the best states to buy investment property in. The three main factors which contribute to Florida being such a great real estate investment are are the large population, exponential population growth, and extremely strong economy. When it comes to renter demographics, they are also separated into three categories:
- Students - Florida is home to major higher education insititutions. Not only does this attract residents from within the US, but it creates a large student diaspora;
- Businessmen/women - Florida has a robust and diverse economy. Job opportunities are everywhere and constantly attracting residents who are looking for business success in the Sunshine State;
- Retirees - Florida is known for attracting retired people because of its wonderfully warm climate and gorgeous beaches.
Additionally, Florida offers an above-average rate of return. However, your profit will depend on where your property is located. Some areas and cities offer a significantly higher rate than others. For example, Tampa is a great city for investing in residential properties when it comes to this. You can help your tenants hire residential movers to reach the city with ease. Although not as great as Maryland or Arizona, Florida is still a relatively landlord-friendly state. Security deposit and eviction laws are highly favorable.
California
California is one of the most profitable states for real estate investment in the entire country. It's one of the most populated states in the US, and the demand for rental properties is extremely high. This is mainly due to high property values. Not everyone can afford a home in California, so most people rent. With such high property prices, it's apparent that this is not a beginner-friendly market, nor is it good for people with limited budgets. However, you can expect a quick and strong profit if you can invest in real estate property in California.
Los Angeles is a very popular city for experienced investors in California.
There is one very important thing to note here. California is one of the least landlord-friendly states in all of America. Tenant rights are protected by many laws, including very strong state, wide rent control regulations. A requirement for eviction is for a landlord to go to court and win.
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To Conclude
Of course, choosing one of the best states to buy investment property in is just the beginning of making a smart investment plan. There's a lot more that goes into it, but this is a great start. You also have to choose the right city/neighborhood within these states and come up with a good marketing strategy. Remember to have a strong exit strategy. It's important to think ahead when investing and be prepared for anything. For example, you could consider what the best time of year would be to sell and opt out of the investment. However, if you plan things carefully and make all the right choices, you may not even need to use that strategy.