If you plan to grow your rental portfolio in 2026, choosing the right market is everything. Some states offer better real estate investing conditions than others, and four stand out above the rest. 

No matter where you invest, ABL can help. We offer DSCR rental loans for properties in 42 states plus D.C. If you need fast, flexible funding for your next rental, don’t hesitate to reach out.

Here Are The Four Best States to Buy Rental Property in 2026:

1. Connecticut

Average rental yield 6.13%
Vacancy rate 2.9%
Annual population growth rate 0.88%
Landlord-friendliness score 57.5/100

Connecticut tops the list for best states for rental property in 2026. Not only does it have the second-lowest vacancy rate across all fifty states (2.9%), but it also offers a relatively high rental yield (6.13%). Meanwhile, the median property listing price is steadily growing, allowing investors to benefit from consistent cash flow and long-term appreciation.

What draws many renters to Connecticut is its Eastern charm and proximity to major metros like New York City and Boston.

2. North Carolina

Average rental yield 5.62%
Vacancy rate 6.4%
Annual population growth rate 1.51%
Landlord-friendliness score 75/100

North Carolina is the most landlord-friendly state on our list (and ranks fifth for landlord-friendliness across all states). This is based on its favorable regulations across security deposit rules and limits, late fee limits, mandatory grace periods, returned payment fee limits, eviction warning notice periods, etc.

North Carolina is also home to the “Research Triangle,” a research park with about 4,000 tech and 600 life science companies. It brings in a lot of young professionals, many of whom rent. 

3. Idaho

Average rental yield 4.30%
Vacancy rate 5.1%
Annual population growth rate 1.55%
Landlord-friendliness score 72.5/100

Idaho is a fast-growing state with impressive real estate dynamics: low vacancy rate, high population growth, and some of the most landlord-friendly regulations nationwide. 

In 2025, Idaho surpassed 2 million residents for the first time. Boise, the capital and most populous city in Idaho, has experienced particularly rapid growth n recent years.

4. Illinois

Average rental yield 8.94%
Vacancy rate 6.5%
Annual population growth rate 0.54%
Landlord-friendliness score 62.5/100

Illinois has the highest rental yield among all fifty states, at 8.94%. This is due to the relatively high average rent ($2,035) despite a relatively low median home price ($273,186). In other words, you can generate more rental income for every dollar in home value. Cities like Chicago—the third-most populous city in the U.S.—have an especially high proportion of renters, providing landlords with a wider pool of tenants to lease to.

What to Look for In a State to Buy Rental Property In

When choosing a state to buy rental property in, look for the following traits: 

High Rental Yield

Rental yield measures how profitable a property is by comparing its rental income to its value. It’s calculated by dividing a property’s annual gross rent by its market value. Here’s the formula:

Rental Yield = Annual Gross Rent / Property Market Value

The higher a state’s average rental yield, the more profitable it is for rental investing.

Low Vacancy Rate

Vacancy rate measures the proportion of available rental units that are unoccupied. It’s calculated by dividing the total number of unoccupied units in a market by the total available units at any given time. Here’s the formula:

Vacancy Rate = Total Unoccupied Units / Total Available Units

The lower a state’s vacancy rate, the less rental income you’re likely to lose to vacancies. 

Population Growth Rate

Population growth rate measures the pace at which a population is growing. Typically, it’s measured on an annual basis by dividing the net increase in population by the prior year’s total population. Here’s the formula:

Annual Population Growth Rate = Net Increase in Population / Prior Year’s Total Population

The higher a state’s population growth rate, the more housing demand there is, which puts upward pressure on rents and property values. 

Landlord-friendly Laws

Finally, some states are more landlord-friendly than others. Steer clear of states that make it hard to evict non-paying or problematic tenants or set unreasonable caps on rent increases.

Finance Your Next Rental Property with an ABL Loan

No matter which state you choose to buy your next rental property in, ABL can help. We’ve helped landlords nationwide secure long-term rentals and boost their returns with our DSCR loan program. It’s fast, flexible, and tailored to investors. 

Pre-qualify for a DSCR rental loan today! We’ll let you know if you’re a good fit within 24 hours. 

Methodology

To determine the top states for buying rental property in 2026, we ranked all fifty states according to their average rental yield, vacancy rate, annual population growth, and landlord-friendly regulations. Each category was weighted equally to arrive at a composite score for each state. Florida was not considered.

We used the following data sources:

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