Getting started in landlord unfriendly states? What market to get into?

Question

Where I live seems to be very landlord unfriendly ( Rhode Island). I do have near by states such as MA, CT and NH. Should I look toward investing there?

How do you find out if a market is the right one to get into?

How do you do market research to analyze this?

Colleen F. · Answer

I have property in RI and I live in MA. I would agree with people that MA is more landlord unfriendly and I am glad I did not choose MA for investing but if I had I would make it work by learning and complying with the laws, picking the right properties, and screening tenants. I would not discard RI as a possibility if I was you but it really depends on what you want to do as a landlord. What kind or property do you want be a landlord to? How far do you want to have to go to manage issues? Are you going to do it yourself or hire a property manager? Once you know the main answers to those questions pick the distance you want to go and price point and see whether you can get the numbers to work. You could pick more then one area and study them both by looking at listings for a while and see if the rents work for you. I am thinking in the providence area you mostly are exposed to the negatives of landlording, that is what you usually hear about. Look at some mid-range properties there and you might get a different view. I am in south county and here is not like Providence but you have to go where you are comfortable. Good luck.

Ann Bellamy · Answer

Chris, I think Massachusetts and California could probably tie for first place for the most tenant friendly states in the nation. So moving from Rhode Island to Massachusetts would definitely be going from the frying pan into the fire. New Hampshire is much more landlord friendly than Massachusetts, but you have to take into account whether or not the drive is worth it to you and how it will impact your investing. I think that's actually much more important, unless you're willing to move to New Hampshire. if I were you, and were not planning on a move, I would consider learning and complying with the laws and investing in my backyard if I could achieve the returns, as opposed to investing out of state.

Chris Lynch · Answer

Account Closed

Thanks for the response. I would love to hear more about how you are investing in out of state property. Wouldn't management become an issue?

Ray Ellen · Answer

@Chris Lynch I whole heartedly agree with @Carrie Cathey . Little Rock & North Little Rock Arkansas are very landlord friendly and have great numbers. There are several investment packages for sale now in this market making form 10% to 20% ROI annually at list price!

When you are investigating an area, call a few of the top realtors in the area and ask them to tell you about the market and what some problems/issues are. Then call a few of the REI groups and talk to them about what seems to be working in the market and ask similar questions. I would also talk to the city and hear about any economic development and be able to point that out on a map. If you do that, you will know more than most of the buyers and sellers and have a good handle. Partner with good locals who will keep you posted on planning / zoning changes, economic developments, changes in the market, etc etc.

I hope we see you investing here in Arkansas. :)

Good luck!!

Account Closed · Answer

@Chris Lynch

CA & NY have the worst laws for landlords, and MA and some other states in the NE are pretty bad too. I live in Los Angeles, and have been investing in TX, TN and GA -- all landlord friendly areas.

Andrew

Ronald H. · Answer

Hi, Chris

If you want to spend time, you can research the Massachusetts Real Estate Laws on Mass.gov Just type In "Real Estate Laws, or Landlord, or Lead Paint. Warning: This can be a time consuming effort though.

Carrie Cathey · Answer

Try to avoid these states and markets if at all possible. Your best bet is landlord friendly markets like Little Rock, Arkansas or in Texas. Little Rock and Memphis are great locations for investments! Get out of where you're at now before it's too late :)

Joel Owens · Answer

I am on the commercial side of things but it's the same.

In commercial my clients tend to stay away from the rust belt states. Many of these areas are dying especially suburban to rural. The colder climates most baby boomers are retiring to the warmer climate states. With many of the 20 million plus aging population wanting to move to warmer climates the migration patterns, job growth, etc. is moving away from the colder states.

That isn't to say there are not investments that make sense in those areas in some spots you just have to be more careful. The landlord - tenant laws are more rougher as well. There is more shuttering of jobs and people on government assistance. Since new business isn't coming In the city and counties are raising property taxes to try to pay for things. It's a deadly spiral with no end in sight for many of these towns.

Some of my clients that live in these areas have seen them die off over decades and now want to invest commercially into warmer climate states for retirement. There is another part with some states being no income tax that is sought after as well as "business friendly" states. Local investors in declining areas might invest there simply because of emotional ties to SAVE the area etc. For a regular investor it's just a numbers and business decision.

So for instance New York urban core might be booming but you get to outlining areas that are more suburban to rural and they are declining.

Eric Dufault · Answer

Keep in mind this website is dated 2009 but it should give you the framework as to what you'll be up against as a landlord in our lovely commonwealth.

http://www.attorneyross.com/landlord.html#23

Also, be sure to check the town website's housing and health departments as each one has specific requirements on how to maintain rental properties.

Chris Lynch · Answer

@Robert Adams

That sounds like a great idea. However I currently live in RI. So wouldn't investing in my first property at such a long distance be a bad idea? Especially in regards to management.

Getting started in landlord unfriendly states? What market to get into?

Getting started in landlord unfriendly states? What market to get into?

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