What Are the Best States to Invest in Real Estate in 2025?
The 3 Best States to Invest in Real Estate in 2025 (Based on Real Experience)
One of the most important decisions you’ll make as a real estate investor is choosing where to invest. The famous phrase “location, location, location” isn’t just a cliché—it’s one of the key pillars of success in real estate. Choosing the right location can make the difference between an investment that brings you financial freedom and one that becomes a burden.
In my case, I live in New York, but my entire investment portfolio is in Florida. Why? Because I learned that the best place to invest isn’t always where you live—it’s where your money works best for you.
How to Choose the Best State to Invest In
When I started investing, I established two golden rules. The first: the property must generate positive cash flow. The second: it should be in a landlord-friendly state—meaning a state where laws favor property owners rather than tenants.
Cash flow is the money left after covering all expenses: mortgage, maintenance, taxes, and insurance. If you end the month with a profit, that property is working for you. If, on the other hand, you’re taking money out of your pocket, that investment becomes a liability.
Regarding state laws, places like New York or California tend to protect tenants more, which can complicate eviction processes or limit rent increases. That’s why I prefer landlord-friendly states, where the law maintains a fairer balance between owners and tenants.
And here comes the big decision: Should you invest locally or long-distance?
Investing locally allows you to oversee your properties, but investing out of state opens the door to more profitable markets. I chose Florida—even though I live in New York—because it meets all my criteria for profitability and legal protection.
Factors That Determine Whether a State Is Ideal for Investment
Beyond laws or prices, there are four essential factors that define whether a state has real real estate potential:
1. Population Growth
Investing where people want to live is a safe strategy. If a state’s population is growing, it means there’s housing demand—both for renting and buying. That constant demand drives up prices and ensures steady occupancy.
2. Infrastructure and Development
Big companies don’t invest on intuition—they conduct extensive market research before building a store, stadium, or new highway. If you see construction, new businesses, or chains like Home Depot or Target arriving in an area, that’s a sign of economic growth.
3. Property Costs
The more expensive the property, the harder it is to generate positive cash flow. The three states I’ll mention offer relatively affordable prices. In 2023, the average home price in the U.S. was around $395,000. In Texas it was $389,000, in Tennessee $402,000, and in Florida $410,000—close to the national average, but with attractive rental returns.
4. Cost of Living and Taxes
In states where the cost of living is lower, people move there seeking stability. Additionally, Florida, Texas, and Tennessee do not have a state income tax, leaving more money in residents’ pockets—and therefore, more capacity to pay rent or buy homes.
The Three Most Profitable States: Florida, Texas, and Tennessee
After analyzing multiple markets, I concluded that Florida, Texas, and Tennessee meet all the criteria that make real estate investment attractive.
Florida is my preferred state to invest in. Its climate, steady tourism, and favorable tax policies attract both residents and foreign investors. Cities like Orlando, Tampa, and Jacksonville combine population growth with solid rental profitability.
Texas, on the other hand, stands out for its diversified economy. Houston, Austin, and Dallas offer jobs, tech companies, and reasonably priced housing. It’s a state with high rental demand and one of the most landlord-friendly legal environments in the country.
Tennessee is less mentioned but nearly perfectly balanced: low taxes, affordable living costs, and booming cities like Nashville and Chattanooga. Its rental market is stable and strong—ideal for those seeking consistent passive income.
How to Calculate Your Cash Flow Before Investing
Calculating cash flow is easier than it seems. Take your monthly rental income and subtract your mortgage and operating expenses (insurance, maintenance, taxes, management). What’s left is your real profit.
For example: if your property generates $2,000 per month in rent and your expenses total $1,500, you have a positive cash flow of $500 per month. That figure, though it may seem small, represents steady passive income that grows with every new property you acquire.
Investing without calculating cash flow is like driving with your eyes closed. It doesn’t matter if the property looks pretty or cheap—if it doesn’t generate positive cash flow, it’s not an investment, it’s a debt.
It’s Not About Where You Live, but Where Your Money Flows
The best states to invest in real estate aren’t always the most popular—they’re the ones where the rules, economy, and people work in your favor.
Florida, Texas, and Tennessee have proven to offer a powerful combination of growth, stability, and long-term profitability.
But beyond the numbers, what truly makes the difference is having a clear strategy and a long-term mindset. The key is to understand your market, analyze your cash flow, and make decisions based on data—not emotions.
Remember: investing in real estate isn’t about luck; it’s about knowledge, planning, and discipline. “It’s not about where you are, but where your money flows.”
If you’re ready to take the next step and identify which state best fits your profile and financial goals, contact one of our experts.
We’ll help you create a personalized strategy to maximize your returns and build a solid portfolio in the most promising markets in the United States.