These Are the 5 Most Landlord-Friendly States

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Location is the most important factor in real estate, and that concept doesn’t apply only to a primary homebuyer; it’s true for a real estate investor as well. One of the reasons I got into the landlord business is that I live in a landlord-friendly state.

Factors that make a state landlord-friendly

Landlord-friendly states have certain qualities that, when looked at overall, favor landlords, such as landlord-friendly laws, a low price of entry, low property taxes, low unemployment or high job growth, and in-migration. Meanwhile, tenant-friendly states tend to have laws that favor tenants, a high price of entry, high taxes, high unemployment, and out-migration.

The factors that make a state landlord-friendly or tenant-friendly can be attributed to something as simple as this: Landlord-friendly states are usually conservative, Republican-led ones (red states), and tenant-friendly states are typically liberal, Democratic-led ones (blue states).

Let’s see if this generalization rings true.

Laws that favor landlords

Heavily regulated states are bad news for landlords, who can usually run a more profitable business the less they’re regulated. Some jurisdictions pass specific laws, such as Seattle’s ”first-in-time rule” (FIT rule), a tenant-friendly rental law that requires landlords to choose the first applicant who applies. Because that law is unique to Seattle, the focus here will be on more common laws. But it’s important for landlords to keep up with legislation that could impact their business and vote it down if possible.

The three types of laws we’ll focus on for comparison purposes have to do with the following:

• The eviction process
• Rent control
• Landlord licensing

Other factors that make a state landlord-friendly

To be successful as a landlord, consider how much it will cost to acquire property, what the property taxes are like, how well the economy is doing as demonstrated by employment and job growth, and whether people are moving to the state in greater numbers than they’re leaving.

The five most landlord-friendly states (in no particular order)

Whether a state is the most landlord-friendly is subjective, based on factors the rater chooses. Based on landlord-tenant laws, price of entry, property taxes, job growth, and in-migration, here’s a list of states you might want to consider investing in.

1. West Virginia

• Evictions: A landlord can immediately file an eviction lawsuit, with no notice required.
• Rent control: None.
• Landlord licensing: Not required.
• Price of entry: At an average home value of $107,064, West Virginia has the lowest price of entry of any state in the United States.
• Taxes: West Virginia, at a property tax rate of 0.54%, is on the low end for property taxes, ranking fifth lowest in the United States.
• Job growth: The bad news for West Virginia is job growth. It’s low compared to other states, with only eight states ranking lower. The unemployment rate, however, is improving as more people are going back to work.
• In-migration: More bad news here: More people are leaving the state versus coming in.
• The takeaway: Landlord-tenant law favors West Virginia landlords, and the price of entry is low, as are property taxes. But with a declining population and high unemployment, it could be risky getting steady rent. You should plan for vacancies and set rent at an affordable price if you choose the Mountain State.

2. Idaho

• Evictions: Tenants have three days to cure the violation. If they don’t, the property owner can file for an eviction hearing.
• Rent control: None.
• Landlord licensing: Not required.
• Price of entry: At an average home value of $303,606, Idaho is on the more expensive side, but other factors make this state a good one for rental property.
• Taxes: Idaho, at a property tax rate of 0.72%, is on the low end, ranking ninth lowest in the United States.
• Job growth: Idaho is booming, which could be the reason for the increased cost of homes. Jobs are expected to grow 1.5% annually through 2022, outpacing the national economy.
• In-migration: People are moving to Idaho more than they’re leaving.
• The takeaway: Landlord-tenant laws favor Idaho landlords. Although the price of entry is on the high side, with an increasing population and job growth, there should be a large market of renters in the Gem State.

3. Tennessee

• Evictions: Tenants have 14 days to cure the violation. If they don’t, the property owner can file an eviction notice.
• Rent control: None.
• Landlord licensing: All owners of rental property must register their property, but the fee is only $10 annually.
• Price of entry: At an average home value of $192,275, Tennessee ranks on the lower end of housing prices in the United States.
• Taxes: Property taxes are low in Tennessee, at a rate of 0.74%.
• Job growth: Tennessee’s nonfarm jobs are projected at a growth rate of 0.9% in 2020, below the national average.
• In-migration: People are moving to Tennessee more than they’re leaving.
• The takeaway: Landlord-tenant law, with the exception of requiring a rental license, favors Tennessee landlords. The price of entry is low, as are property taxes. Combine low costs with an economy experiencing high in-migration, and you have a great combination of factors that make the Volunteer State a good choice to buy rental property.

4. North Carolina

• Evictions: There is no statute on evictions. Landlords can end the tenancy with a termination notice, called an unconditional quit notice, if a lease term or rental agreement term is violated.
• Rent control: None.
• Landlord licensing: Not required.
• Price of entry: At an average home value of $210,766, North Carolina ranks on the lower end of housing prices in the United States.
• Taxes: Property taxes are low in North Carolina, at a rate of 0.86%.
• Job growth: Job growth is on the rise in North Carolina. Leading the growth are the healthcare and tech industries.
• In-migration: People are moving to North Carolina more than they’re leaving.
• The takeaway: Landlord-tenant laws favor North Carolina landlords. The price of entry is low, as are property taxes. Combine low costs with an economy experiencing job growth and positive in-migration, and you have a great combination of factors that make the Tar Heel State a good choice to buy rental property.

5. Alabama

• Evictions: Tenants have seven business days to cure the violation. If they don’t, the landlord can file for eviction.
• Rent control: None.
• Landlord licensing: Not required.
• Price of entry: At an average home value of $147,539, Tennessee ranks on the lower end of housing prices in the United States.
• Taxes: Alabama, at a property tax rate of 0.37%, is on the low end for property taxes, ranking second lowest in the United States. (Hawaii ranks first, but it’s the most expensive state in which to buy a home.)
• Job growth: At 0.7%, job growth in Alabama is below the national average of 1.2%.
• In-migration: People are moving to Alabama more than they’re leaving.
• The takeaway: Landlord-tenant laws favor Alabama landlords. The price of entry is low, as are property taxes. People are moving to Alabama more than they are moving from the state, but job growth is below the national average. You should plan for vacancies and set rent at an affordable price if you choose the Yellowhammer State.

The Millionacres bottom line

The states profiled here as landlord-friendly ones — West Virginia, Idaho, Tennessee, North Carolina, and Alabama — have traditionally been considered ”red” states, while the worst states to be a landlord — Washington, New York, Oregon, New Jersey, California, and Maryland — have traditionally been considered ”blue” states.