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Rental demand, property taxes, red tape — there’s a lot to consider when you’re thinking about investing in real estate. Whether you’re flipping houses, running rental properties, or managing short-term stays, the potential returns are largely shaped by location. But how do you decide which state offers the strongest market opportunity?
Let’s explore seven of the best states to invest in real estate and see how working with Better boosts ROI through affordable mortgage rates.
Which factors influence the best states for real estate investment?
When prospective owners are exploring where to buy a property for investment next, they typically look at the following elements:
— Economic and job growth: A thriving local economy usually goes hand in hand with a booming housing market.Â
— Migration and birth rates: An influx of new residents creates a stronger need for rentals. With people competing for the same number of homes, demand drives up both rent and property prices.
— Friendly regulations: Relaxed zoning and reasonable landlord-tenant laws foster a flexible housing market. These conditions draw more homebuyers to the area.
— Property taxes: The best states to buy real estate often have low property taxes, which appeals to investors who want to maximize their returns.
— Cost of living: Regions with lower living expenses and affordable housing options attract migration and support rental demand. On the other hand, areas with a higher cost of living may better suit investors focused on long-term appreciation.
Which states have the best real estate markets? 7 top options
The nationwide median home price is $512,800, and the nationwide median rent for a two-bedroom unit is $1,700. For comparison, the table below ranks the states with the best real estate investment conditions in the 2025 housing market, from most to least expensive home prices.Â
To understand why these areas stand out, we’ll look at the numbers that matter most to investors — median home prices, median two-bedroom rents, and median appreciation rates.
| State | Median Home Price | Median Rent (2-Bedroom) | Home Price Appreciation |
|---|---|---|---|
| Montana | $528,000 | $1,116 | 2.4% |
| Nevada | $496,000 | $1,360 | 2.9% |
| Arizona | $470,200 | $1,431 | 1.8% |
| Florida | $433,600 | $1,446 | 1.1% |
| Tennessee | $389,100 | $1,120 | 3.6% |
| Vermont | $388,000 | $1,350 | 3.7% |
| North Carolina | $380,300 | $1,158 | 3.3% |
1. Montana
Montana experienced strong population growth during the pandemic that continues to this day. Home values are well above the national median, leaving many residents with limited access to affordable housing. That said, with plenty of inventory and consistent home value appreciation, Montana is an attractive option for buy-and-hold investors looking to build equity fast.
2. Nevada
With low property taxes and reasonably affordable homes, Nevada is another location to consider for buy-and-hold strategists. The combination of no state income tax and plentiful sunlight could trigger an influx of newcomers over the next decade. For long-term investors, that steady inflow of residents could mean higher home values and stronger rental demand down the line.
3. Arizona
Arizona is experiencing fast economic expansion due to industries like semiconductor manufacturing and bioscience. It also benefits from its longstanding appeal as an outdoor recreation hub, home to internationally known landmarks like the Grand Canyon and Monument Valley. With 1.8% appreciation rates and below-average rents, Arizona attracts growth-focused buyers as well as cash-flow seekers. Together, these drivers have pushed the state into the nation’s top five for new housing construction.
4. Florida
What factors contribute to Florida's robust real estate market? Rapid population growth plays a big role, with people moving for reasons like warm weather and no state income tax. The state’s status as a holiday hotspot also fuels demand for vacation homes and short-term rentals on platforms like Airbnb. This creates opportunities for long-term investors — backed by a 67.6% five-year appreciation trend — as well as for those capitalizing on year-round tourism through short-term rentals.
5. Tennessee
Why is Tennessee attractive to real estate investors? Two big reasons: a 0.46% effective property tax rate and affordable home prices. Combined with Nashville’s booming healthcare industry and other strong urban economies, new residents are calling Tennessee home. In turn, this fuels long-term housing demand. And because home prices remain relatively low compared to potential rent growth, the state is well-positioned for buy-and-hold investors who want to purchase now and profit as the market appreciates.Â
6. Vermont
Vermont has one of the best markets for real estate in the U.S.A. Investors have more options than before, with an 18.5% increase in homes for sale this year compared to last. While the state’s small population makes it less active than a larger market like Florida, properties here have delivered strong returns. Demand for vacation homes and rentals in places like Stowe and Killington makes Vermont appealing to investors seeking seasonal income.Â
7. North Carolina
North Carolina is seeing a rapid rise in new residents, supported by solid economic growth and a thriving tech scene. Combined with home prices below the national median, the state is emerging as a viable candidate for real estate investors focused on buy-and-hold strategies. Plus, the low effective property tax rate of 0.62% keeps ongoing expenses like utilities and insurance manageable, helping buyers sustain lasting profitability.
Top tips for successful long-term real estate investing
Successful real estate investors plan for the future, not just quick returns. Here are some ways to build a resilient portfolio for the long term:
— Diversify: Single-family homes aren’t your only option. Adding commercial or multi-family properties diversifies your portfolio, reducing the risk of relying on a single asset type. For example, combining rental properties and buy-and-hold investments helps you balance steady cash flow with long-term growth.
— Follow the trends: Stay on top of the latest housing market developments in the states you’re considering buying in. Timing your entry right makes a big difference in your ROI since factors like rates and demand affect returns.
— Maintain and renovate: Regular maintenance and strategic upgrades protect the value of your investment and keep you on good terms with tenants.
— Optimize your finances: Take advantage of tax incentives, build cash reserves for surprise expenses, and shop around for the best mortgage offers. With Better, you can lock in a competitive rate in as little as three minutes. That means more time spent hunting down the perfect investment and less time chasing affordable financing.
...in as little as 3 minutes – no credit impact
Invest smarter with Better
In today’s U.S. real estate market, investors can target states that offer stronger returns. Lower taxes, affordable home prices, and growing economies give buy-and-hold investors an edge. With careful planning and the right partner, the difference between a good investment and a great one becomes clear. Better makes that possible.Â
With competitive rates and no hidden fees, we guide you through the entire buying process. See how simple investing can be with Better by your side.
...in as little as 3 minutes – no credit impact
FAQ
What type of real estate investing is best for beginners?
A common place to start is with single-family homes. They’re easier to maintain than multi-unit or commercial properties because you’re only managing one residence. Turnover rates also tend to be lower, as families and long-term renters often stay for years. Lower prices and more loan options make them easier to finance as well.Â
Should I focus on urban or suburban properties for rentals?
For affordable deals and stable rental income, suburban homes may be the better choice. But if you’re comfortable with higher prices and more market swings, urban areas can offer stronger returns.Â
What makes a good real estate investment?
To evaluate an investment property, look at a mix of factors in the area like pricing, population growth, and job market stability. Strong rental demand and reasonable property taxes can also signal long-term profitability.