Landlord-friendly states have laws and procedures that allow landlords to exert more control over their properties. That’s why many small business owners are attracted to working as a landlord in these areas.
From the eviction process to programs like rent control, many parts of landlord-tenant law tend to favor tenants. However, not all states slant their procedures toward renters. Some are more neutral or even benefit landlords more. Knowing if you are in one of these states or why you might want to consider doing business there can allow you to work as a landlord in a more lucrative way.
Let’s learn more about landlord-friendly states, what laws you can expect to see in these places, and what else you should be aware of going forward.
Table Of Contents On The Most Landlord-Friendly States
State laws in some areas are likely to give landlords more freedom and control over their business, but which states have these favorable rules? Learn more about the most landlord-friendly states in today’s complete guide:
- What Makes Landlord-Friendly States So “Friendly”?
- What Are The Most Landlord-Friendly States?
- The Best States To Be A Landlord: FAQs
- Landlord-Friendly States For You
What Makes Landlord-Friendly States So “Friendly”?
Some states are known to be more friendly toward landlords, but what exactly does this mean?
Landlord-friendly states are considered the best locations to have rental property because the rules, regulations, and general rental ecosystem make for a better rental business. From lower taxes to faster evictions, there are various ways that states can be landlord-friendly.
Let’s look at specific ways that a state may be landlord-friendly.
#1: The Eviction Process
For many landlords, one of the most frustrating parts of their job can be trying to file for and win an eviction case. When tenants are not paying rent or are destroying the property, it can feel like a no-brainer that they should be evicted, but often the law’s red tape gets in the way.
Evicting quickly is not possible in some states. Landlord-friendly states, however, have eviction processes that are less complicated, faster, and easier to pursue. These states focus on the landlord as the rightful owner of the property and make it possible for them to regain control quickly.
#2: Property Tax Rates
Yearly property taxes can get expensive. Those taxes will cut into your annual profits if you own many properties in a state with high tax rates. However, having the same size investment in a state with lower taxes will reduce how much of your money gets tied up in tax obligations.
#3: Rent Control Rules
Rent control laws exist in some cities and states. These government programs control how often rent can be increased and when. These rules can vary greatly, and they can have a huge effect on your profits—or not. Either way, you will want to be aware of any applicable rent control programs in your investment area.
#4: Local Economy
Another factor that isn’t directly tied to local laws, but affects how landlord-friendly a state is the local economy.
Landlords need tenants who can afford to pay rent. If the local economy is suffering from severe depression or loss of personal income, it may be difficult to find a stream of reliable tenants due to the lack of economic growth in the area. Areas with low unemployment rates are more landlord-friendly, but this doesn’t mean there is a possibility for growth in other regions.
#5: The Rental Market
Another factor determining if a state or area is landlord-friendly is the overall rental market. If an area is saturated with rental units and many of those units are unoccupied and available, consistently finding tenants might be difficult. Choosing the right landlord-friendly state on this front will also help keep your units full.
#6: Landlord-Tenant Laws
Before starting a business in a new state, review the landlord-tenant laws as they may differ from what you are familiar with. Every state specifies what rights landlords and tenants are afforded there. These rules can vary from state to state.
Some states are very balanced in these laws, while others favor one side over another. Regardless, you need to know what you are getting into before you do business in a new state, to ensure you will be able to exert your rights and make a good living at the same time.
#7: Required Registrations
In some states that are less friendly toward landlords, it is necessary to get special licenses and complete various registrations to operate a rental business. Despite the positive intention of these laws, these credential requirements cost landlords both time and money. Burdensome additions like these take away from your overall profits.
What Are The Most Landlord-Friendly States?
Considering all of these factors, what are the most landlord-friendly states?
Many landlords and rental experts agree that the best states for landlords are:
Remember, of course, that the rules and regulations are different in each of these states, which means the reason that each state is landlord-friendly also differs. Take a closer look at each state to determine if it’s a good investment area for your rental business.
Arizona is home to very low property taxes and a simplified eviction process that favors landlords. There are only three types of eviction and lease termination notices to be aware of, which makes regaining control of your rental assets easier than in tenant-friendly states.
Arizona state laws also allow landlords to issue unconditional quit notices when the tenant makes a serious infraction. This makes it possible to regain control of the rental property almost immediately, which is a favorable rule for landlords in the state.
Many rental investors like to invest in Alabama because it is also a landlord-friendly state. Landlords don’t need licenses here, and they can also determine their own late fees. Eviction notices require between seven and 14 days’ notice, which is considerably less than many other states.
Additionally, property tax rates average less than 0.5%, making it the state with the second-lowest property tax rate.
Like Alabama, Kentucky has very lenient eviction laws. Landlords must provide between seven and 15 days’ notice depending on the cause of eviction, and eviction lawsuits tend to move forward very quickly if the tenant doesn’t comply.
There are no state laws on late fee limits, and landlords can also collect as much as they feel is appropriate for their security deposit. Average property tax rates hover around 0.8% in Kentucky, which is lower than in many states.
Property tax rates may be high in Texas, but the landlord-tenant laws here undoubtedly favor landlords. Security deposits can be as high as a landlord feels is reasonable, and landlords have more rights when tenants aren’t paying rent on time.
Eviction notice periods are as short as three days in Texas, which allows for rapid repositioning of rental properties whenever a tenant falls behind on rent or otherwise violates their lease. However, some local jurisdictions overrule this time frame with a more extended period.
Landlord-tenant laws in the Sunshine State are relatively limited, and this tends to be favorable for landlords to create their business exactly as they want it to be. There is no rent control in the state, and late fees can be set as seen fit by the landlord. Additionally, evictions happen very fast in the state. The shortest eviction notice for nonpayment of rent is just three days so that landlords can handle problem tenants quickly.
Lease breaches in Indiana don’t go unnoticed, and landlords only have to give 10-day notice to move forward with an eviction. In the case of serious lease breaches, the landlord might even be able to issue an immediate and unconditional notice.
Additionally, the tax rates in Indiana are very low at just 0.87% for property taxes. This allows for a greater profit margin when working on rental properties in the state.
Georgia has long been a popular state for landlords, and it is unlikely that will change anytime soon. The state has a very low tax rate at just 0.91%, so this is one of the first reasons investors are drawn to the region. Additionally, late fees and security deposits are not limited by landlord-tenant laws at the state level.
The eviction process in Georgia is very different from other states. Landlords can give notice for nonpayment of rent, and there isn’t a specific period required. If tenants don’t respond in seven days, landlords can file for eviction. This informal process definitely favors landlords.
Beyond The Best States For Landlords
Regardless of whether you are working as a landlord in a landlord-friendly or renter-friendly state, many parts of your job will remain the same. For one thing, it’s still going to be vitally important that you properly screen and select potential tenants.
High-quality tenant screening practices are some of the top things that experienced landlords recommend you develop, and there is a lot that your screening practices ultimately affect.
What are you doing for tenant screening, and how could you be doing it better? If you need help analyzing applicants and getting the information you need, utilizing a third-party tenant screening service like RentPrep could be what you need.
With our high-quality tenant screening, you can set up an easy process for collecting background checks, credit reports, and credit checks, to make your decision process more manageable. Don’t keep using an outdated practice; start with RentPrep today.
The Best States To Be A Landlord: FAQs
Which state is most landlord-friendly?
The answer to this question largely depends on your exact priorities as a landlord. Still, many experts will agree that Indiana, Alabama, and Georgia are three of the most landlord-friendly states.
These states all have fast and easy eviction procedures, relatively low property taxes, and other regulations that make it easier to be a landlord. While working in these states, you won’t face as many trying situations where it is challenging to enforce reasonable control over your main asset: your properties.
What are the most tenant-friendly states?
As of writing, these are the most tenant-friendly states:
- Rhode Island
- South Dakota
While tenant-friendly states aren’t necessarily bad for landlords to do business in, there are some significant differences in how the laws work in these locations compared to landlord-friendly states.
Be aware of which states are considered tenant-friendly, and pay attention to how you will need to alter your business procedures in order to succeed. Remember, tenant screening will continue to be one of the most critical factors.
What are the least landlord-friendly states?
Oregon is considered one of the most challenging states to be a landlord due to the large number of tenant-friendly laws that have been implemented. In addition to a statewide rent increase cap, there are also rules that make it harder to evict long-term tenants, even in cases of severe infractions. These rules can make it harder to be a landlord, but it is still possible to do business successfully in the state.
What is the difference between landlord-friendly and tenant-friendly states?
Landlord-friendly states have laws that make it easier for landlords to exert control over their property, such as fast eviction laws and fewer regulations on rent increases. On the other hand, tenant-friendly states focus on protecting tenants from rapid changes or evictions, even when they cannot pay rent. Tenant-friendly laws concentrate on providing and maintaining housing, while landlord-friendly laws preserve the landlord’s rightful assets.
Landlord-Friendly States For You
As we’ve learned today, some states focus on the needs of landlords more so than those of tenants, and others do not. It is possible to succeed as a landlord in either situation, but you should always be aware of your working atmosphere to maximize growth.
The most landlord-friendly state for you is going to have rules and regulations that line up with your business priorities. Remember to review the following in each state where you consider doing business:
- Eviction laws
- Security deposit laws
- Rent increase laws
- Rent control
Feel free to add any other priorities, such as property taxes, to the list you will review. By checking out each state in terms of what is most important to you, you’ll be more likely to find success as a landlord. Landlord-friendly states might be the right move for your business, but they also might not be necessary. The only way to find out is to research your options, just as you are today.