The 10 best states for property investment

Updated May 20, 2024

To be a homeowner is one thing, but to be a property investor is on a whole different level. In the United States, many are interested in buying and selling houses for residential use. However, there are a few who look for properties not for the sake of living in them, but to maximize these houses’ potential.

Aside from residing in a property, turning one into an income-generating asset is an excellent idea. Most real estate investors do this by leasing their properties. They rent them out to generate passive income.

If you’re looking at properties in the US to buy as investments, this article will give you a head start. If you work in the mortgage sector, use this article as a client education piece. It offers information and insights on the best states for property investment.

Top states for property investment

As with any endeavor, the first step is the most important. With property investment, your initial move must be to research about your chosen state’s location. Afterwards, find out the median rent and median home price of the properties within that state.

This is why Mortgage Professional has listed the top ten best states for property investment. We will also discuss the prices mentioned above and explain other details that will help you choose and invest in a property wisely.

Here are the top ten best states in the US for property investment:

For the parameters, we ranked the top ten best states with median rental charges that are above the national price and with the lowest median home prices. Let’s look at them closely:

1. Delaware

First up, we have the state of Delaware. Its median home price is below the national median while the opposite is true for its median rent. Delaware has tons of parks, lighthouses, museums, and other national heritage spots, making it attractive to property investors and tourists. It is also the home of the historical First State National Historical Park.

2. Alaska

Major cities in Alaska like Fairbanks, Anchorage, and Cooper Landing are great places for investment. This is thanks to indoor and outdoor activities, tourist destinations, and food hubs. All these factors pushed Alaska to land on the second spot of the best states for property investment. Also, the median home price is lower than the national median. The same goes for the median rent. This can mean faster return on investment (ROI) for real estate investors.

3. Connecticut

In 2019, Connecticut had the highest per capita personal income in the US. As such, it is not surprising that this wealthy state made it to our list. While the cost of living is above average in Connecticut than in most states, it still attracts a lot of property investors every year. This is mostly due to renters wanting to live in Connecticut because of high-paying jobs, and low crime rate. Another reason is the presence of Yale University in the area.

4. Florida

The state of Florida has the highest home insurance rate in all of the US, but it is still a great place to invest in. The downside is that interested property investors will have to pay more than the national median price should they desire to buy a house in Florida. Nevertheless, the rental demand in this state is continuously moving upward so foreign and American investors may still want to consider.

Photo alt text: low angle shot of office buildings and palm trees against the blue sky in Miami Florida

5. Maryland

At no. 5 of the best states for property investment, we have the state of Maryland. This is another great place to put your money in because of the number of renters and entrepreneurs within its cities. Maryland’s affordable standard of living plus excellent schools attract such individuals from across the US. Maryland also has the highest median rent on our list despite its $421,800 median home price. With this, property investors are guaranteed to maximize their investment return in no time.

6. Nevada

Up next is Nevada. House flipping is common in this state. This means purchasing a worn-out property or house at a low price, fixing it up, then reselling it at a higher price. Buyers can pay for the renovations out of pocket or they can get a loan to flip a house.

Nevada is also the home of Las Vegas, a famous city around the globe for its high-end hotels, casinos, and bars. Nevada attracts both local and foreign investors.

7. Virginia

Virginia is among the ten best states for real estate investment due to its median rent being in favor of real estate investors. Professionals from every industry as well as students from all over the country are flocking to Virginia. High-quality schools, state-of-the-art medical facilities, and renowned business institutions are some of the many reasons why the real estate market is thriving here.

8. New Hampshire

Trailing behind is New Hampshire in eighth place. Property investors will find it advantageous to purchase a rental property here because the rental demand is getting stronger this year. New Hampshire’s history and culture is also colorful, making it another subtle attraction in this state.

The taxes in this state are also among the lowest in the country. Being near the Atlantic Ocean, you can easily find breathtaking views in New Hampshire. These contribute to the desirability of this state for property investment.

9. New Jersey

With the soaring demand for rental properties in New Jersey, property investors are certain to get their investment returns with ease. New Jersey’s strategic location is also a plus. It is close to Philadelphia and New York, both major cities in the US. The standard and quality of living in this state is also on the positive side. Which is why despite New Jersey’s high median home price, it is still worth considering if you plan to invest in the property market soon.

The Hudson River Waterfront Walkway in the modern state of New Jersey

10. Oregon

Snatching the final spot is the state of Oregon. Its median home price is quite above the national median but don’t let that hinder you from investing. There are tons of job opportunities in this fair state, making it desirable for renters. The income is also competitive, and the crime rate is low. Oregon’s economy is stronger and more stable than the other states as well. But if you are not into high-risk real estate investments, Oregon might be the state for you.

Would you like to know more about real estate investing for beginners in the United States? Watch this video:

Median rent and home price versus average rent and home price

What’s the difference between median rent versus average rent? What about the median home price versus national average home price? These words can be misused and interchanged if not understood properly. Let’s go over these terms:

• Average house price. The sum of all the prices for properties sold within a state, divided by how many properties are sold within a given period
• Average rent. The average rent is the sum of all the rent prices in one state divided by how many rental units there are within a given period
• Median home price. If one will arrange all the property prices in a state from lowest to highest, vice versa, the middle price is the median home price
• Median rent. The median rent is similar to the median home price, except that the values considered are the rental prices

Do you know that the median prices are preferred by real estate professionals? They give a better illustration of the house and rental amounts per state and at the national level. Average prices tend to be unreliable if one or several variables are lightyears in comparison to the rest.

Let’s say a number of properties are priced at millions of dollars while most are just hundreds. The average will not reflect a proper comparison of all the prices. The extremities, may they be on the higher or lower end of the price range, can cause the average to be slanted drastically. Again, this is why the median prices are preferred. They provide the middle price of the entire range regardless of how far the difference between the lowest and highest prices are.

The latest research shows that the median home price in the US is worth $384,500. On the other hand, the national median rent is approximately $1,123.

Other US states for real estate investments

Interested to know about the other states? We have listed all 50 states plus the District of Columbia for better comparison:

The information used in this article is from the World Population Review’s state rankings. As for the median home prices for Montana, South Dakota, and North Dakota, the price values were from a data analysis by Bankrate.

When should I invest in the US property market?

Ultimately, there is no foolproof method for predicting the perfect time to invest in properties. Conducting careful research to keep yourself updated is helpful; part of that research is knowing what the best states for property investment are. Analysis of the market’s condition can also be beneficial.

A well-informed approach is key in identifying opportunities for a successful property investment in the US. Speaking of approach, here’s a guide on top real estate investment strategies to help you plan your next property investment venture.

Do you have an investment in any of these states? Is it worth the risk and the price? Share your thoughts in the comment section below.