Rental real estate is a great way to earn income either full-time or on the side. However, some states are better than others regarding returns on these types of investments. This article looks at the 5 of the best states to buy investment property in 2023.

1. South Carolina

One of the original 13 colonies, South Carolina is full of old-world charm and whimsy. You’ll find plenty of coastlines and history alongside a warm climate. Sprinkled within are cities such as Charleston and Columbia. These locations offer great universities, plenty of hospitality, and some of the lowest crime rates in the country.

At 0.57%, South Carolina has some of the lowest property taxes as well. With homes averaging $170,000, costs are only about three-quarters what you’d pay in other parts of the country. This is still true despite a 1% increase in the last few years. Median household income comes in at $54,800.

Approximately 30% of South Carolinians rent homes and on average pay $922 per month. The state’s population is increasing at a rate of 1.27% per year. This is just under the 1.43% employment growth across all occupations.

2. Idaho

Known as the Gem State, Idaho is a gem to live in. Even if potatoes aren’t appealing, there are plenty of other reasons Idaho is desirable. There are state parks everywhere and less than two million people throughout. Crime rates are also some of the lowest in the nation, even in bigger cities like Boise.

Looking at the numbers, Idaho’s median household income nearly crosses $59,000. This value shifts upwards by over 8% each year. The state has a booming economy with one of the best employment rankings in the United States.

Property values see a steady rise, moving from $230,000 to over $250,000 in just a year’s time. Renters typically pay $900 for lodging and make up 28.4% of the total population. It’s clear homes are being rented and sold, as the population steadily increases by 2% year over year. Moreover, it’s also the best state for real estate in the U.S.

3. North Carolina

North Carolina looks to impress with a nice mix of beachfront and mountains. There’s an abundance of things to do outdoors, and the weather cooperates for most of the year. Colleges and universities are some of the best in the country, right alongside healthcare options. Residents never have to go far to find good food or southern hospitality.

The state boasts a thriving job market, especially in top cities like Charlotte and Raleigh. Fortune 500 companies litter the cities, drawing in top talent. Even so, median property values across the state come in at $183,200, significantly lower than the national average. Median household income is closer to the standard at $56,600. Both numbers are increasing nearly 7% per year.

Property taxes are near the country’s midpoint of 0.90%. Residents have to deal with a fixed 5.25% for better or worse. 34.7% of the state’s population are renters, costing them on average $1,234 per month. This number is over 20% higher than it was in just 2021.

4. Florida

Florida boasts an extra month of sunshine compared to the national average each year, explaining its well-earned nickname. The desirable climate brings young and older people looking for work or the ideal retirement lifestyle. As a popular vacation spot, even travellers like to take advantage of rental properties. It doesn’t hurt that Florida is one of the few states not charging any income tax for residents.

The state’s population sees consistent growth, increasing around 1% each year. The median property value sits at $245,000 and is on track to increase year after year. This fits well with the state’s median of $59,227, which jumped roughly 6%. Average rent at present lies somewhere in the $1,200 range. One and two-bedroom homes have gone up 38% since 2021.

Approximately 34% of Florida residents rent a home or apartment, slightly higher than the national average. Employment opportunities saw a 2.5% growth to help draw people in. Florida’s biggest downfall is property taxes, landing in the $3k range.

5. Tennessee

Tennessee is beautifully split between the Great Smoky Mountains and stunning flatland. The music scene in Nashville is second to none, and many other cities rise to the challenge as great places to live. It features top-notch hospitals and stellar schools and universities to draw in families. The location also makes for temperate weather during all four seasons.

Taxes are a draw here, with 0.71% property taxes and no income tax to speak of. Median household income is lower than other parts of the country, coming in at around $54,800. It nearly matches the 8% property value growth from last year. Those looking to buy homes should expect to pay an average of $191,500.

One-third of the state’s population are renters, paying on average $910 per month. Tennessee has an above-average job growth rate, seeing a 4.14% change from 2021. Its population is increasing steadily, up just under 1% year over year.

Bottom Line on the Best States for Buy Investment Property

The best states to buy investment property exude all the features potential renters look for work and leisure. Employment opportunities must abound to draw people in, and cost of living and quality of life must be sufficient to keep them from leaving. The states that made our list check these boxes while laying the groundwork to continue doing so for years to come.