Buying rental property is one of – if not the – most popular ways of investing in real estate. It’s a stable and secure strategy that can provide a lucrative return on investment. However, owning a successful rental property business is all about finding deals in great locations. In the US housing market, median property prices, rent prices, and demand for rentals differ from state to state. Therefore, the profit you’ll earn as an investor will also differ depending on which state your rental property is located. That’s why it’s important to know the best states to buy rental property where you should focus your property search.
Luckily, there are lots of statistics and real estate data available to help you identify the best places to own rental property. Investors can get their hands on such information from real estate investor websites including Mashvisor. Our data comes from reliable sources like Zillow, MLS, and Airbnb. After analyzing this big data, we provide predictive analytics for both the traditional and Airbnb rental strategies. This helps you determine the optimal strategy to make the highest return possible from your rental property investment wherever it’s located. To learn about our product and data methodology, click here.
In this article, we review the best states to invest in real estate according to our most recent data. And because we know that each investor has different criteria when it comes to choosing a real estate market to invest in, we’ve organized the list into 4 categories. Below, you’ll discover the best rental markets in terms of affordability, property tax, traditional rental property income, and Airbnb rental income. This makes it easier to pick a location based on your preferred criteria.
Related: How to Choose a Real Estate Market to Invest In
Best States to Buy Rental Property – Affordability
The first category or factor that investors base their decision on when it comes to where to invest in real estate is property prices. Whether you’re buying your first rental property or want to add a new rental to your portfolio, you definitely have a budget that you’re sticking to. That’s a smart thing to do because it helps you filter out states and cities where properties are prices above what you can afford. So, here’s a list of the 10 cheapest states to buy a house in the US right now. These are the best states to buy rental property where prices are below the national median.
#1 Iowa Median Property Price: $229,561
- Price Per Square Foot: $148
- Traditional Rental Income: $1,118
- Airbnb Rental Income: $2,238
- Airbnb Occupancy Rate: 47%
- Average Airbnb Daily Rate: $155
- Price to Rent Ratio: 17
- Average Days on Market: 106
#2 West Virginia Median Property Price: $233,210
- Price Per Square Foot: $189
- Traditional Rental Income: $1,098
- Airbnb Rental Income: $2,123
- Airbnb Occupancy Rate: 50%
- Average Airbnb Daily Rate: $177
- Price to Rent Ratio: 18
- Average Days on Market: 125
#3 North Dakota Median Property Price: $241,311
- Price Per Square Foot: $121
- Traditional Rental Income: $1,272
- Airbnb Rental Income: $1,897
- Airbnb Occupancy Rate: 56%
- Average Airbnb Daily Rate: $107
- Price to Rent Ratio: 16
- Average Days on Market: 80
#4 Ohio Median Property Price: $246,031
- Price Per Square Foot: $132
- Traditional Rental Income: $1,204
- Airbnb Rental Income: $2,245
- Airbnb Occupancy Rate: 54%
- Average Airbnb Daily Rate: $138
- Price to Rent Ratio: 17
- Average Days on Market: 68
#5 Indiana Median Property Price: $252,683
- Price Per Square Foot: $118
- Traditional Rental Income: $1,128
- Airbnb Rental Income: $2,195
- Airbnb Occupancy Rate: 55%
- Average Airbnb Daily Rate: $140
- Price to Rent Ratio: 18
- Average Days on Market: 81
#6 Mississippi Median Property Price: $267,413
- Price Per Square Foot: $124
- Traditional Rental Income: $1,212
- Airbnb Rental Income: $1,856
- Airbnb Occupancy Rate: 52%
- Average Airbnb Daily Rate: $128
- Price to Rent Ratio: 18
- Average Days on Market: 120
#7 Kentucky Median Property Price: $269,246
- Price Per Square Foot: $203
- Traditional Rental Income: $1,142
- Airbnb Rental Income: $2,013
- Airbnb Occupancy Rate: 48%
- Average Airbnb Daily Rate: $160
- Price to Rent Ratio: 19
- Average Days on Market: 99
#8 Arkansas Median Property Price: $269,944
- Price Per Square Foot: $144
- Traditional Rental Income: $1,117
- Airbnb Rental Income: $2,108
- Airbnb Occupancy Rate: 53%
- Average Airbnb Daily Rate: $130
- Price to Rent Ratio: 20
- Average Days on Market: 114
#9 Missouri Median Property Price: $275,194
- Price Per Square Foot: $715
- Traditional Rental Income: $1,200
- Airbnb Rental Income: $2,064
- Airbnb Occupancy Rate: 50%
- Average Airbnb Daily Rate: $125
- Price to Rent Ratio: 19
- Average Days on Market: 107
#10 Nebraska Median Property Price: $278,955
- Price Per Square Foot: $139
- Traditional Rental Income: $1,144
- Airbnb Rental Income: $2,470
- Airbnb Occupancy Rate: 56%
- Average Airbnb Daily Rate: $121
- Price to Rent Ratio: 20
- Average Days on Market: 76
Use Mashvisor’s Property Finder tool to find rental properties for sale within your budget in your market of choice!
Best States to Buy Rental Property – Property Tax
When investing in rental properties, it’s important to know all costs you’re paying for including property taxes. Property taxes can have a considerable impact on renal property cash flow, which is why you need to know how much your property tax rate. However, property tax rates vary significantly from state to state. Therefore, depending on where you’re investing, property taxes can either be a small inconvenience or a major burden on your rental property investment. Some investors favor buying rental property out of state if property taxes are too high in their own state. Here are the best states to buy rental property with the lowest property tax rates according to WalletHub:
#1 Hawaii Effective Property Tax Rate: 0.27%
- Median Property Price: $927,247
- Price Per Square Foot: $675
- Traditional Rental Income: $2,161
- Airbnb Rental Income: $4,288
- Airbnb Occupancy Rate: 59%
- Average Airbnb Daily Rate: $218
- Price to Rent Ratio: 36
- Average Days on Market: 135
#2 Alabama Effective Property Tax Rate: 0.42%
- Median Property Price: $302,768
- Price Per Square Foot: $148
- Traditional Rental Income: $1,174
- Airbnb Rental Income: $2,615
- Airbnb Occupancy Rate: 52%
- Average Airbnb Daily Rate: $174
- Price to Rent Ratio: 25
- Average Days on Market: 104
#3 Colorado Effective Property Tax Rate: 0.53%
- Median Property Price: $589,983
- Price Per Square Foot: $556
- Traditional Rental Income: $1,935
- Airbnb Rental Income: $2,764
- Airbnb Occupancy Rate: 57%
- Average Airbnb Daily Rate: $207
- Price to Rent Ratio: 25
- Average Days on Market: 98
#4 Louisiana Effective Property Tax Rate: 0.53%
- Median Property Price: $293,925
- Price Per Square Foot: $144
- Traditional Rental Income: $1,332
- Airbnb Rental Income: $2,253
- Airbnb Occupancy Rate: 45%
- Average Airbnb Daily Rate: $177
- Price to Rent Ratio: 18
- Average Days on Market: 131
#5 District of Colombia Effective Property Tax Rate: 0.55%
- Median Property Price: $729,436
- Price Per Square Foot: $541
- Traditional Rental Income: $2,602
- Airbnb Rental Income: $2,503
- Airbnb Occupancy Rate: 52%
- Average Airbnb Daily Rate: $144
- Price to Rent Ratio: 23
- Average Days on Market: 72
#6 Delaware Effective Property Tax Rate: 0.56%
- Median Property Price: $395,199
- Price Per Square Foot: $246
- Traditional Rental Income: $1,544
- Airbnb Rental Income: $2,172
- Airbnb Occupancy Rate: 47%
- Average Airbnb Daily Rate: $235
- Price to Rent Ratio: 21
- Average Days on Market: 192
#7 South Carolina Effective Property Tax Rate: 0.57%
- Median Property Price: $355,665
- Price Per Square Foot: $322
- Traditional Rental Income: $1,333
- Airbnb Rental Income: $2,317
- Airbnb Occupancy Rate: 51%
- Average Airbnb Daily Rate: $190
- Price to Rent Ratio: 22
- Average Days on Market: 121
#8 West Virginia Effective Property Tax Rate: 0.59%
- Median Property Price: $233,210
- Price Per Square Foot: $189
- Traditional Rental Income: $1,098
- Airbnb Rental Income: $2,123
- Airbnb Occupancy Rate: 50%
- Average Airbnb Daily Rate: $177
- Price to Rent Ratio: 18
- Average Days on Market: 125
#9 Wyoming Effective Property Tax Rate: 0.61%
- Median Property Price: $684,125
- Price Per Square Foot: $331
- Traditional Rental Income: $1,533
- Airbnb Rental Income: $2,477
- Airbnb Occupancy Rate: 46%
- Average Airbnb Daily Rate: $208
- Price to Rent Ratio: 37
- Average Days on Market: 134
#10 Arkansas Effective Property Tax Rate: 0.63%
- Median Property Price: $269,944
- Price Per Square Foot: $144
- Traditional Rental Income: $1,117
- Airbnb Rental Income: $2,108
- Airbnb Occupancy Rate: 53%
- Average Airbnb Daily Rate: $130
- Price to Rent Ratio: 20
- Average Days on Market: 114
Best States to Buy Rental Property – Traditional Rental Income
It’s important for real estate investors to look at statistics regarding rental prices to find the best places to buy rental property. This is because the best real estate markets are those where rent prices are growing at a stable rate. This allows owners of long-term rental properties to make a high monthly rental income that covers their costs and leaves positive cash flow. However, keep in mind that states with a high rental property income typically have a steep median price. Most residents can’t afford to buy and this increases the rental demand which, in turn, increases rent prices. Just make sure to run a real estate market analysis before investing in these best states to buy rental property for high rental income:
#1 California Traditional Rental Income: $2,640
- Median Property Price: $761,542
- Price per Square Foot: $414
- Price to Rent Ratio: 14
- Average Days on Market: 79
#2 District of Colombia Traditional Rental Income: $2,602
- Median Property Price: $729,436
- Price per Square Foot: $541
- Price to Rent Ratio: 23
- Average Days on Market: 72
#3 Connecticut Traditional Rental Income: $2,336
- Median Property Price: $504,736
- Price per Square Foot: $219
- Price to Rent Ratio: 18
- Average Days on Market: 105
#4 New York Traditional Rental Income: $2,271
- Median Property Price: $618,157
- Price per Square Foot: $300
- Price to Rent Ratio: 22
- Average Days on Market: 137
#5 Hawaii Traditional Rental Income: $2,161
- Median Property Price: $927,247
- Price per Square Foot: $675
- Price to Rent Ratio: 36
- Average Days on Market: 135
#6 New Jersey Traditional Rental Income: $2,097
- Median Property Price: $444,609
- Price per Square Foot: $356
- Price to Rent Ratio: 18
- Average Days on Market: 108
#7 Massachusetts Traditional Rental Income: $2,082
- Median Property Price: $670,119
- Price per Square Foot: $362
- Price to Rent Ratio: 27
- Average Days on Market: 97
#8 Colorado Traditional Rental Income: $1,935
- Median Property Price: $589,983
- Price per Square Foot: $556
- Price to Rent Ratio: 25
- Average Days on Market: 98
#9 New Hampshire Traditional Rental Income: $1,889
- Median Property Price: $436,355
- Price per Square Foot: $209
- Price to Rent Ratio: 19
- Average Days on Market: 99
#10 Florida Traditional Rental Income: $1,858
- Median Property Price: $464,078
- Price per Square Foot: $270
- Price to Rent Ratio: 21
- Average Days on Market: 131
Best States to Buy Rental Property – Airbnb Rental Income
Is renting out on Airbnb your preferred strategy for making money in real estate? If so, you need to know the best places to buy vacation rental property. And the best way to determine the profitability of an Airbnb investment is, again, the rental income. In the US, Airbnb rentals can generate higher rental income than traditional rentals in the same location. Still, certain locations are more attractive to tourists and vacationers, making them better than others for investing in short-term rental properties. Here are the best states to buy rental property for Airbnb investing in the US. Remember to check and comply with the Airbnb regulations in your state of choice.
#1 Hawaii Airbnb Rental Income: $4,288
- Median Property Price: $927,247
- Price per Square Foot: $675
- Airbnb Occupancy Rate: 59%
- Average Airbnb Daily Rate: $218
#2 California Airbnb Rental Income: $3,663
- Median Property Price: $761,542
- Price per Square Foot: $414
- Airbnb Occupancy Rate: 58%
- Average Airbnb Daily Rate: $205
#3 Connecticut Airbnb Rental Income: $3,123
- Median Property Price: $504,736
- Price per Square Foot: $219
- Airbnb Occupancy Rate: 51%
- Average Airbnb Daily Rate: $187
#4 Rhode Island Airbnb Rental Income: $3,028
- Median Property Price: $559,739
- Price per Square Foot: $286
- Airbnb Occupancy Rate: 51%
- Average Airbnb Daily Rate: $196
#5 Massachusetts Airbnb Rental Income: $2,969
- Median Property Price: $670,119
- Price per Square Foot: $362
- Airbnb Occupancy Rate: 55%
- Average Airbnb Daily Rate: $218
#6 New Hampshire Airbnb Rental Income: $2,823
- Median Property Price: $436,355
- Price per Square Foot: $209
- Airbnb Occupancy Rate: 49%
- Average Airbnb Daily Rate: $209
#7 New York Airbnb Rental Income: $2,816
- Median Property Price: $618,157
- Price per Square Foot: $300
- Airbnb Occupancy Rate: 49%
- Average Airbnb Daily Rate: $204
#8 Colorado Airbnb Rental Income: $2,764
- Median Property Price: $589,983
- Price per Square Foot: $556
- Airbnb Occupancy Rate: 57%
- Average Airbnb Daily Rate: $207
#9 Vermont Airbnb Rental Income: $2,718
- Median Property Price: $364,075
- Price per Square Foot: $170
- Airbnb Occupancy Rate: 52%
- Average Airbnb Daily Rate: $252
#10 Virginia Airbnb Rental Income: $2,702
- Median Property Price: $396,867
- Price per Square Foot: $236
- Airbnb Occupancy Rate: 53%
- Average Airbnb Daily Rate: $191
What’s the Next Step?
After covering the best states to buy rental property, it’s now up to you to do your due diligence before actually making a purchase. You need to research the market to decide which city and neighborhood you should buy. For example, while a certain state is generally affordable, prices in some cities might be above the state median. In addition, crime rates, walk scores, and the local economy are factors that affect the value of properties in cities and neighborhoods. Make sure to study those trends in your market of choice to decide if it’s a good place to buy investment property.
Furthermore, even if you’re investing in one of the best places in the United States to buy rental property, it doesn’t mean that any property on the market is worth investing in. There are properties that are ideal and some that are not in every state, city, and neighborhood. You should talk to local real estate agents for information on the property you’re eyeing and run a rental property analysis using data to get an estimation of your potential ROI. Mashvisor’s Rental Property Calculator will help you in this step!
As you can see, Mashvisor provides a complete analysis of any rental property in the US housing market. The analysis will come with pre-calculated data based on rental comps in the area. It’ll provide you with information regarding the property and estimations of its rental income, expenses, cash flow, cash on cash return, cap rate, and occupancy rate. Moreover, these numbers are provided for both the traditional and Airbnb rental strategy to show you the optimal way to rent out your property.
Ready to start your search in the best states to buy rental property? Start Your 7-Day Free Trial with Mashvisor Now!