Location has always been the most crucial factor when investing in real estate. This fact is especially true for a large, geographically diverse country like the United States. Each state has different urban centers, government policies, population growth rates, cost of living, job opportunities, and many other characteristics that impact property values.
Top 6 States To Invest in Real Estate
Which states have the greatest real estate investment potential? What makes them so attractive? Here are some of the best states to invest in property — including their most desirable locations and characteristics.
Texas is arguably the best state to invest in real estate, with many qualities that benefit property owners. For starters, it has no state income tax. It has also led the nation in job growth since 2015, with more than two million jobs created. Texas’s economy has made an impressive recovery from COVID-19 and doesn’t show signs of slowing down.
The state is also filled with prosperous metropolitan areas. These three massive urban centers have the most significant property investment potential:
- Dallas-Fort Worth-Arlington: The U.S. Office of Management and Budget recognizes Dallas, Fort Worth and Arlington as a singular metropolitan area due to their proximity, which bodes well for real estate investors. The median home price is $378,700, according to the National Association of Realtors.
- Houston: Texas’s most populous city is the world’s energy capital and thus has a flourishing economy. The oil and gas industry has greatly influenced the city’s success. It has a median home price of $337,900.
- Austin: Austin has seen impressive growth in recent years due to an influx of technology start-ups, cultural centers and younger demographics. This city is full of opportunities for up-and-coming real estate investors.
Texas is also home to many of the fastest-growing cities in the country, including San Antonio, Georgetown and Leander. The cost of living can greatly differ from town to town, but the state’s overall cost of living is the 15th most affordable out of all 50 states.
Colorado doesn’t have a state income tax, which automatically makes it attractive for real estate investors and other entrepreneurs. It has the country’s best employment record thanks to low unemployment, high labor participation and fast job growth. The state’s convenient location in the heart of the country is a big reason for its impressive economic growth.
These three cities in particular have active housing markets:
- Denver: As the only major midwestern city between Chicago and Las Vegas, Denver is the economic hub of the Rocky Mountain region. Property is expensive in these parts, with median home prices of $640,000. However, about 50% of Denver’s population consists of renters, so there is massive income potential here for real estate investors looking to rent out their properties.
- Colorado Springs: Just an hour south of Denver, Colorado Springs has emerged as the second-most prosperous city in Colorado. However, property here is much cheaper, with median home prices of $443,400.
- Fort Collins: A family-friendly college town, Fort Collins has grown by 2% each year and is home to a highly active real estate market. Median home prices here are $585,300. Although its northern location isn’t ideal, the suburban sprawl provides many safe real investment opportunities.
Despite an above-average cost of living, Colorado is one of the fastest-growing states. The technology industry’s mountainous terrain and job opportunities have attracted a younger population. It will be an attractive state for real estate investors for years to come.
Once again, a state with no income tax is one of the best places to invest in real estate. Florida’s unmatched weather and low crime rate make it a popular destination for old and growing families. In fact, Florida is the fastest-growing state in the union. These three metropolitan areas are particularly alluring:
- Jacksonville: This city is in a perfect spot for people relocating from out-of-state, just south of the Florida-Georgia border and near the coastline. It also has a diverse economy, with flourishing health, finance, transportation and manufacturing sectors. Its median home price is a modest $386,000.
- Tampa Bay: The Tampa Bay area is surrounded by many flourishing communities, including Tampa itself, St. Petersburg, Clearwater and Bradenton. It’s the economic center of Florida’s gulf coast. Its median home price has skyrocketed by 12%, but it’s still affordable at $399,000.
- Gainesville: Despite its location in the heart of the swampland, Gainesville is growing fast because of its impressive health care and educational institutions. Investors can find lots of profitable commercial real estate here. There are also many family-friendly neighborhoods due to the city’s education opportunities.
Florida is a largely suburban state with over 400 cities, towns and villages. That means real estate investors can take advantage of the slightly more expensive suburban cost of living. The average monthly suburban rent is $1695 — about $50 more expensive than the urban average. This seemingly small gap can make a huge difference in long-term profitability.
North Carolina is one of the country’s most geographically diverse states, with the Smoky Mountains in the west and a beautiful eastern coastline with beaches like the Outer Banks and Emerald Isle. It also has a diverse economy, including the prosperous agriculture, manufacturing and finance sectors.
- Charlotte: The largest city in NC, Charlotte is currently the eighth-fastest growing city in the country due to its major banking center. It has an excellent job market and impressive school districts. The median home price is $395,500. It’s one of the nation’s hottest markets for real estate investors right now.
- Raleigh: While Charlotte is growing fast, it hasn’t quite matched Raleigh’s pace. Raleigh is the fourth-fastest growing city in the country due to its affordable housing, job opportunities, outdoor attractions and entertainment options. The median home price is $431,000.
- Durham: Less than an hour away from Raleigh, Durham has had the same growth rate for the same reasons. It’s also home to Duke University and the University of North Carolina. Educational opportunities abound here, making it a popular destination for growing families. The median home price is $435,600.
Idaho is one of the states with the best quality of life due to its low cost of living, low crime rates and breathtaking geography. It also has an impressive employment record, ranking fourth in job growth overall. Rural landscapes primarily dominate the state, but a handful of cities are growing into extremely attractive investment centers:
- Boise: The potato state’s largest city has blossomed in recent years thanks to an increase in Idaho’s national attention. Communities like Meridian and Nampa have everything growing families could want, including safety, natural scenery and economic opportunities. The median home price is $457,800.
- Twin Falls: Location is the main appeal of Twin Falls. It’s Idaho’s southernmost “big city,” almost equidistant to Nevada and Utah. It’s an ideal city for people relocating from surrounding states. The median home price is $375,000, but that number is trending upward year over year.
- Idaho Falls: Idaho Falls is eastern Idaho’s economic and cultural center. It also has great influence in western Wyoming and southern Montana. Although agriculture is the leading trade, the science and technology sectors are surprisingly prosperous. The median home price here is $395,000.
It’s not the most exciting state, but it’s certainly one of the most profitable for real estate investors. Idaho’s home and rent prices are climbing as the population increases, so investors should hop on the bandwagon before it’s too late.
The Buckeye State isn’t as flashy as the others on this list, but it’s full of real estate investment opportunities. The cost of living is 11% below the national average, which makes it a popular destination for people just starting their careers. Ohio has quietly emerged as one of the most economically prosperous states in the Midwest, especially in these three cities:
- Columbus: Ohio’s capital city has significantly outpaced the rest of the state in population growth, job growth, household income and home values in the 21st century. It’s incredibly affordable, with a median home price of just $286,000. Real estate investors can bid for a lot of property in the Columbus area.
- Cincinnati: The Queen City sits in a perfect location along the Ohio River, bordering Kentucky to the south and Indiana to the west. The population has increased by 5.6% in the last decade alone as people are flocking to take advantage of the many job opportunities and low cost of living. The median home price is just $255,300.
- Toledo: The fourth-largest city in Ohio, Toledo boasts one of the most affordable housing markets in the country. The median home price is just $105,000. Toledo has many family-friendly communities with potential real estate investments, including Westgate, Deveaux, Ottawa Hills, Erie and Franklin Park.
Real estate investors looking to snatch up cheap property should start their search in Ohio. This state’s population has been largely stagnant outside of Columbus and Cincinnati, but the economic stability and low cost of living make property in this state a safe investment.
Start Investing in These Profitable States
Texas, Colorado, Florida, North Carolina, Idaho and Ohio are among the best states to invest in real estate. Although they vary in size and geography, they share the necessary qualities of a profitable state — affordable cost of living, economic prosperity and population growth in significant urban centers. Start looking for properties in these states before someone else gets them!