The 10 Best States for Landlords

It’s an age-old saying: location, location, location. The place where you buy a rental property and work as a landlord will have a massive impact on your success and profitability. Luckily, I’ve done the work of finding the best states for landlords based on expansive vital data. Read this guide to learn about the most landlord-friendly states and their pros and cons.

Key Takeaways Consider a variety of economic and real estate data to accurately determine the best areas for landlords Favorable conditions for landlords are not always favorable conditions for renters or homeowners Your state may have a few unfavorable conditions for landlords, but it can still be a great state for a rental property if you have a strong marketing and rental pricing strategy Overall, states with a higher cost of living and high median home prices are better for landlords

The 10 Best States for Landlords

1. Massachusetts

• Rent vs buy ranking: 4th
• Rent potential ranking: 2nd
• Tenant happiness ranking: 2nd

Massachusetts earns the label of the best state for landlords because it ranks high in multiple categories, like overall rent potential and tenant happiness. These rankings come from low crime rates (the second lowest in the country), a high average rent of $1,336 per month, and a low rental vacancy rate of 4%. This state also has the third-highest median household income of $89,645, with a homeownership rate of just 65.4%. This metric means plenty of potential renters with a solid income aren’t ready to purchase a home.

2. Maryland

• Rent vs buy ranking: 9th
• Rent potential ranking: 11th
• Tenant happiness ranking: 4th

The second-most landlord-friendly state is Maryland, which has the highest median household income of $90,203. Its median rent of $1,415 per month is the fourth highest on the list, which makes it easier for rental property owners to generate a profit. On the other hand, Maryland has a low percentage of renters, at only 32%, ranking 22nd on the list. Plus, as of March 2024, the year-over-year rent value decreased by 0.41%, which is not ideal for landlords. 

However, this number can change frequently, and having a well-informed real estate leasing agent to strategically market properties can mitigate this issue. Maryland has high incomes, high rent prices, and low unemployment and crime rates, making it an excellent state for landlords.

3. Hawaii

• Rent vs buy ranking: 7th
• Rent potential ranking: 12th
• Tenant happiness ranking: 13th

Hawaii has the highest average monthly rent in the nation at $1,651 and the fifth-highest percentage of renters (40.6%). These stats reflect the state’s premium living costs and desirability among renters. It’s also unsurprising that Hawaii has the second-highest community well-being score of all US states, making it one of the best states for tenant happiness. Plus, with a high median home price of $720,200, it’s more difficult for residents to purchase their own. 

However, it has a high rental vacancy rate of 9.6%, which shows that many of the rental properties in this state are probably better as short-term rentals. Even with this potential con, Hawaii can still be highly profitable for landlords if you set rent prices that balance out the likely vacancy rates.

4. Connecticut

• Rent vs buy ranking: 8th
• Rent potential ranking: 15th
• Tenant happiness ranking: 10th

Connecticut has a high average monthly rent of $1,201, with a year-over-year rent price increase of 6.22%, the 10th highest in the country. Plus, there is a significant demand for rental properties in Connecticut, with 29.5% of the state’s population choosing to rent and the 7th lowest vacancy rate. Even though Connecticut’s rent-to-price ratio ranks 30th, the high home values ($393,700) and high cost of living (113.1) make renting a better option for many residents.

5. New Jersey

• Rent vs buy ranking: 21st
• Rent potential ranking: 3rd
• Tenant happiness ranking: 11th

New Jersey has the third-highest overall rent potential score, with a high average rent price of $1,368, a low vacancy rate of 4.1%, and rent prices increasing by 6.2%. This state has the fifth-lowest crime rates and the third-highest community well-being score. Even though its rent-to-price ratio is one of the lowest on our list, it has the fourth-highest average income of $89,296. This data shows that New Jersey renters are satisfied with renting over buying and have the income to stabilize your rental properties.

6. Colorado

• Rent vs buy ranking: 2nd
• Rent potential ranking: 4th
• Tenant happiness ranking: 32nd

Colorado’s rental market is another fascinating one with notable pros and cons. For example, it is the second-best state for renting vs buying, with a high median home price of $580,900, a high cost of living of 105.5, and a high rent-to-price ratio of 36.26. It also has the eighth highest average monthly rent of $1,335 and a remarkably low vacancy rate of 3.4%.

On the other hand, it ranks 32nd for tenant happiness, with one of the highest crime rates and a relatively high unemployment rate of 3.8. Colorado’s stats show that the rental market thrives despite (or maybe even because of) a high cost of living. You may want to consider the crime and unemployment rates when creating your lease and choosing tenants. Install high-quality security and use an online rent payment service to ensure your tenants continue paying their rent on time.

7. Rhode Island

• Rent vs buy ranking: 18th
• Rent potential ranking: 1st
• Tenant happiness ranking: 19th

The seventh best state for landlords is the Ocean State, Rhode Island. It ranks number one for overall rent potential, with the lowest rental vacancy rate in the nation at 1.4%. It also has the fourth-highest percentage of renters. Its overall rent vs buy data is above average, with the 16th highest median income ($74,008), the 11th highest median home price of $462,100, and the 23rd highest average rent price at $1,031.

Rhode Island also has low crime rates and the 12th-best community well-being score of 64. Overall, the rental market data for Little Rhode show that its rental market is booming and highly competitive. Landlords here should have plenty of renters to choose from and low vacancy rates, so you can set a rent price that will generate consistent income, even with tenant turnover.

8. New York

• Rent vs buy ranking: 18th
• Rent potential ranking: 7th
• Tenant happiness ranking: 14th

New York state ranks as the best state for home value for landlords, with the highest median home value of $819,000. It also has the second-best homeownership rate of 52.4% and a year-over-year rent increase of 8.48%. Overall, it’s obvious why New York is one of the most landlord-friendly states. Landlords can easily find strong tenants with a solid rental listing marketing strategy and consistently focus on finding new leads for properties.

9. California

• Rent vs buy ranking: 1st
• Rent potential ranking: 9th
• Tenant happiness ranking: 31st

California’s rental market is similar to Colorado’s because it is the best state for renting vs buying. It has the fifth-highest cost of living (134.5), the sixth-highest median income ($84,907), the second-highest median home price ($785,900), and the third-highest average rent price ($1,586). These factors make it an ideal state for residents to rent instead of buying a home, which is demonstrated by the third-highest percentage of renters. Ultimately, the high prices of homes and the cost of living create a solid economic environment for rental property owners.

Where California landlords need to be careful is in the tenant happiness category. It has the second-highest unemployment rate and ranks 32nd for crime rates. However, if you consider this and do your due diligence when screening tenants, you can choose stable, long-term residents.

10. Nebraska

• Rent vs buy ranking: 15th
• Rent potential ranking: 20th
• Tenant happiness ranking: 7th

In the 10th position of the most landlord-friendly states, Nebraska stands out for its incredibly low unemployment rate of 2.6 and a low vacancy rate of 3.6%. Although its median income is smack-dab in the middle (25th), its rent-to-price ratio is the sixth best in the country. These statistics show that Nebraska is one of the country’s most stable, consistent rental markets.

Full Data & Methodology for Best States for Landlords

To accurately determine the best states for landlords, my team gathered a huge variety of real estate statistics about each state’s housing market. We categorized all the data into three main categories that give us a comprehensive understanding of each state’s rental market, from the ability to find profitable rental properties, the number of renters, average incomes, and even the overall well-being of residents.

Each of the three categories was weighed equally (33.3%). Here’s a more detailed look at the data included in each category:

Rent vs Buy Ranking

• Cost of living (data from World Population Review): A lower cost of living will attract more people to that area, develop more demand for housing, and thus allow landlords to take advantage of the area’s growing population.
• Median household income (data from World Population Review): A higher median household income means tenants can pay higher rent prices, leading to a strong rental market with more cash flow.
• Average mortgage rates (data from Business Insider): Higher mortgage interest rates mean less interest from residents in buying properties, leading to more renters than homeowners.
• Median home price (data from World Population Review): Higher average home values lead to a higher percentage of renters. 
• Rent-to-price ratio: A higher rent-to-price ratio means the property is more likely to generate returns over time.

Rent Potential Ranking

• Average monthly rent (data from World Population Review): Higher average monthly rents lead to higher cash flow for rental property owners.
• Rental vacancy rate (data from US Census Bureau): A low vacancy rate translates to a high demand for rentals, so landlords have better chances of keeping their property occupied throughout the year.
• Percentage of renters (data from US Census Bureau): A higher percentage means landlords have more options when choosing renters and can price their properties for maximum profits.
• Homeownership rate (data from US Census Bureau): A lower homeownership rate means that a higher percentage of the population are renters. Therefore, landlords can choose the best renters for their properties.
• Year-over-year rent change (data from Rent.com): Rent prices with a higher percentage of growth from year to year show a strong rental market, which translates to increased rental income for landlords.

Tenant Happiness Ranking

• Unemployment rates (data from US Bureau of Labor Statistics): Lower unemployment rates mean more stable tenants and more reliable income. Tenants don’t have to stress about paying and are more likely to pay higher rent prices.
• Crime rates per 100,000 (data from World Population Review): A low crime rate means a happier, more positive, and more involved community. This environment makes an area more appealing and drives rental demand up.
• Community well-being (data from Well Being Index): A high well-being score means that the residents of this area have a better quality of life. This can make the area appealing to more people, ultimately raising demand for rentals. 

Frequently Asked Questions (FAQs)

Your Take

Being a successful landlord or rental property owner in any state is possible, but you have to be aware of rental market trends and economic factors. Even if your state has some unfavorable conditions for landlords, you can develop a strategy to minimize the negative impact.

Where do you live? Let us know about your experience with the rental market in your area!