One of the advantages of property management companies is that they let you build a geographically diverse portfolio. By not putting all your eggs into one basket, you won’t be at the mercy of local conditions.
That means if the local economy goes south or there’s an environmental disaster, you won’t be entirely wiped out. But you can also find local conditions that are more favorable to both investing and investors.
That’s because some states are more landlord-friendly than others.
What Makes a State More Landlord Friendly
These are how some states are more landlord-friendly than others. To gain further insight, talk to property managers or other real estate professionals in the area you want to invest.
- Evictions: In landlord friendly states, evictions are easier and faster. Elsewhere, they can take months.
- Property Taxes: Simply put, there are states where you pay fewer property taxes.
- Rent Control: Rent control varies from state to state and even city to city. In some places, there are more restrictions on when and how frequently rent can go up. Fewer limitations on rent increases or more lenient regulations are preferred for landlords.
- Other Restrictions: Some states make it easier to be a landlord because there are fewer regulations to keep track of and adhere to when it comes to:
- Lease Agreements
- Lease Terminations
- Security Deposit Timelines
- Property Access Notices
- Maintenance
Landlord Friendly States
With the above in mind, here are seven landlord friendly states in alphabetical order and what they have going for them.
1. Alabama
- The average property tax rate is .42%
- You don’t need a rental license to be a landlord or rent out a property.
- State law doesn’t cover late rent fees, so you can set the late fees based on what you think is reasonable.
- Eviction based on breach of lease requires a 14-day written notice stating the lease will end if the issue isn’t corrected within 14 days.
- Eviction based on unpaid rent requires a 7-day written notice.
2. Arizona
- Property taxes are .72%
- Eviction requires:
- 5-day notice for late rent.
- 5-day notice for failing to maintain the rental property.
- A 10-day notice for violating the lease or rental agreement.
- Failure to correct the issue means the landlord can file an eviction lawsuit.
- The landlord can terminate a lease in severe cases. If, for example, a tenant fails to report a criminal record and continues their illicit activity, and the situation can’t be remedied, the landlord can issue an Unconditional Quit Notice. This states that the lease has been terminated immediately. After delivering the notice, the landlord can file an eviction lawsuit.
3. Florida
- The average property tax rate is .98%
- Landlord-tenant laws aren’t very detailed.
- Rent control is prohibited.
- No restrictions on late fees.
- No limit on security deposits, although they must be returned within 15 to 60 days after the renter moves out.
- Eviction for late rent only requires three days’ notice. The renter has three days to pay or vacate.
- Eviction for intentional destruction of property or repeated lease or rental agreement violations require an Unconditional Quit Notice. Tenants have seven days to vacate before the landlord can file an eviction lawsuit.
4. Georgia
- The property tax rate is only .91%
- No limits on late fees and security deposits.
- No laws dictating how much notice has to be given before entering a property (although a 24-hour notice is suggested).
- An informal eviction process. Tenants are owed notice of when rent is due, but it doesn’t have to be written, and there’s no specific period in which the notice has to be given (unless it’s stipulated in a written lease). Once the notice is received, tenants have seven days to pay or follow the order. If they don’t, the property manager can file an unlawful detainer lawsuit at a court, beginning the eviction process.
5. Indiana
- Property tax rate is .87%
- Eviction for failure to pay rent requires a 10-day notice to pay rent or move out. If the tenant does neither, the landlord can file an eviction lawsuit.
- If the tenant is paying month-to-month and intentionally damages property, the landlord can terminate tenancy right away.
- There’s no limit on security deposits. Landlords can hold onto security deposits for upwards of 45 days after the tenant leaves. After 45 days, the landlord must return the amount of the security deposit owed to the tenant. Tenants can only file a suit to get their deposit back after 45 days.
6. Kentucky
- The average property tax rate is .86%
- There are no legal limitations on late fees.
- There are no legal limitations on how much a security deposit can be. The security deposit has to be returned within 30 to 60 days of the tenant moving out. The security deposit can be kept due to unpaid rent, unpaid utility charges, or property damage.
- Evictions for failure to pay rent require a 7-day notice to remedy the situation.
- Evictions for other violations require a 15-day notice to remedy the situation.
- The landlord can file an Unconditional Quit Notice if rent payments are late for six months or if any other violation persists for six months. If this happens, the tenant has to leave within 14 days, even if they can make the rent payment. The landlord then has 60 days to hold onto the security deposit while figuring out how much of it, if any, is necessary to cover repairs.
7. Texas
- Tax rate is 1.83%
- No limit on how much a security deposit can be. A landlord can hold the security deposit for 30 days while figuring out how much, if any, should be spent on repairs.
- Landlords and tenants make their repair arrangements. If a tenant is late on rent, the landlord can refuse to pay for repairs.
- Evictions for failure to pay rent only require a 3-day written notice to pay or leave. If your tenant does neither after three days, you can file an eviction lawsuit. In Texas, some jurisdictions allow for eviction lawsuits to be submitted online.
Bottom Line
Investing in property in a landlord-friendly state makes it easier for your property manager to do their job.
This doesn’t mean tenants have no rights.
This also doesn’t mean you don’t have to be a good landlord.
You should act as if your investment is in a tenant-friendly state because a happy tenant is more likely to stay longer, re-sign their lease, and be well-behaved.
