If you’re considering buying an investment property in 2023, the year ahead, one of the first things to decide is where you’re going to buy. While some investors opt to buy locally to make management easier, others look to different states and regions where conditions are more favorable for Landlords.
There are pros and cons to each strategy, but if you’re opting to buy in a different city or state than where you live, it’s vital to do plenty of research to make sure that you understand the market and are able to acquire properties that will produce good returns.
Factors to Consider When Looking for an Investment Property in 2023
One thing to keep in mind wherever you purchase is that real estate is first and foremost local. What this means is that markets and values are determined based on the location of the property and vary widely from one locale to another. This is a central tenet of real estate investing and something that investors should focus on when considering acquiring a new property.
Because of this, investors need to understand local economies and markets as much as possible. This includes knowing about property values, appreciation values, rental occupancy rates, rent prices, property tax rates, the local rent-to-income ratio, the local debt-to-income ratio, population growth, and employment levels.
We’ve evaluated these factors and created a list of 8 states that are attractive for real estate investors in 2023. As you review this list, keep in mind that it’s still important to research local markets and neighborhoods before purchasing your next rental unit.
8 States Where Landlords Should Consider Investing in Property in 2023
Indiana is attractive because of its affordable housing, low cost of living, and growing rental demand. The state is seeing population growth, low unemployment rates, and a growing economy. At the same time, home values remain low – the median home value is $204,018 – and the cost of living is below the national average. Similarly, property taxes are low – .81%.
Some of the most attractive local markets for the year ahead are Gary, Fort Wayne, Lafayette, and Elkhart.
2. North Carolina
North Carolina is appealing because of its thriving economy and growing population. The state, especially in Raleigh-Durham and Charlotte, is seeing a flood of tech jobs. The growth rate for 2021 was around 1.1% and the unemployment rate is around 3.8%. Additionally, 34.7% of the population rents.
While the economy is growing and adding quality jobs, property values still remain below the national average, with a median home value of $183,200. The result is that homes are affordable, rental markets are strong, and home and rent prices are rising.
Specifically, Raleigh-Durham, Winston-Salem, and Greenville all boast strong rental markets with good opportunities for investors.
Florida’s warm climate and booming tourism have led to tremendous growth in the state in the last couple of decades. There has been consistent population growth – around 1% a year – and a growing economy with an unemployment rate of just about 2.7%. The median home value is $245,000 and the median income is $59,227, up 6% in the last year.
With 34% of the population renting and average rent prices of $1,200, there is steady and growing demand for rental units. Tampa is a particularly hot market at the moment, with rental prices outpacing the increase in property values.
With a low cost of living, low property taxes, and no income tax, Tennessee is a state investors should consider. The state’s population is growing steadily at a rate of just under 1%, there is steady job growth, and low property taxes (.71%).
Approximately one-third of the state’s population rents and the average rent price is $910. The median home price is $191,500, despite an 8% increase in property values last year.
While it’s more expensive to enter than some other parts of the state, Nashville’s rental market is booming. The area’s economy and population are both growing rapidly, leading to increased demand for rental units.
Idaho is seeing large population growth, averaging 2% a year. Its strong economy and growing population have led to rising property values, yet homes are still affordable in the state. The median home value has increased from $230,000 to $250,000 in the last year, with an average rent price of $900.
In addition to the population growth stats, investors should focus on the state’s employment rankings. Idaho was ranked 4th overall for job growth and 11th overall for low unemployment.
6. South Carolina
South Carolina’s mild climate, low cost of living, and low tax rate make it appealing for investors. The average home price in the state is $170,000, the population is increasing at a rate of 1.27% a year, and job growth is around 1.43% a year. The tax rate is one of the lowest in the country at just .57%, 30% of the population rents, and the average rental price is $922/month.
One area in particular that investors should check out is Myrtle Beach, which has been ranked the fastest growing city for 2022-2023 by US News & World Report. Home prices in Myrtle Beach have increased by 26% in the last year but still remain affordable. The average Zillow home price in the area was $316,199.
Population growth, job growth, and affordability make Texas a location that investors should explore. The population is growing steadily at a rate of around 1.02% per year and job growth is around 2.97% a year.
Dallas, Houston, and San Antonio are all markets with strong and growing rental markets. Dallas in particular has seen a population surge and substantial growth in the financial sector. McCallen is also a promising area, with a low cost of entry and above-average growth. While Austin is a popular spot, the high home prices in the area make it less appealing to investors in 2023.
While the cost of entry into Colorado markets is higher than other areas, there are lots of factors that still make this a state to consider. The median household income in Colorado is $77,000, which is well above the national median of $70,784, 34% of the population rents, and the median rent price is $1,335.
Additionally, US News & World Report recently ranked Colorado Springs as the second-best city to live in for 2022-2023. Only one hour south of Denver, Colorado Springs offers year-round outdoor activities and easy access to Denver, while also being substantially more affordable than Denver.
Landlords that don’t mind paying a little more to enter the market – the median home price in the state is around $394,000 – will be rewarded with strong rental markets and above-average rent prices.
We Can Help With Tenant Screening and Creating Your Lease
Once you’ve done the hard work of finding your next rental property, we can help you get the most out of it. Visit ezlandlordforms.com to use our Free Rental Application, Tenant Screening Services, and State-Specific Lease Agreements.
Emily Koelsch, ezLandlordForms Contributing Writer
Emily Koelsch is a freelance writer and blogger, who primarily writes about business, real estate, and technology.