If you’re investing in real estate this year, choosing the best states to buy rental property in 2025 is just as important as selecting the right property. The most promising markets offer a balance of affordable home prices, strong rental demand, growing populations, and landlord-friendly laws. These factors can lead to higher cash flow and long-term returns.

Meanwhile, certain states may hinder profitability due to rent control, high property taxes, or declining populations. Below, we break down the best—and worst—places to invest in rental property this year.

Top 5 States for Rental Property Investment in 2025

State	Why It Stands Out	Best Cities for Investors
Ohio	Affordable homes, strong rent demand, economic growth in cities like Columbus and Cincinnati	Columbus, Cleveland, Cincinnati, Dayton
Missouri	Landlord-friendly, low property taxes, high rental yields in metro areas	Kansas City, St. Louis, Springfield, Columbia
Indiana	Low taxes, strong population growth, high affordability	Indianapolis, Fort Wayne, Bloomington, Lafayette
Mississippi	Among the lowest housing costs nationwide, increasing rental demand	Jackson, Gulfport, Biloxi, Hattiesburg
South Carolina	Rapid population growth, expanding job sectors in healthcare and manufacturing	Charleston, Greenville, Columbia, Myrtle Beach, Spartanburg

These states are attracting investors due to favorable economic trends, rising rents, and relatively low barriers to entry. They offer the potential for solid returns with lower upfront costs compared to major coastal markets.

Investor Insight

Real estate investor and podcast host Sam Dolciné recommends Midwestern cities like Dayton, Kansas City, and Indianapolis for their low entry prices, strong rental income, and resilient job markets.

States to Avoid for Rental Property Investment in 2025

Not every state offers a welcoming environment for investors. The following locations are considered less favorable due to their legal frameworks, market trends, or tax burdens:

State	Reasons to Avoid
California	High cost of entry, strict tenant laws, population decline, low cash flow potential
Oregon	Statewide rent control, flat home values, limited investor protections
New York	Expensive real estate, restrictive rent laws, urban outmigration
Vermont	Very high property taxes, decreasing home values, minimal legal support for landlords
Washington, D.C.	Second-highest tax burden in the U.S., shrinking rental values, tenant-friendly policies

While some investors may still find success in these areas, the risks and regulations often outweigh the benefits for most rental property buyers.

What Makes a State a Good Place to Buy Rental Property?

To evaluate a state’s potential for rental property investment in 2025, consider the following key metrics:

Factor	Why It Matters
Population Growth	Signals ongoing demand for housing and long-term rent stability
Job Market Strength	Drives new residents and supports rent increases
Low Price-to-Rent Ratio	Improves cash flow potential and reduces time to profitability
Landlord-Friendly Laws	Allows for easier eviction processes and protection of rental income
Affordable Taxes	Keeps overhead low and increases net operating income

Choose Wisely, Invest Confidently

Whether you’re a first-time buyer or scaling your portfolio, selecting the best state to buy rental property in 2025 is a critical part of your strategy. Markets like Ohio, Missouri, Indiana, and South Carolina combine low home prices with strong rent growth and pro-investor legislation.

On the other hand, high-cost, heavily regulated markets such as California and New York could shrink your returns and introduce more risk.

For the best results, pair your market research with guidance from an experienced real estate agent or mortgage advisor. At Loan Pronto, we work closely with investors to help you secure financing and evaluate markets where your rental property can thrive.

 

Get My Custom Rate Quote

No SSN required. Zero impact to credit. Your Information is never sold.