Landlording & Rental Properties

Tenant-Friendly vs. Landlord-Friendly States: How to Tell the Difference

Expertise: Mortgages & Creative Financing, Real Estate Investing Basics
42 Articles Written
Hand with house key in foreground, living room with light wood floors, white couch and white shelves in background

A common question in the forums is, “How do I pick a market to invest in?”

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While it may be tempting to invest in your own backyard, the cards may not be stacked in your favor. And since real estate is illiquid and immovable, market (and submarket) choice is super important.

Here are a few variables I research for every market/submarket I look to invest in:

  • Population growth
  • Job growth
  • Job diversity
  • Income growth
  • Housing prices and value growth
  • Rent increases
  • Poverty decline
  • Vacancy stabilization or decline
  • Tax rates

While you can technically invest anywhere, I want to stack as many cards in my favor — putting the economic winds at my back, so to speak. The last (but certainly not least) variable I research is if the area is tenant-friendly or landlord-friendly.

When you sign the lease with a tenant, you are giving control of a high-dollar asset over to them for the duration of the lease. Therefore, I want to know that, as the property owner and possible debt holder, I have legal recourse to take back control of the property should major issues arise and be compensated if there are damages. However, property issues are handled differently between landlords and tenants in nearly every state.

As such, I want to be in areas where I, as the business owner, am calling the shots on how my investment is run.

landlording-tips

How To Tell

When you are researching if a state is landlord- or tenant-friendly, it’s not quite as binary as checking a box. State laws cover many aspects of the landlord-tenant relationship, from security deposits to landlord access to rental property. Below is a list of resources to read through regarding your state of choice.

Related: How to Be a Landlord: Top 12 Tips for Success

But I know that most investors’ eyes would glaze over if they were asked to analyze all of the data in the above links. Therefore, I’m all about making this a bit easier for you.

There is a simple chart on RentCafe.com that rates states based on an index of which are landlord-friendly and which ones are tenant-friendly according to their aggregated index. (Keep in mind local laws are changing right now with COVID-19.)

good-tenants-1

Landlord-Friendly States

  1. West Virginia
  2. Arkansas
  3. Louisiana
  4. North Carolina
  5. Alabama
  6. Mississippi
  7. Wyoming
  8. Idaho
  9. Ohio

Related: The 5 Most Common Reasons Tenants Leave Your Rentals

Tenant-Friendly States

  1. Vermont
  2. Delaware
  3. Rhode Island
  4. Maine
  5. South Dakota
  6. Kansas
  7. Arizona
  8. Nevada
  9. Oregon

Once you have determined the overall sentiment of the state, look up local policy to understand if the local market has additional laws, bill of rights, or healthy home programs that you as the landlord will need to be familiar with.

The presence of local laws and programs does not mean you can’t invest in the area, you just need to know how they work and how it could impact your investment.

Wrapping It Up

While it’s true that great investments can be found (and made) anywhere, deciding on where to invest based on how the law of the land treats landlords is just another way to protect your “ass”ets.

How do you protect your investment while maintaining good tenant relationships?

Let us know in the comments.

Whitney is a real estate investor and personal finance trainer whose vision is to launch 10,000 families on the path toward financial independence. After purchasing her first rental in 2002, and hi...
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    Nathan G. Real Estate Broker from Cody, WY
    Replied 3 days ago
    Great resource! I don't know about all the states you've listed, but it appears to be accurate. The links should provide ample opportunity for investors to research and make informed decisions. Well done!
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 19 hours ago
    Glad you found value. I was surprised at the RentCafe analysis as well!
    Ed Emmons Specialist from Milford, ME
    Replied 2 days ago
    Great article. One of the best I’ve read on overall analysis. Thanks.
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 19 hours ago
    You are most welcome!
    Steve B. Investor from Centralia, IL
    Replied 1 day ago
    Thank you for providing this info. Very helpful
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 19 hours ago
    Glad you found value!
    Christopher Smith Investor from brentwood, california
    Replied 1 day ago
    It will be very interesting to see if this list changes with the numerous rent control legislative measures being proposed across the country, especially in a post Covid world. CA is very aggressively stepping up it's attack on landlords from a whole host of different angles. The state and local governments are running out of money and breaking businesses is clearly target number 1 in their private wealth confiscation efforts.
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 19 hours ago
    I 100% agree! You have to stay on top of the dynamics in your investing area. Last year, KCMO passed a Tenant Bill of Rights. What it started out as was very different from what was actually passed. However, one could assume things will continue to trend that way.
    Cheryl Farless
    Replied 1 day ago
    Exactly! Hard to believe as a landlord in California you have absolutely No rights at this time.
    Gloria Grotjan Investor from Aptos, California
    Replied 1 day ago
    Thank you. Timely article for me as I'm researching landlord friendly markets right now.
    Mi Rez
    Replied 1 day ago
    What happened to California and New York states?
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 19 hours ago
    RentCafe's 2109 analysis didn't take into account COVID. Will those become permanent? We don't know, but only time can tell.
    Joe Chase
    Replied 1 day ago
    Yes NY definitely needs to be on there. Was this written before all the new laws went into effect last year? NY is so restrictive it makes it extremely unattractive to invest in. Especially now with all the draconian mandates under cuomo
    Katie P. Real Estate Agent from Oakland, CA
    Replied 1 day ago
    Yes, I cannot believe California (and New York) is not #1 when it comes to tenant-friendly states. Squatters have more rights than landlords. In Oakland, any occupant staying more than 29 Days is considered a tenant, contract or not. We have statewide rent control, and many cities have MUCH stricter rent and eviction control measures. Homeowners pay (through property taxes) tenants' free legal representation, while homeowners receive no free legal representation.
    Edward Meiner Professional from Orlando, Florida
    Replied 1 day ago
    Truth, CA and NY and most blue states are all for social justice and rent relief measures for tenants. Florida is a great state that is very landlord friendly and my eviction practice was great until this year.
    Jim Spatzenfeld Investor from Buffalo NY & Sacramento CA
    Replied 1 day ago
    How about a list of where you can make the highest profit of rentals? In tenant friendly states where I invest (CA and NY) you have to be very picky choosing tenants to reduce your risk.
    Jim Spatzenfeld Investor from Buffalo NY & Sacramento CA
    Replied 1 day ago
    NY changed the law last year on security deposits, now they allow security deposits equal to only 1 month rent. In the past when you had a shakey applicant you could just ask for a larger deposit. Now you just have to deny those applicants. The lawmakers are making it more difficult for some tenants to find a rental.
    Joe Chase
    Replied 1 day ago
    They changed a tremendous amount of things. Evictions now take a minimum of 2 months due to the stretched out procedures and court dates. You can't ask about criminal records including rape/pedophilia. Credit checks are more difficult The list goes on - section8, mobile park rates,etc
    Vic Poskus Investor from Willowbrook, Illinois
    Replied 1 day ago
    looks like landlords are most humiliated and discriminated group ...
    Glen E from Savannah, Georgia
    Replied 1 day ago
    Overall this is an extremely helpful article. Like other posters have said, I haven't seen any other article that links to all the resources like this article does. The one thing I find very confusing is that the article says, "There is a simple chart on RentCafe.com that rates states based on an index..." Then the article gives a ranking of the top 9 landlord-friendly and tenant-friendly states. It seems like the ranking is supposed to be based on the just-mentioned chart/scores on RentCafe.com. However, there are several discrepancies between the article's ranking and the RentCafe chart/scores. I might think that the RentCafe scores have changed since the article was written, but the article has a date of yesterday (Oct 17, 2020), and I doubt the RentCafe scores changed so much in just one day. Following are the discrepancies. Landlord-Friendly States: (Note, the article doesn't show the RentCafe scores, but I am listing them so one can see places where the states are obviously out of order.) 1. West Virginia 12.5 2. Arkansas 12.5 3. Louisiana 25 4. North Carolina 25 5. Alabama 37.5 6. Mississippi 30 7. Wyoming 25 8. Idaho 27.5 9. Ohio 30 From the scores, we see that Alabama and Mississippi are ranked too high. Also, Georgia with a score of 25 is missing. Thus, the top 9 should be: 1. West Virginia 12.5 2. Arkansas 12.5 3. Louisiana 25 4. North Carolina 25 5. Wyoming 25 6. Georgia 25 7. Idaho 27.5 8. Mississippi 30 9. Ohio 30 Tenant-friendly states (again, I'm listing the RentCafe scores which are not shown in the article): 1. Vermont 90 2. Delaware 80 3. Rhode Island 72.5 4. Maine 67.5 5. South Dakota 65 6. Kansas 65 7. Arizona 70 8. Nevada 65 9. Oregon 65 From the scores, we see that Arizona is ranked too low. Also, Hawaii (80) and Alaska (67.5) are missing from the list. Thus it should be: 1. Vermont 90 2. Delaware 80 3. Hawaii 80 4. Rhode Island 72.5 5. Arizona 70 6. Maine 67.5 7. Alaska 67.5 8. South Dakota 65 9. Kansas 65 10. Nevada 65 11. Oregon 65
    Glen E from Savannah, Georgia
    Replied 1 day ago
    Sorry my comment came out as one long paragraph. I had broken my reply into several paragraphs and had the lists with one state per line, but I suppose the commenting here doesn't preserve formatting like that, so it ends up looking like one long paragraph, making it almost unreadable.
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 19 hours ago
    Here is the direct link to the RentCafe analysis (https://infogram.com/renter-friendly-vs-landlord-friendly-states-1hmr6gokdrqo4nl) . If you hover over the states, the weighted index will come up. Landlordolgy and Avail have two other good analyses.
    Jonathan Gragg
    Replied 1 day ago
    Excellent article! I’ve been considering renting my property out but have been completely afraid to with this always extending rent moratorium Governor we have.
    Stan Eloy from Bridgewater, Massachusetts
    Replied 1 day ago
    Thank you for the leg work.
    Lesley Zvavanjanja Rental Property Investor from Houston, TX
    Replied 1 day ago
    Bravo! Thank you for the useful information
    Karen F. Investor from San Diego, CA
    Replied 1 day ago
    Whoever wrote this either used WAY out of date info, or is utterly clueless as to the reality of "landlord friendliness" of certain states. For example, a year ago, NYS passed some of the strictest tenant protections in the country, making it extraordinarily difficult to evict, even for non-payment of rent. Many residential real estate investors are no longer buying in NYS, because of this. Yet NYS doesn't make the list. In Massachusetts, it can be extremely difficult to evict many classes of tenants - but MA is not on the list. I only know the climate in the Northeast, but I think that the writer combined out of date information with irrelevant criteria. For instance, probably the MOST important criteria for "landlord-friendliness" for any landlord is how easy is it to get a non-paying tenant, or a tenant who harasses/threatens the other tenants or the landlord, OUT, quickly and cheaply. This is more important to me than any other criteria used. After that would be freedom to set the rent at whatever rate the landlord determines appropriate. I'm less concerned about deposit limits, because with speedy eviction, there is no need for a huge deposit. What states that are "tenant-friendly" fail to realize is that when they set restrictions on the landlord, the price of housing goes up, to compensate. When they set restrictions on the price of housing, rental housing stock and quality plunge, since the landlord has no incentive to maintain existing housing, or build new. Right now, the eviction moratorium has caused an enormous bottle-neck in low-priced rental housing, since landlords cannot evict non-paying tenants, and so are unwilling to take ANY risk on new tenants who are less than perfectly qualified. So units sit empty, while the poor who were not already in housing, cannot get into housing, even if they have reasonable income and are likely to pay.
    Brian Garlington Real Estate Agent from Oakland CA with multifamily units here in the Bay Area and Cleveland, OH
    Replied 1 day ago
    Goodness how did you miss California as a tenant friendly state
    Bruce Biegler Investor
    Replied 1 day ago
    You should take a look at some of the metrics you are using, this is definitely not accurate. As a South Dakota investor the laws are more Landlord-friendly than NY, CA, MA, NJ and many other states.
    Shiela Roberts Investor from Boulder, Colorado
    Replied about 21 hours ago
    Nice idea but landlord tenant law varies from city to city. I'd caution anyone to use this as more than a rough guide, if at all. Feels similar to blanket statements like "the housing market is good (or bad) in the US". For instance, I have owned property in different cities and counties within Colorado. The City of Boulder is the only city I know of that requires landlords to put a security deposit into an interest bearing account. However, I specifically state that I will not do that in my leases. Just as I state that I have 60 days, not 30 to return the security deposit. As always, do your own research and get to know the specific laws and customs of the city, town, township, etc. when purchasing rentals.
    Colleen F. Investor from Narragansett, Rhode Island
    Replied about 20 hours ago
    I would encourage people to View this with some caution. MA is less landlord friendly then RI in my experience. And there is no way MA could be considered neutral, not a chance! The other thing this article doesn't capture and can't capture is how the courts work, not sure how you get a perspective on that. There are really no metrics on the court process and how they enforce legislation.
    Justin R. Rental Property Investor from Newbury Park, CA
    Replied about 16 hours ago
    This is great. Although there is much more "grey" area than what you can list on this objective list. Yes CA is 3 days for termination of violation on the books, there is zero chance you would get the tenant out anywhere near this timeframe. Between the appeals process, and postponing court dates a tenants could easily maintain their rental in CA for six months or longer. Contrary to CA, there are several states on this list that have a longer termination date, but the sheriff would be at the door on that exact date. Hard to show this subjectiveness on a list though.