As a real estate investor, it’s important to understand the concept of “landlord-friendliness” as it applies to your state. Some states provide more favorable terms for tenants than landlords, many states fall somewhere in the middle, and a handful of states provide more favorable terms for landlords. These are the states that will make your life as a buy-and-hold real estate investor easier.
Before we dive into the most landlord-friendly states for 2020, we should probably clarify what makes a state landlord-friendly. Landlord-friendly states offer:
- Legislation that protects landlords
- Affordable housing prices
- Reasonably low property taxes
- Rising property values
- Strong rental rates compared to the total property value
With those criteria in mind, here are the top three landlord-friendly states for 2020.
1. West Virginia
Low home prices make West Virginia an affordable market for real estate investors. With the median home value estimated at around $108,000 and the median monthly rental rate at $975, investors can quickly recoup their investment. To get an even better deal, investors are using tools like PropStream’s Distressed Property Finder to acquire properties under market value. And with the Rehab Estimator Tool, you can use local labor and material prices to project a more accurate rehab budget for maximum ROI.
Landlords in West Virginia also benefit from landlord-friendly legislation, like the simple eviction process. A landlord can terminate a lease for nonpayment just five to 10 days from filing the court documents.
Arkansas is known in the real estate world for its landlord-friendly legislation. Landlords have a full 60 days to return a deposit following the termination of a lease, and they can dispose of tenants’ abandoned property immediately (instead of being required to store the property for a set period).
Arkansas is also the only state where tenants can face criminal charges for failure to vacate when in arrears. It should go without saying, but none of this legislation is intended to allow landlords to take advantage of tenants. Rather, these laws provide some protection for landlords and their property against unscrupulous or irresponsible tenants.
Colorado makes this list of the top three landlord-friendly states for 2020 because of the exceptionally low property taxes and the rising property values. With an effective property tax rate of just .59%, Colorado has one of the lowest property tax burdens in the country. And lower expenses mean greater profit margins. With PropStream, you can view property tax information by property to get a clear picture of the taxes for your target market.
Rising property values are also a landlord-friendly indicator for Colorado. While growth has started slowing across much of the country in the last year or so, Colorado still enjoyed an average increase of 2.6% over the past year and is projected to increase by another 2.8% in the year to come.
Other Notable States
West Virginia, Arkansas, and Colorado may be the top three landlord-friendly states for 2020, but they aren’t the only ones. Here are a few other strong options for landlords in 2020:
And if you don’t happen to live or work in any of these states, no problem! There are great deals to be found in every market. You just need the right tools to help you find those deals and maximize their income potential.