To be a successful real estate investor, it's essential to choose the right locations that offer equity growth, positive cash flow, and long-term profitability. Many factors contribute to the earning potential of a specific area, such as home values, vacancy rates, cost of living, taxes, appreciation, and opportunities for renters. In this article, we will explore the top 10 states to invest in real estate and the five worst states, providing valuable insights and data for each location.
1. Georgia
Georgia takes the top spot as the best state overall to invest in real estate. With a high population of renters (34.1%) and a low cost of living, it offers an ideal environment for real estate investors. The state has a remarkable property appreciation rate year-over-year (YoY) of 22.1%, indicating the potential for rising rents and long-term equity growth. Georgia also ranks high in location opportunities for renters, with impressive rankings in economic, job, population, and overall happiness growth.
Houses on Bay Avenue in Somers Point, NJ
2. Utah
Utah secures the second spot on our list due to its growing population, high market appreciation, and low vacancy rates. The demand for rental units drives home prices up, making it an attractive option for investors. Although property prices may be out of reach for many buyers, investors can benefit from the rental demand. Utah residents pay an average monthly rent of $1,090, and the state offers a strong job growth rate and median household income.
3. Texas
Ranked third, Texas stands out as an excellent state for buying an investment property. With its favorable location opportunities and high resident affordability, investors can expect a welcoming market. The state has a significant inventory of homes, reflecting growth potential. Despite a relatively high vacancy rate, the percentage of renters offsets this, indicating a strong demand for rental properties. Texas boasts a comparatively low overall tax burden and appreciating property values.
4. North Carolina
North Carolina offers an excellent opportunity for real estate investors and secures the fourth spot on our list. Although the available inventory may be limited, the state's overall location opportunity score ranks high, signifying growth potential. With moderate tax burdens and rental appreciation rates, investors can benefit from increased equity and cash flow.
5. New Jersey
Despite its high cost of living, New Jersey is an attractive option for real estate investors. The state's high median income and availability of inventory make it an appealing choice. New Jersey ranks high in monthly rental income and the percentage of renters versus owners, indicating a strong rental market. With moderate home and rental appreciation values, the state offers income and home equity potential.
Seattle Skyline at sunset, Washington
6. Tennessee
Tennessee ranks sixth on our list, boasting a low cost of living and overall tax burden. The state's rental income increase and property appreciation rates make it an attractive option for investors. With its moderate growth opportunities and a healthy rental market, Tennessee offers potential for equity and rent growth.
7. Washington
Washington secures a spot in the top 10 due to its overall location opportunities, high rental income, and low vacancy rates. The state's high median household income and rental percentage contribute to a stable rental market. Although rental income appreciation may be moderate, property values have appreciated, making it an appealing option for investors.
8. Delaware
Ranked eighth, Delaware offers investment opportunities with its tight home inventory and rental income increase. The state experiences moderate job, population, and economic growth, attracting investors and residents alike. Despite a high cost of living, Delaware benefits from a low tax burden, making it appealing for both residents and investors.
9. Nebraska
Nebraska ranks well in overall affordability, making it a good option for investing in rental property. With moderate growth opportunities and appreciation rates, the state offers a sound choice for investors. Although taxes may be higher than average, the demand for housing offsets this, creating opportunities for investors.
10. Florida
Florida rounds out our list as one of the best states for real estate investment. With high property appreciation rates and rising rents, the state offers attractive investment opportunities. Although affordability may be a concern, the influx of newcomers and available inventory make Florida an appealing choice for investors.
5 Worst States to Invest in Real Estate in 2023
Contrasting the best states, we also evaluated the worst states to invest in real estate. These states typically have low rents, high vacancy rates, and weak demand for rental properties. With low household incomes and sluggish economies, these states rank at the bottom for real estate investment opportunities.
For a complete overview of the data and rankings for each state, refer to the map below. Click on your state to see the rankings for each evaluation category.
If you're considering real estate investment, it's crucial to carefully analyze the market and choose a location that aligns with your investment goals and financial capabilities.
