
Real estate investors who’ve been around the block a few times realize the importance of investing in landlord friendly states. I’m one of those investors, but I began my journey with a rental in a non-landlord friendly location which ended up costing me thousands of dollars when an issue with a tenant popped up. I have to say that this scenario will never happen again because now I only buy in states that are landlord friendly. In doing so, my return on investment (ROI) is better protected, as well as my cash flow and the property itself.
Since being up-to-date on which states are landlord friendly and only buying in these locations is essential to your success as an investor, I’ll cover this topic in detail to set you on the right path. I’ll include a list of the most landlord friendly states, outline the characteristics that place them in this category, as well as provide a list of the least landlord-friendly states, and highlight other important information you should be aware of.
What are Landlord Friendly States?
A landlord-friendly state offers rental laws and regulations that are more favorable towards property owners. These are locations that grant landlords stronger protection when it comes to rental disputes which can safeguard a property owner’s profits. Landlord friendly states offer a more streamlined eviction process, limit tenant rights to withhold rent for repairs, allow flexibility in setting security deposits and rent prices, among other things. Additionally, many states that are landlord friendly sport lower property taxes, and don’t collect state taxes, which can increase a landlord’s overall return on investment.
Let’s break this down a bit by diving into more specifics…
Typical Criteria for a Landlord-Friendly State
Although every landlord friendly state’s owner protections may vary slightly, the same idea applies, which is to have laws and regulations in place that protect the investor’s rights. With that in mind, below, I’ll cover the main benefits of investing in a landlord friendly location:
1. Eviction Policy Laws that Can Save a Landlord Thousands of Dollars
Landlord friendly states have favorable eviction laws that help keep an investor’s profits where they should be, and prevent them from slipping into the red financially. This is the case because efficient eviction laws can lessen the amount of time a property stays vacant, which reduces a potential loss of rental income.
In my experience, having the law on your side when it comes to evictions is one of the biggest benefits a landlord-friendly state can offer. I know this because I’ve had to go through the eviction process myself as a landlord and I lost thousands of dollars in the process. The tenant sat in MY property, not paying rent for months. All the while, my hands were tied because the law was protecting the tenant. Why? Because my rental was in a non-landlord friendly state, which was New Jersey.
In states where eviction laws are more favorable to landlords, like Texas and Florida, the risk of financial setbacks from tenant disputes or legal battles is significantly reduced, ensuring that landlords can protect and maximize their investments.
2. Rent Control Regulations in States with Landlord Friendly Laws Increase Profits
Rent control policies are designed to protect tenants, but end up causing financial challenges for landlords. The obvious reason for this is a cap placed on how much a property owner can raise the rent can cause a reduction in their rental income potential. This reduction can make it difficult to cover maintenance and property management costs, and could lead to property issues.
Landlord-friendly states typically don’t impose a restriction on how much a property owner can raise their rent. This is especially important in today’s economic climate where inflation can impact an investor’s bottom line.
3. Security Deposit Amounts That Cover Unpaid Rent and Property Damage
A security deposit is sometimes the only backup a landlord has in place to cover nonpayment of rent, damage repair, and so on. Because of this, having security deposit state laws in place that protect the landlord’s finances is essential to keeping their ROI on track.
An ideal landlord friendly security deposit law would be where there is no limit in place. This enables the property owner to set a deposit that they feel will cover all their bases should a mishap occur. Also, having a limit of no more than one and one-half month’s rent, is also acceptable, as well as reasonable. In addition to this, the timeframe in which a landlord must return the tenant’s deposit upon move-out is also factored in, with some states setting a two-week time frame and others capping it at 60 days.
4. Landlord Friendly States Sport Late Fee Laws that Keep Cash Flow on Track
Late fee laws and regulations in landlord-friendly states provide flexibility that can protect against potential financial losses from late rent payments. In states that favor landlord friendly laws, property owners often have the right to set reasonable late fees, which gives tenants a financial incentive to pay rent on time.
Texas, which is a landlord-friendly state, allows for a late fee of no more than 12% of the rent. In contrast, California restricts a landlord to no more than 6% when charging a late fee, which is half the amount of what TX allows. This highlights just how important it is to have supportive policies in place. Tight restrictions on late fees may limit a landlord’s ability to effectively manage their cash flow, which may lead to a financial strain.
5. States with Lower Taxes Increase a Landlord’s Profits
Some landlord friendly states don’t collect state income tax, which can enable landlords to funnel more profits back into their investments, potentially saving thousands of dollars each year in the process. While you’ll still have to pay federal taxes, not having to pay a state income tax can significantly decrease your overall tax burden, and increase your profit margin.
Top Landlord Friendly States 2024
Now, let’s go over the best landlord friendly states to buy a rental in. But first, if you prefer to hear about what states are landlord friendly instead, then be sure to watch my video below:
Also, before we get started covering specific states, keep in mind that you don’t have to live in the state your rental property sits in. Most investors don’t own rentals in their own backyard. This is the case because the investment should be selected based on how lucrative the location is, not how convenient it may be to travel to. That said, I put together two helpful articles on this topic:
- Long Distance Investing – A Strategy for Wealth Building
- Why Location Matters in Real Estate Investing
1. Colorado
When it comes to rent control, Colorado offers landlords considerable flexibility. A bill presented a few years ago that could have imposed rent control restrictions failed to pass, allowing landlords to continue setting rent increases as they see fit. Additionally, CO doesn’t enforce a certain limit on the deposit amount landlords can charge, and there isn’t a requirement for landlords to provide tenants with written receipts upon receiving these deposits. Security deposits are required to be returned within a month after lease termination, or 60 days if specified in the rental agreement, with the option for landlords to withhold funds for damages or unpaid rent.
Colorado’s policies also favor the landlord when it comes to late fee regulations, and the eviction process is also streamlined to protect the property owners’ cash flow and ROI. For instance, when there’s a lease violation, landlords provide the tenant with notice, and if the matter is unresolved within three days, the landlord can initiate eviction by filing a forcible entry and detainer. With these landlord friendly laws set in place, as well as the low property taxes CO sports, it certainly makes for a financially favorable location to purchase a rental property.
2. Indiana
Indiana boasts landlord-friendly laws that make it a great state for property owners seeking investment opportunities. A key aspect of these laws is the flexibility around rent increases and late fees, which significantly protect landlords’ rights.
By not imposing strict regulations, Indiana allows landlords to determine the extent to which they can increase rents, as long as they give tenants a 30-day notice. Also, security deposit policies in this state enable landlords to set reasonable amounts and return them within 45 days after moving out. When it comes to Indiana’s eviction laws, the process is streamlined to help landlords in situations where a renter stops paying rent or violates a lease agreement. If tenants stop paying rent within a specified grace period, landlords can issue a 10-day notice for payment before proceeding with eviction. This means investors won’t have to deal with a drawn-out eviction process, which will minimize potential financial losses.
3. Florida
When a landlord owns a rental property in Florida, they’ll benefit from the fact that there are no state-imposed rent increase limits. In fact, rent control is prohibited by law. This policy allows landlords to determine rent increases independently, which can be crucial in offsetting the costs of large repairs or upgrades. Also, Florida landlord-tenant laws allow investors to set security deposits without an upper limit, protecting them from financial loss if they find damages after the tenant moves out.
Florida’s landlord-friendly position extends to late fees and the eviction process. For example, the state’s landlord-tenant act does not restrict late fees, as long as the conditions are clearly outlined in the lease agreement. The eviction process also favors landlords, presenting two main grounds for eviction: nonpayment of rent and non-compliance with the rental agreement.
If rent is unpaid beyond a three-day notice period, or if non-compliance continues after a seven-day notice, landlords are allowed to end the lease. In addition to this, Florida boasts low property taxes and doesn’t charge a state income tax, allowing landlords to hold on to more of their rental income.
4. Arizona
When looking into Arizona’s rental laws, it’s clear why the state is considered landlord-friendly. One significant factor is that Arizona doesn’t cap the amount landlords can charge for rent, allowing for flexible pricing adjustments in times of high inflation or tax increases, which helps landlords cover their costs.
Regarding security deposits, while Arizona sets a cap at one and a half months’ rent, this is seen as reasonable when compared to states that restrict it to just one month. Plus, tenants can opt to pay more if they agree, and landlords have 14 days to return the deposit, minus deductions for damages or unpaid rent.
There are no state-imposed limits on late fees, as long as the tenant is informed through the lease agreement. For evictions, a landlord can evict tenants who fail to disclose criminal activity or break the lease terms. A notice period of five to ten days is generally required, after that, landlords can initiate eviction proceedings.
5. Texas
Among the top states noted for being landlord-friendly, Texas is my top pick for real estate investments. Texas significantly favors landlords when it comes to landlord-tenant issues, which speeds up the process when tenant breaches happen. This state’s laws make it clear that property ownership rights are respected across the state.
In Texas, landlords benefit from the lack of rent control laws, allowing rental prices to be adjusted at lease renewal without a cap. However, a 30-day notice is required if the landlord does decide to increase the rent. Security deposit regulations in Texas are also set to favor the property owner, with no limits on the deposit amounts.
The state’s late fee charge is set so that it doesn’t exceed 12 percent of the rent. However, landlords are allowed to charge beyond 12% if it doesn’t cover the costs related to overhead and collecting late fees. Additionally, the new rental legislation mandates a two-day grace period before any late fees can be applied.
Additionally, the absence of state income tax enhances the profitability of investing in the state of Texas, making it even more attractive financially. You can read more about investing in Texas by diving into the following articles I created:
- What Makes Rental Real Estate in Texas Profitable
- Lubbock Recognized as Recession-Proof City and Maintained a Strong Texas Rental Market Throughout Pandemic
Top 5 Landlord-Friendly States Map
Just to give you a visual, here’s a map of the United States that displays the top five landlord friendly states 2024 that you should consider when looking for a lucrative location to invest in:
Landlord Friendly States 2025 – What to Expect
Projecting ahead to 2025, will the landlord-friendly states 2024 list be altered due to legislative changes in landlord and tenant laws? There are some changes we’ll be seeing in 2025, but they won’t affect how these landlord friendly states ranked. I’ll cover the only changes worth mentioning below, which will take place in the state of Florida.
Florida has some legislative changes in store for 2025, but in my opinion, it won’t change its ranking status of being on the list of the best landlord friendly states. Here’s a brief overview of the changes:
Florida’s Adjusted Tenant Landlord Laws
- Extended Notice Periods for Evictions: Tenants are given more time to address concerns or find new housing.
- Mandatory Mediation for Certain Conflicts: Before proceeding to court, landlords and tenants are now required to attempt mediation for some disputes, such as unpaid rent or maintenance issues.
- Detailed Housing Standards: New regulations specify the requirements a rental property must meet, ensuring tenants have safe and healthy accommodations.
Investing in the most landlord friendly states is really a strategy to safeguard your money and your investment. With that in mind, I suggest diving into my articles below that can provide you with additional ways to protect yourself as a landlord:
- Risk Mitigation Strategies for Real Estate Investors
- Safeguarding Your Investment with Tenant Background Checks
Now, let’s switch gears and briefly discuss states that are not landlord friendly…
Non-Landlord Friendly States Investors Should Stay Away From
Investors should be careful about buying rental properties in non-landlord-friendly states because it can impact their bottom line. In these states, the laws tend to favor tenants, which can make it difficult for landlords to manage their properties effectively. For example, eviction processes can be lengthy and complicated, all while the tenant is permitted to continue living rent-free in your rental, which results in large financial losses.
As mentioned, I’ve been through a costly eviction process where it seemed my rights as the property owner didn’t matter. If you ask around, you’ll most likely be able to hear a few nightmare eviction stories from fellow investors that will have you running to landlord friendly states.
In addition to this, rent cap policies may also be in place in non-landlord friendly states, as well as low security deposit laws. Imagine owning a rental home and not being able to charge a monthly rent you think is reasonable, all because the state thinks it should be a lower rate. High property taxes may be an issue in these states, as well as burdensome state taxes.
Here’s a list of the top ten least landlord friendly states an investor should never set up camp in:
- California
- New Jersey
- New York
- Deleware
- Washington, D.C.
- Kansas
- Maine
- Massachusetts
- Nebraska
- New Hampshire
Now that you have your list of landlord friendly states at your disposal, as well as details on which locations to never invest in, if you still need advice as to which state is more appropriate for your goals, feel free to schedule a complimentary call with the Morris Invest team. We can assist you in owning a rental in a landlord friendly state that will help protect your financial interests. You can also head over to our article – How to Easily Buy a Rental Property Before the End of the Year, for some advice on moving forward with a rental property purchase.
Frequently Asked Questions
For those looking for as much information as possible regarding states that are landlord friendly, I’ve added a bonus section that contains common questions on this topic:
1. What are the Top 10 Landlord Friendly States?
Although I prefer to invest in the best landlord friendly states that make it to the top five, I’m frequently asked what the top ten list includes. That said, you’ll find that list below which also includes my original list of five:
- Texas
- Florida
- Colorado
- Arizona
- Indiana
- Missouri
- North Carolina
- Alabama
- Georgia
- Montana
2. Which State is Landlord Friendly and Has a High Demand for Rentals?
Texas, which is my top choice for landlord friendly states, also boasts a high demand for rentals. This is the case because the Lone Star State sports a low cost of living which attracts residents, as well as doesn’t impose state income tax. These two reasons, and more, have people moving to TX in droves, especially from the state of California.
Texas, especially the city of Lubbock, has a booming economy that keeps workers in the area, and these workers need a place to call home. This state is an ideal location for investors because of its high demand for rental properties that’s coupled with laws that protect a landlord’s rights.
Our Power Programs & Resources
Before we wrap things up, you’ll want to take a moment to explore our main programs and resources listed below, along with additional articles that offer a wealth of information that can place you on the right path.
- The Financial Freedom Academy
- Freedom Number Cheat Sheet
- 90-Day Financial Empowerment Bootcamp
- Morris Invest & SDIRA Program Overview
Additional Morris Invest Articles for Future Reading:
- Guide to Residential Property Management
- Understanding Rent to Price Ratio – Metrics and Application
- What is Landlord Insurance and What Does it Cover?
- Most Landlord Friendly States 2024 for Investors
- What is Rent Guarantee Insurance and its Benefits?
Keep Your ROI High by Investing in the Most Landlord Friendly States
When it comes to landlord vs tenant friendly states, it’s clear that those with a goal of safeguarding their investment, should buy in a state that protects a landlord’s rights. In doing so, you’ll enhance your protection against loss of income, as well as having your bank account drained from a costly eviction. For those interested in acquiring a cash-flowing rental property in a lucrative landlord friendly state, we can make it happen for you.
Our experienced team can provide you with a new construction property that comes with landlord-friendly safeguards that can keep profitability on track. Each rental will have an experienced property manager assigned and a thoroughly vetted tenant. With years of experience in the rental real estate market, Morris Invest offers proven strategies to maximize returns, and we take care of all the details when it comes to placing a cash flowing rental property in your portfolio. With that said, be sure to reach out to Morris Invest to start the process of acquiring a high-performing property.
If you’d like to buy a rental property in a landlord-friendly state before the end of the year, then dive into my video below: