Over the last several years, I’ve noticed a new fear emerge among investors. Many people are finding themselves hesitant to invest because they worry they are going to get stuck in a bad situation with a tenant who doesn’t pay. Especially after some of the rent freezes and eviction moratoriums of the pandemic era, it’s a valid concern.
So on today’s show, I’m going to share the #1 thing you can do to avoid getting stuck in a position with a tenant who doesn’t pay rent: invest in a landlord friendly state. You’re going to learn why this one factor is so important, and exactly how to identify a landlord friendly state.
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Here’s the secret to successful investing: you must buy properites in a landlord friendly state. As a real estate investor, one of the most important things you can do is make sure you’re investing in the right location. Different states have different laws when it comes to investing, so you’ll want to make sure your property is located in a landlord-friendly environment with favorable laws.
Let’s talk about some metrics that make a state landlord friendly:
- Eviction process. While you can never be totally immune from evictions, you can make sure the law is on your side. Before you invest in a market, you must have a solid understanding of what the eviction process looks like. All states have different eviction processes, but landlord friendly states have very little tolerance for non-paying tenants. Make sure you understand how long it takes to go through the eviction process, including whether you need a lawyer, and the specific steps you need to take to initiate an eviction. Evictions are never fun, but landlord friendly states help make the process a little less painful.
- Security deposits. Every state is going to have different laws around security deposits, including the maximum, what you can and cannot charge against it. Be sure you know your rights in this area before you invest.
- The local economy. Another thing to consider is the health of the local economy. Looking at metrics like the vacancy rates, job growth, crime rates, and more can help you ensure that you’re investing in a healthy economy with great tenants, potential for growth, and high profits. In strong local economies, you’re going to see that people have expendable income, steady employment, and the desire to rent long-term. If they like the property and the school district, you’re going to see tenants who not only want to rent, but have the financial means to cover their rent payment every month.
- Registrations and licenses. Certain states and cities require a ton of red tape — others, not so much. In general, a landlord friendly state is going to have fewer hoops and hurdles for you to jump through. Usually, this type of thing isn’t going to make or break your experience, but it’s certainly something to look out for. Be sure to find out what types of fees and forms you need to complete in order to be in compliance. Determine whether registrations are one-time or yearly, and make sure you know what’s expected at the city, county, and state level.
- Rent control. Certain cities might set limits on how much you can charge for rent. Like everyone else, landlords experience the crunch of rising costs, and in my opinion, should be able to set or raise their rent at a fair market rate in order to cover expenses.
- Access to multiple proven and effective property management companies. It’s also worth noting that an instrumental part of your success and profitability comes down to your property management team. They can help with many of the things we talked about today, including collecting rent, the eviction process, and more.
So as you can see, investing in a landlord friendly state can save you a lot of time, money, and grief. Keep this in mind before you buy a rental property, even if you think the numbers make sense.
This market research process can be lengthy and exhaustive, but it’s critical to your overall success. Investing in a landlord friendly state will help you maximize your returns and protect the health of your investment. And if you need help along the way, our team at Morris Invest spends years analyzing market data, and we only offer properties in the best, most landlord friendly states across the US. Safe and affordable housing is great for local economies, and we believe in investing in markets that align with that belief.
You can schedule a free call with our team at morrisinvest.com . We’d love to talk with you about landlord friendly states, new construction rental properties, and how our full-service real estate process can help you reach your goals. Just click the red button, and let us know when to call.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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