The 10 Best (& Worst) States to Buy Investment Property in 2024

Rental properties can be a lucrative investment, providing a steady income stream. However, not all states offer the same returns on investment when it comes to real estate. In this article, we'll explore the 10...

Rental properties can be a lucrative investment, providing a steady income stream. However, not all states offer the same returns on investment when it comes to real estate. In this article, we'll explore the 10 best states to buy investment property in 2024, as well as the worst states for real estate. Whether you're a seasoned investor or just starting out, this list will give you valuable insights to make informed decisions.

1. South Carolina

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South Carolina, one of the original 13 colonies, offers a unique blend of old-world charm and modern amenities. With beautiful coastlines, a warm climate, and cities like Charleston and Columbia, South Carolina has a lot to offer. It boasts great universities, a welcoming community, and low crime rates.

In terms of property taxes, South Carolina has one of the lowest rates at 0.57%. The average home price is around $170,000, significantly lower than other parts of the country. The state's median household income is $54,800, providing a favorable income-to-cost ratio.

Approximately 30% of South Carolinians rent homes, paying an average of $922 per month. The state's population is steadily increasing, indicating a healthy demand for rental properties. With its attractive features and favorable market conditions, South Carolina is a top choice for real estate investment.

2. Idaho

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Known as the Gem State, Idaho offers a wealth of natural beauty and a high quality of life. With state parks, low crime rates, and a population of less than two million, Idaho is an attractive destination for both residents and visitors.

The state's median household income is nearly $59,000, with a strong annual growth rate. Property values are on the rise, making it an ideal time to invest. Renters in Idaho pay around $900 per month, and they make up 28.4% of the population. With the steady population growth of 2% per year, the demand for rental properties continues to rise.

3. North Carolina

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North Carolina offers a mix of beautiful beaches and stunning mountains, making it a desirable place to live. With a pleasant climate, top-notch universities, and excellent healthcare options, North Carolina has something for everyone.

The state's job market is thriving, particularly in cities like Charlotte and Raleigh, where Fortune 500 companies are located. Despite these advantages, North Carolina has relatively affordable property values, with a median of $183,200. The median household income is $56,600, and both numbers are steadily increasing.

Property taxes in North Carolina are around the national average at 0.90%. Approximately 34.7% of the population rents homes, paying an average of $1,234 per month. With its attractive features and strong job market, North Carolina is an appealing choice for real estate investment.

4. Florida

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Florida, also known as the Sunshine State, offers a pleasant climate and a vibrant lifestyle. With its beautiful beaches and tax advantages, it attracts not only residents but also vacationers looking for rental properties.

The state's population is consistently growing, and property values are on the rise. The median property value is $245,000, and the median household income is $59,227. Rent prices in Florida range from $1,200 onwards. Approximately 34% of residents choose to rent, slightly higher than the national average.

One factor to consider in Florida is the higher property taxes, which can reach around $3,000. However, the overall demand for rental properties and the state's strong job growth make it an attractive market for real estate investment.

5. Tennessee

Tennessee's picturesque landscapes, including the Great Smoky Mountains, make it a highly desirable place to live. With its vibrant music scene and top-notch healthcare and education facilities, Tennessee offers a high quality of life.

Tennessee stands out for its low property taxes at 0.71% and no income tax. The median household income is around $54,800, and the average home price is $191,500. Approximately one-third of the population rents homes, paying an average of $910 per month.

The state's job growth rate is above average, signaling a healthy economy. With its affordable cost of living and favorable market conditions, Tennessee is worth considering for real estate investment.

6. Colorado

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Colorado's stunning natural landscapes, including mountains and sand dunes, draw people in. With cities like Denver and Colorado Springs, it offers both urban amenities and outdoor recreational opportunities.

Colorado's tax benefits, including a flat income tax rate of 4.55% and a low property tax rate of 0.51%, make it an attractive destination for investment. The state's median household income is $77,000, significantly higher than the national average. However, property values are also higher, with a median of $394,000.

Approximately 34.1% of people in Colorado choose to rent, paying an average of $1,700 per month. The state's population is increasing steadily by over 1% each year. With its thriving economy and diverse attractions, Colorado is a promising market for real estate investment.

7. Arizona

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Arizona's warm climate and abundant sunshine make it an appealing destination for those seeking year-round comfort. With cities like Phoenix offering a high quality of life, Arizona has become an attractive place for residents and investors alike.

The state's job market is strong, and the median household income is around $61,529. Property values in Arizona are rising slowly, with a median of $255,900. Property taxes are below average at 0.66%. Approximately 34.7% of residents choose to rent, paying an average of $1,100 per month.

Despite its relatively high rental costs, Arizona's strong job growth and desirable lifestyle make it a promising market for real estate investment.

8. California

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California, known for its stunning beaches, innovation, and entertainment industry, offers a unique blend of opportunities. With its thriving economy and diverse culture, the state attracts residents and tourists from around the world.

While California has a high cost of living, rental properties can be lucrative due to the demand from vacationers throughout the year. The median home value in California is over $530,000, and the median household income is $78,600. Rental prices average above $1,600 per month, and over 45% of residents choose to rent.

California's property tax rate of 0.76% is relatively low, considering the state's high property values. However, income taxes can be significant, ranging from 1% to 13.3% depending on the income bracket. Despite the challenges, California's strong job growth and vibrant rental market make it an appealing choice for real estate investment.

9. Indiana

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Indiana, the only Midwestern state on our list, offers a range of job opportunities and a central location for exploring the rest of the country. With its affordable cost of living, Indiana is one of the cheapest states to live in.

Property taxes in Indiana are lower than the national average, and the state has a fixed income tax rate of 3.23%. The median property value is relatively low at $148,900. The median household income is around $58,200, and 30.7% of the population chooses to rent, paying an average of $920 per month.

With its budget-friendly options and growing job market, Indiana is an attractive market for real estate investment.

10. Texas

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Texas, the Lone Star state, offers a vibrant culture and a strong sense of community. With its renowned schools and beautiful weather, Texas attracts families and individuals seeking a high quality of life.

One significant advantage of investing in Texas is the absence of state income tax, providing more favorable conditions for residents and investors. The state's economy is thriving, with a 3% annual job growth rate. The median household income is around $63,800, and the population is steadily increasing.

While property taxes in Texas are relatively high at 1.8%, rental properties remain attractive due to the state's strong job growth. Approximately 40% of residents choose to rent, paying an average of $1,340 per month. The median property value is $200,400, offering potential for both long-term growth and rental income.

10 Worst States to Buy Investment Property

Not every state offers favorable opportunities for investment properties. Here are the 10 worst states to consider if you're looking to buy investment property:

  1. Illinois
  2. South Dakota
  3. New York
  4. West Virginia
  5. Michigan
  6. Wisconsin
  7. Mississippi
  8. New Mexico
  9. Hawaii
  10. Louisiana

These states have various factors that contribute to their unfavorable ranking, such as high property taxes, low job growth, and limited rental income potential. It's important to consider these factors when making investment decisions.

How We Ranked the Best & Worst States to Buy Investment Property

To determine the best and worst states for investment properties, we considered several factors. We looked at job opportunities, quality of life, and cost of living to determine which states are attractive to potential residents and renters. We also considered property taxes, housing rates, and rental income potential to assess the profitability of real estate investments.

Bottom Line on the Best States to Buy Investment Property

The best states for buying investment property offer a combination of employment opportunities, quality of life, and affordable living costs. These states attract individuals and families looking for both work and leisure. By considering factors such as population growth, property values, and rental demand, investors can make informed decisions to maximize their returns.

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