5 Worst States To Own Rental Properties & Why

The profitability and suitability of owning rental properties can vary significantly from state to state due to factors such as market conditions, regulations, taxes, and landlord-tenant laws. While the situations change with politics, here are five states that were generally considered less favorable for owning rental properties, along with some reasons why:

1. California:

   - High cost of living and property prices: California has some of the highest property prices and living costs in the country, making it challenging for real estate investors to achieve favorable cash flow.

   - Stringent tenant protections: California has strong tenant protection laws that can make it difficult for landlords to evict non-paying tenants or raise rents.

   - High property taxes: Property taxes in California can be relatively high, impacting the overall return on investment for rental property owners.

2. New York:

   - Rent control laws: New York has strict rent control regulations in certain areas, limiting landlords' ability to increase rents and potentially affecting profitability.

   - High property prices and taxes: Like California, New York has high property prices and property taxes, which can impact rental property cash flow.

   - Eviction process: The eviction process in New York can be lengthy and complex, making it challenging for landlords to remove problem tenants.

3. Illinois:

   - High property taxes: Illinois has some of the highest property taxes in the nation, which can eat into rental property profits.

   - Landlord-tenant laws: Illinois has tenant-friendly laws, which may favor tenants over landlords in disputes or legal matters.

   - Economic challenges: Some parts of Illinois, such as Chicago, have faced economic challenges that can impact rental demand and property values.

4. New Jersey:

   - High property taxes: New Jersey is known for its high property taxes, which can make it difficult for landlords to generate positive cash flow.

   - Eviction process: New Jersey has strict eviction laws that can prolong the process of removing non-paying tenants.

   - Landlord regulations: New Jersey has various landlord regulations that can add complexity and costs to owning rental properties.

5. Hawaii:

   - High cost of living: Hawaii has one of the highest costs of living in the United States, which can make it challenging for landlords to achieve attractive rental yields.

   - Limited land availability: Land in Hawaii is limited, which can drive up property prices and make it difficult to find affordable rental properties.

   - Vacation rental regulations: Hawaii has strict regulations on vacation rentals, which may limit the potential for short-term rental income in certain areas.

It's important to note that real estate markets are constantly changing, and what may have been true last year may not be the case today. Additionally, within each state, there can be variations in market conditions and regulations at the local level. Therefore, it's essential for real estate investors to conduct thorough research and due diligence before investing in rental properties in any state.