15 Best States to Invest in Real Estate in 2023
December 16, 2022
Interested in growing wealth through investing in rental homes? Join the Priority Access List today.
You don't have to invest in real estate in your home state. You can invest anywhere if you hire a property management company. But how do you know which states are the best?
Keep reading to learn the 15 best states to invest in real estate.
What Makes a State the Best to Invest in Real Estate?
To find the best real estate investments, consider the cost to invest there, the cost of living, population growth, and job opportunities.
Compare this to your budget and financial plan, and you'll find the best states to invest in for your real estate portfolio.
15 Best States to Invest in Real Estate
Idaho is known for more than potatoes. With a small population of 2 million people, Idaho has some of the lowest crime rates in the country and some of the prettiest areas. It's the 14th largest state in the U.S., yet only the 39th largest in population.
Idaho has had tremendous job growth over the last couple of years, and its current unemployment rate is only 2.7%. Job growth has increased by over 4% in 2022, and median income increased by over 8%. This makes it an excellent place for real estate investors to invest in real estate. The population growth is expected to continue at a steady rate. Buying real estate now will put you ahead of the competition.
The average rental property price is $1,400 - $1,500 in Idaho, and the median home price is $484,900, which is 5.2% higher than last year.
Tennessee offers the best of both worlds with the beautiful Smoky Mountains and plenty of flat lands, giving residents incredible scenery to view no matter where they live. There are many reasons people live in Tennessee, including entertainment, top-notch schools, and the weather that provides all four seasons, but moderately, so the weather is always enjoyable.
Tennessee boasts a low 3.3% unemployment rate, which is 1.1% lower than last year, which is a great reason to invest in the housing market there, as more people will likely move there for employment stability. In addition, Tennessee has seen an over 4% job growth rate increase, unlike Idaho, a steady population growth increase of just 1%. There are currently 6.7 million people living in T.N. By 2025, it's predicted to have 7.5 million residents. Real estate investors looking for a hot place to invest may want to consider buying an investment property in Tennessee to get ahead of the population growth.
The average rent in T.N. is low, around $1,100, and its median home price is $374,900, which is 11.9% higher than last year.
Missouri provides the best of both worlds, with bustling cities and quiet rural towns. Whichever you prefer, you'll find it in this beautiful state. Whatever option you choose, everything is just a short drive away in Missouri, so your tenants can live in one and enjoy the other whenever they need a break.
The unemployment rate in Missouri dropped 1.6% since last year and is just 2.5% today. Missouri is the 18th most populated state in the country and the 21st largest in land. Over the last couple of years, its population growth has increased; in 2020, it was the 19th most populated state, and now it moved up one spot to the 18th.
The average rent in MO depends on where you buy a home but ranges from $$775 - $1,300, and the median home price is around $219,000. In the last year, 33% of homes had a price drop, thanks to the price jumps in 2021. The price drops make the housing market much more accessible for real estate investors to jump into, allowing them to buy low and keep their overhead costs down.
You probably already know why it's desirable to live in North Carolina. The charm is unmatched, and the weather is incredible. Everywhere you look, you'll find beaches, mountains, and charming little towns that will make your tenants feel like they're on vacation every day they live there.
Job growth continues to increase in this charming state as it returns to its pre-Covid levels, with more than 130,000 jobs added since before the pandemic. Wages have risen about 5 percent in the area, which doesn't keep pace with inflation, but that's the case for most states today.
The average rent in North Carolina is a bit higher, with the average rent for a two-bedroom apartment costing $1290 - $1500 a month. However, the media home price is around $350,000, making homes in N.C. affordable for real estate investors looking to buy into one of the country's most beautiful states.
Ohio, the Buckeye state, is a Midwest state popular for real estate investment property. Almost 30% of the population in Ohio is renters, making it a great place to buy a property and hold it long-term. Even if you don't live in the area, you can buy an investment property there and pay a property management company to manage it.
Job growth in Ohio has been slow, with an increase of just 1.5% this year. InIt'sne of the slowest-growing states regarding job growth. In addition, as of August 2022, the unemployment rates are up to 4%, a bit higher than the national average of 3.7% unemployment rate.
Ohio is known for its incredible culture and friendly atmosphere. The state is home to some of the best museums and art galleries and is a culinary dream for foodies. The cost of living is low too, which is why it's one of the best states for real estate investing.
The average rent in Ohio is $850 - $1500, so much lower than the national average rent prices. In addition, Ohio's food and utility prices are lower than the national average, making it an excellent place for new families to enjoy the area without going over budget.
Indiana is another Midwest state great for rental real estate property investment, but because of its strong job market growth. They have many strong industries, including farming, healthcare, energy, mining, and many others.
Another reason Indiana is one of the best real estate markets is the low cost of living. They are lower than the nation's average, yet don't force renters to sacrifice anything. They have the best of both worlds: big cities filled with entertainment, shopping, dining, cornfields, and rural areas for peace and quiet.
Indiana's rent prices are low, with an average of $800 - $1200 a month, and their utility costs are well below the average. So it's no wonder the state has a large population of 6.8 million people and continues growing at a steady rate of 1.5% annually.
Indiana has a flat income tax and sales tax, which are reasonable compared to other states. The average salary in IN is $59,000, so you'd be catering to middle-class renters looking to start their lives in this beautiful state.
The median sales price in Indiana is $242,400, a great affordable price for real estate investors, and is a 10.3% increase over last year.
There's a reason it's called the sunshine state. Florida has gorgeous year-round weather and sun most of the time. While it's prone to issues like major hurricanes, the coastal areas are safe and beautiful places for people to live.
Florida has over 22 million residents, and the population grows at a steady 1.6% annually, making it one of the top most populated states. Even though it's known as the place where most retirees or snowbirds go, the median age in Florida is 42.7, so there are plenty of young families building their lives there, giving real estate investors many opportunities.
Rent prices are significantly higher in Florida but are still somewhat lower than before the pandemic. In Tampa and Orlando, rent prices are an average of $1500 - $1800, and in Miami and Fort Lauderdale, they get as high as $3,000. In addition, utility prices are lower than the national average, and Florida has a lower sales tax than most other states, at 6%.
Another big reason many people move to Florida is they don't have a state income tax, which means residents keep more of their paycheck and can enjoy their income a little more.
The median sales price for a house in Florida is $396,000, and homes are currently on the market for an average of 30 days.
You know Georgia for its delicious peaches and pecans, but there are many other reasons it's one of the best places to invest in real estate. It's home to bustling cities, like Atlanta, and cute Southern towns, giving residents the best of both worlds.
The cost of living is low in Georgia, and their property tax rates are below the national average by about $800. The average rent costs are around $1,600, and the median sales price for a home is $361,000. Georgia is the 9th lowest cost place to live, making it a great place for real estate investors who want to buy a home to rent out.
The job growth rate continues to increase at about 2.25% per year, especially in Atlanta, which is home to Coca-Cola, Delta Airlines, UPS, and Cox Enterprises.
Almost 30% of the population in Georgia rents, so it can be a suitable property market to get into when investing in real estate.
Alabama is known for its big universities, but there are many other reasons to love it. Alabama has a population of 5 million and a stable employment history. In addition, Alabama has the fourth lowest cost of living out of any state, which includes low rent prices. The average rent is $600 - $1800, and the average home sells for $278,000.
The low housing prices are an excellent way for new real estate investors to get into the market and invest in real estate. Unfortunately, the average utility costs in Alabama are a bit higher than the national average. Still, their property taxes are among the lowest in the country, making it a great place to take advantage of the real estate markets.
Overall, the interest in rental properties in Alabama has been low, which gives new real estate investors a great chance to jump in at low prices and take advantage of one of the hottest real estate markets.
It's no wonder they do everything big in Texas; it's the second-largest state in the country. Not only is it a large state by land, but it's the most populated state too. As a result, real estate investors will have their work cut out for finding properties in the real estate market because it's so hot.
Approximately 20% of the state is renters, so the rental real estate market isn't as hot as in other states, but if you can find the perfect home, you can invest in Texas real estate and build a business there.
The population growth in Texas continues to increase yearly by as much as 1.4%, so there's no shortage of people to market to if you buy a home to rent out.
The housing prices are higher for a real estate investment, as the median sales price is $359,200. However, the ever-increasing employment rate in the state helps offset the higher prices, knowing that you'll have a large pool of tenants to choose from.
One downside you should consider, though, is Texas has high property taxes compared to many of the other states on our list, and is something you should consider as you look at investment properties.
If you want to keep your rental properties in the Midwest, Iowa is an affordable investment place. In addition, the state, bordered by two rivers, has quite a cultural scene and plenty of outdoor recreation, making it a wonderful place for people of all ages to live.
Residents have a good mixture of cities and small towns, giving their residents the best of both worlds. In addition, housing costs are much below the national average. The average sales price is just $234,000, making it a great option for real estate investors looking to start investing in residential real estate or who want to add to their real estate portfolios.
Surprisingly, the property taxes in Iowa are the 12th highest in the country, but their overall cost of living is much lower. In addition, almost 30% of Iowans rent properties, so it's a great place for real estate investors to buy residential properties and make money.
Kentucky is a state that is home to southern culture, an average cost of living, and incredible culture. Bluegrass music, moonshine, delicious food, and sports are the center of Kentucky culture.
Kentucky is an affordable place to live, and outside of its two major cities, Louisville and Lexington, the rest of the state is picturesque and laid back. Rent prices in the state are well below the national average, and the median sales price is $247,800, making it easy to jump on board and invest in real estate.
The property taxes are affordable, and over 30% of Kentucky residents rent properties. Kentucky is still a seller's market, so watch the prices when looking for investment properties. Once you snag one, hold onto it and take advantage of the increasing population and rent prices in the area.
Arkansas is another state with a low cost of living, which makes it one of the best states to invest in real estate. Real estate investors can jump on board with median sales prices of just $257,000 and cater to the 35% of residents that rent.
The state currently has around 3 million residents and one of the lowest property tax rates in the nation. Renters will love the low utility costs in the area, and the overall cost of living is well below the national average.
Arizona is a state with stable temperatures and beautiful scenery, including, of course, the Grand Canyon. It has a population of 7 million and is one of the fastest-growing job markets.
It's more expensive to invest in real estate in Arizona because median sales prices are higher, at $433,000, but for established investors, it can be a good place to invest. In addition, Arizona charges income tax, but its property taxes are lower than the national average.
The average rent is around $1500 in Arizona, and many residents, especially those in Tucson, rent.
If you want to invest in a state with incredible scenery and beautiful weather, look at Colorado. They have a flat income tax rate and low property taxes, which make up for the higher median sales price of $568,000.
The job market is always booming, with plenty of job opportunities for people in all industries. More than one-third of its population rents, and the population grows around 1% annually.
Other Considerations for Real Estate Opportunities
Before investing in the real estate market, check the area's valuation. Don't focus only on today's values but the average property values for the last few years. The pandemic years may not be a good measure, but seeing how the market reacted, can help you understand what might happen moving forward.
Population growth is the key to the best real estate investments. If you invest in an area with low or decreasing population growth, you might find more vacancies than anticipated.
Affordability and the housing market haven't gone hand-in-hand recently, but it's always the most important factor. Don't buy a rental property investment in an area you can't afford the median home price. There are many good areas to choose from, find the most affordable one.
Investing in an area with high job growth also decreases your risk of vacancies. Find areas with new companies moving in or where industries are expanding. Job growth and the unemployment rate can have a direct impact on the success of your real estate investment.
Tips for Investing in Real Estate
Make a Plan
Before investing in real estate, create a business plan, much like when opening a brick-and-mortar business. Decide how much money you have to invest, how you'll manage the property, what rents you can charge, and how much profit you'll make.
Determine if you'll need mortgage financing or if you'll pay cash for the homes, and create an exit plan should you need to get out of the real estate market quickly.
Learn Your Market
Before investing in residential real estate, do your research. First, find out how rental properties have done in the area in the last few years. Next, determine vacancy rates, property tax rates, and the overall likeability of the area. Then, work with a reputable real estate agent to get to know the area and possibilities for up-and-coming cities in the US.
Don’t Limit Yourself to Online Listings
You'll likely use the internet for your search but use word-of-mouth too. Many people sell their homes before officially listing them just by getting the word out. So network as much as possible to find properties that aren't yet on the market, as you might save the most.
Find out the insurance requirements in the area, as each area differs in rental properties. Then, figure the cost into your budget and determine if it's a good investment area. Most insurance companies have higher rates for investment properties because there's a higher risk of claims when you aren't the occupant.
Best States for Property Investment FAQs
Where Is a Good Place to Invest Money Right Now?
Real estate is a great place to invest money because it's a hedge against inflation. However, like any investment, you should assess your risk tolerance, timeline, and available capital to determine where to invest.
Where Is Real Estate Appreciating the Most?
Real estate appreciates the fastest in the southern states, including North Carolina, Tennessee, and Texas.
Which States Have the Lowest Property Taxes?
Ironically, Hawaii has the lowest property taxes but the highest cost of living. Other states with low property taxes include Colorado, Louisiana, and South Carolina.
What Is the Best State to Own Land?
Land is a limited commodity, so if you can get your hands on it, you may have a good investment. Arkansas is the best place to buy land, but Tennessee, Utah, and Arizona are great places to own land.
Is It Wise to Buy Land in 2022?
Investing in land gives you an investment that appreciates, can be built on, or sold for a profit. Since no one can make more land, getting your hands on a good piece of land can provide financial security.
Best States to Invest in Multifamily Real Estate?
New York has the most multifamily properties and offers the highest profits. Since there are so many renters in N.Y., the chances of having tenants year-round increases. Miami, Austin, and Atlanta are great places to invest in multifamily real estate.
The Bottom Line
Investing in real estate is a great way to diversify your portfolio. Do your research and find the best states to invest in real estate, given your financial goals, risk tolerance, and what you want to accomplish with your real estate business. Learn more by signing up and visiting our blog.
This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security which can only be made through official documents such as a private placement memorandum or a prospectus. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Neither Concreit nor any of its affiliates provides tax advice or investment recommendations and do not represent in any manner that the outcomes described herein or on the Site will result in any particular investment or tax consequence.Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Concreit does not guarantee its accuracy.