There are several factors to consider when investing in a new state to rent the space out. You want to make sure that there are landlord-friendly laws surrounding this like eviction, taxes, controlled rent, crime rate, and more.
First and foremost, you need to make sure that you have a quick and clean way to remove a tenant who is not paying their rent. It will likely happen to you at some point, and some states make it much more difficult to evict tenants even when they’ve seriously violated the lease. However, there will be fast and easy eviction processes in place in the best states for landlords.
Property Tax Rates
Property taxes will be unavoidable no matter where you purchase property, so you should look for locations with either low property taxes or provisions for lowering tax rates on properties that aren’t your primary residence. Some states have significantly lower property taxes than others, like Alabama. There are also states like Illinois that allow a landlord to pay lower taxes on rental properties.
Licensing & Rent Control
Finally, be sure you’re clear on any rent control measures that are in place, as well as any legal or administrative differences like landlord licensing. For example, some states require landlords to be licensed before renting out property. In some areas, the amount of rent you can charge will be legally capped, or your ability to raise rent will be restricted to specific increments.
One of the most landlord-friendly states to buy a rental property in, Alabama, does not require any rental licensing, and the property tax is just 0.48%. In addition, there are no limits to deposits or late fees, so any reasonable amount can be demanded in the lease terms.
If a landlord needs to remove a tenant for any breach of the lease, it only requires a 14-day written notice to terminate the lease agreement if the breach is not remedied. If the eviction is for unpaid rent, only a 7-day notice is required.
If you are the landlord of a property in Arizona and your tenants are not paying rent, you are protected. Tenants can be given a 5-day notice for late rent, a 5-day notice for failing to maintain the property, and a 10-day notice for any other violation of the lease terms.
There are even provisions to terminate and evict immediately by filing an Unconditional Quit Notice and immediately taking the claim to court. To cap it off, the property tax on investment properties is only 0.72%, modest compared to some markets.
Investing in rental property in Colorado is much lower stress than other markets due partly to the protections that the state gives to landlords. This makes it much easier to protect your investment.
The state has eviction processes that are very favorable to the landlord and requires the landlord only to give a 72-hour compliance notice. If the notice expires without remediation or payment of rent and fees owed, the landlord only needs to give the tenant 48 hours to vacate.
While property values in Florida may be high enough to price out some landlords, the laws are incredibly landlord-friendly and only require minimal effort on the part of the landlord to keep their property safe. Rent control is prohibited in Florida, and there are no limits to the late fee or security deposit amounts. Landlords also have up to 60 days to return the security deposit. Evictions for non-payment only require 3 days to remedy, and evictions for damage or lease violations only require 7 days.
With a property tax rate of 0.91% and no limits to charging late fees or requiring deposits, Georgia is one of the most landlord-friendly states in the US. Landlords don’t even have to give notice before entering, whereas other states often require 24 hours notice.
Eviction is informal and only requires that the tenant be notified that they owe rent and that they must pay what’s due. From that point, they have 7 days to fulfill the request, or the landlord can have the eviction suit heard in court.
Illinois is another state where evictions can begin very quickly. If the tenant has fallen behind on rent, they are given a 10-day notice to pay or leave, after which the eviction will be heard in court.
Landlords in Illinois can set their security deposits freely without limit and have 45 days after move-out to return the security deposit or show cause for withholding. While property taxes aren’t among the lowest, Illinois has an incredibly large renter pool, so you’ll never be looking for tenants.
Evictions in Indiana are relatively quick compared to less landlord-friendly states. They allow tenants in breach of the lease to be evicted in 10 days if they fail to pay back rent. There is also no grace period for month-to-month leases, and if the property is damaged, the tenant can be evicted immediately.
Whether evicted or leaving otherwise, the landlord has 45 days to determine if the security deposit can be returned. The property tax rate is also relatively low at just 0.87%.
With low taxes and a booming job market, North Carolina is a prime spot for rental investors. The property tax is only 0.77%, well below the average for the nation. North Carolina has no formal eviction laws, so the tenancy can be ended once the tenant is given notice, known as an Unconditional Quit Notice.
There are no rent control measures in place in the state, and there are no limits to the deposits or fees. Therefore, the landlord can charge any deposits and fees they agree on with the tenant.
With a tax rate of only 0.83%, investing in Kentucky rentals looks better every day. They also help protect the landlord by giving fast and easy eviction guidelines. For non-payment, a 7-day notice is posted, after which the eviction process can be started.
Other lease violations require a 15-day notice to remedy the violations. If the situation has not been corrected, the eviction suit can be filed. Landlords can even evict someone late on their rent for 6 months, and late fees have no legal caps in the state.
The property taxes in Texas are nearly 2%, but just about everything else is landlord-friendly. There is no limit to charging security deposits, and landlords can set their terms for premises repair and upkeep. This means that you can have it in the terms of the lease that the tenant is responsible for keeping the appliances repaired and in good working order.
To evict for non-payment, Texas only requires 3 days to remedy. If the amount due isn’t paid by the end of the 3 days, the eviction can be filed immediately. Landlords only have 30 days to return the security deposit in Texas.