Owning a rental property that is capable of generating long-term profits is one of the best ways to build wealth in real estate. Before purchasing your next real estate investment, consider how landlord-friendly is the state where the rental property is located.
What is a landlord-friendly state?
As a property owner, it goes without saying that you need to do your best in taking care of your tenants. However, there are times when things don’t go as planned and you need to make sure that your investments are well protected. The most landlord-friendly states have laws that give more benefits to the property owners than just about everywhere else. The best states for landlords have minimal licensing and registration requirements, affordable property taxes, easy eviction process, and favorable regulations on rent increase. Based on this criteria, we rounded up 8 states that have the most landlord-friendly laws you can consider for your next property purchase:
8 of the most landord-friendly states for owners in 2020
- Texas – It is difficult to beat the Lone Star state when it comes to facilitating easy relief, compensation, or repossession of rental units in the event that lease conditions are violated. In Texas, landlords can give a 3-day notice (sometimes even shorter!) for tenants to pay or leave if rent payments are late or the lease contract has been breached. The terms for unit repairs can also be set, which means tenants may be responsible for repair payments. Additionally, the laws in the state allows for landlords to retain security deposits up to 30 days after the tenant moves. This gives landlords plenty of time to inspect the property for damages that may be caused by tenants.
- Indiana – The state has attractive rental rates and the median home value is well below the national average. This gives a price-to-rent ratio that earns a considerable profit potential. Indiana laws also don’t put a limit on security deposits and gives up to 45 days for landlords to withhold deposits that allows for a thorough inspection of the property.
- Colorado – Landlords find Colorado to be a great place to own a rental property because the laws lean heavily in their favor. While the eviction process in other states drags on too long, evicting a tenant for unpaid rent is much easier here in Colorado. Tenants with late rent are given a mere 72 hours to comply after notice is served and only 48 hours to leave the property if tenants do not comply.
- Alabama – Property taxes in Alabama are the second lowest in the country. This alone makes the state an attractive choice to real estate investors. In addition, property owners can raise their rent as long as they provide a 30-day written notice and set their own price for late rent fees. The eviction process also heavily favors the landlords. To end the lease, they can give a 14-day notice and if tenants fail to comply, a 7-day eviction notice can be given.
- Arizona – It is easy for landlords to terminate a tenancy. They can give a 5-day or 10-day period for the tenant to comply with lease violations before they file for eviction. Similar to Alabama, landlords in Arizona can also raise rent after a 30-day notice.
- Florida – Landlords can take advantage of the lack of detail in the rental laws to tailor-fit their guidelines for their protection. They are also allowed to charge security deposit and set fees for late rent according to their fair judgement.
- Kentucky – Evictions are an easy process in this state which makes it another good choice for real estate investors. When a tenant fails to pay rent, a 7-day notice can be handed prior to filing an eviction case. If the rental agreement was violated in other ways, 15-days can be given for the tenant to comply before evictions. If a tenant has received a 15-day notice within 6 months, a landlord can file a 14-day unconditional quit notice.
- Georgia – Eviction laws highly favor landlords in Georgia. A written notice of eviction is not required, which makes it more flexible and informal compared to other states. Although most landlords still provide a written notice, this is not a requirement. Eviction can also be a very quick process because the regulations don’t indicate how long landlords should wait before filing for eviction.
It is in your best interest to invest in states where the laws work in your favor so you can earn a living from your real estate investing business. Hence, pay special consideration to the rules and regulations in the particular state where you are interested to buy a rental property.
