Throughout the country, there are varying laws and regulations surrounding the landlord-tenant relationship. Between the two parties, landlords and tenants, each state tends to lean in favor of one more than the other.
A landlord-friendly state leans more so in favor of the landlord than the tenant. As a landlord, it’s good to know what type of situation you will be in before you get into property management.
But what exactly makes a state landlord-friendly? Here we’ll take a closer look at some of the different factors that are valuable to landlords.
One of the most significant factors that determine a landlord-friendly state is the laws surrounding the eviction process. Evictions are time-consuming, but in landlord-friendly states, you can anticipate a relatively simple process to complete.
While you’ll still have to take your tenant to court, the overall process will be more simple and require less on your end as a landlord. Ultimately, a speedier eviction process helps you get your lousy tenant out and a new tenant in quicker, minimizing the amount of time your property sits vacant.
Another important aspect of being a landlord of a rental property is the taxes associated with it. While property taxes can never be avoided, you will find that some states across the country have more desirable tax brackets than others.
Property taxes are something to consider if you are looking to purchase rental properties in different states.
Even in the ideal landlord-tenant relationship, as a landlord, it is still crucial for you to raise the rent in line with the cost of living and rising property values in your area over time.
In landlord-friendly states, you’ll find that there are fewer regulations surrounding rent control. For example, there will be fewer regulations around how much you can raise the rent and/or how frequently you can do so.
If you own rental property, more than likely, you are looking to earn a profit on your investment. Tax and insurance rates can play a huge role in your bottom line as a landlord.
Take the time to research the tax and insurance rates in the area you are looking to purchase your rental property. It might be worth looking into alternative options if the rates are too high. Rates vary drastically across the country, so don’t be discouraged if the first place you’re looking for seems out of reach.
States can enforce what type of registration and licenses are required to own and operate rental properties. Landlord-friendly states generally have minimal registration and license requirements, making the process easier and cheaper to begin.
As you can imagine, in landlord-friendly states, there is likely to be a lot of competition. Make sure you research everything, not just the costs to you. Competition is also an essential aspect of your earnings potential.
COVID-19 forced the world to make significant changes, and the rental property industry is no different. Many states throughout the country imposed new legislation following COVID-19 that directly impacted the rental market.
Do your research and make sure you are up to date on the latest regulations in the state of your choosing post-COVID-19.
When looking at the country as a whole, the southern region tends to have more landlord-friendly states. Here are the best landlord-friendly states of 2021:
Alabama is one of the best landlord-friendly states in the country. A 0.42% tax rate makes owning rental property fantastic here, and the eviction process is also known to be very landlord-friendly.
With one of the lowest property tax rates in the country at 0.72%, Arizona is what landlords consider to be a dream of a rental property state. Arizona’s eviction process is quick, allowing landlords to turn it over to the courts in as little as five days.
Colorado is known for its landlord-friendly eviction laws. In this state, landlords can give tenants as little as 72 hours’ notice to pay up or be taken to court to go through the eviction process.
One of the best states to be a landlord renting your property in is Indiana. With a combination of a 0.87% tax rate and eviction laws in favor of landlords, owning rental property here is a bit of a dream.
Another one of the best landlord-friendly states is Florida, known for its favorable eviction laws. For landlords, Florida only requires you to provide a three-day notice to pay or begin the eviction process in court.
Illinois is also known for its affordable tax rates and landlord-friendly laws. The state only requires a 10-day notice to begin the eviction process. One of the most favorable aspects of being a landlord in Illinois is that rental and security deposit rates have no restrictions.
The property taxes in Texas are slightly higher than the others on the best landlord-friendly states list, but the landlord-tenant law otherwise is very favorable to landlords. The eviction laws only require a three-day notice, and deposit laws are incredibly lenient.
Pennsylvania is a rather large state and, as such, is known for having higher rental rates. With high rental rates and favorable eviction laws, Pennsylvania is another one of the best landlord-friendly states in the nation.
In Ohio, landlords can look forward to tax write-offs, including improvements made on the property and mortgage appreciation. Ohio is also considered one of the best landlord-friendly states because of its eviction process that favors landlords.
Kentucky is another one of the great landlord-friendly states in the country. With a 0.86% tax rate and a relatively lax eviction process, Kentucky is a great place to be a landlord.
For landlords looking to raise their bottom line, Georgia is a great state to do so. Georgia has a 0.91% property tax rate, which is low compared to much of the country. Also, landlords have free reign over the eviction process in Georgia.
While having a better understanding of the landlord-friendly states in the country may not make you sell and relocate your rental options, it’s something to consider for future purchases. Being strategic about where you own your rental properties can be incredibly beneficial to your bottom line in the long run.