🌎 The 10 best (and worst) states to be a landlord

👋 Happy Sunday, Best Ever readers! It’s officially August. How is that possible? Still, we roll on.

In today’s newsletter, we discuss landlord havens, tariff delays, rent growth maps, multifamily dead zones, and much more.

Today's edition is presented by Sunrise Capital Investors, which has a track record of over $1 billion in transactions and zero investor losses. Learn more about their latest fund today.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🇺🇸 Tariff Delay: President Trump has delayed new tariffs until August 7 after signing an executive order imposing rates on 66 countries, ranging from 10% baseline to 39% for Switzerland. The delay injects fresh uncertainty as legal challenges question Trump’s emergency authority.

👽 Signs of Life: U.S. CRE sales reached nearly $110 billion in Q2, up 18% YoY, surprising analysts who expected weaker performance. Retail led with 37.4% growth while industrial gained 15% as cap rates compressed 25 bps to 6.5% overall.

🔍 Fraud Evolution: Rental fraud has evolved beyond fake applications to sophisticated subletting schemes, where scammers use multiple identities to lease apartments and either sublet them at inflated rates or disappear after collecting rent from unsuspecting subtenants.

🏘️ Multifamily Shift: Semi-urban areas now hold 43.4% of multifamily households vs. 32.4% in city centers and 24.2% in suburbs, growing 25.5% from 2013-2023. These middle-ground neighborhoods offer city amenities at lower costs, attracting both renters and developers post-pandemic.

🏨 Hotel Pipeline: The U.S. hotel construction pipeline grew 3% YoY to 6,280 projects with 737,036 rooms in Q2 2025, with extended-stay brands comprising 39% of total projects. Dallas led with 199 projects, while 735 new hotels are forecast to open by year-end.

🎓 EXPERT RESOURCES
A CRE MASTERCLASS WITH ASH PATEL & MATT FAIRCLOTH

NNN FAST TRACK COURSE

Are you tired of getting outbid on 5% cash-on-cash multifamily deals? Managing tenants, repairs, and property managers? Feeling stuck because every “good” asset is overpriced or picked over?

This course gives you a new lane — NNN (Triple Net) commercial real estate — where your tenants pay the taxes, insurance, and repairs … and you collect checks.

In 5 modules, you’ll learn directly from Ash Patel, who’s closed dozens of NNN deals across the country, and Matt Faircloth, a veteran multifamily operator who knows how you think and asks the questions you may have.

NNN Fast Track gives you:

✅ 5 video modules with downloadable worksheets and assets
✅ Real deal walkthroughs with actual returns
✅ Ash's underwriting tools and proven call scripts
✅ Lifetime access to Best Ever CRE Community with a private space for NNN Fast Track students and direct access to Matt Faircloth and Ash Patel

🏆 TOP STORY
THE 10 BEST (AND WORST) STATES TO BE A LANDLORD

State regulations create dramatically different operating environments for multifamily investors. This week, property management software company TurboTenant released its rankings of the 10 most landlord-friendly states based on eviction processes, property and income taxes, rent control restrictions, and other key factors.

• No. 10, Colorado: 0.49% property tax rates and no rent control.

• No. 9, Kentucky: Seven-day eviction notices and $196,550 average entry costs.

• No. 8, Ohio: Three-day eviction periods with Cleveland's $116,700 home prices.

• No. 7, North Carolina: Requires no notice for lease-breaking tenants while delivering 8-12% rental yields.

• No. 6, Georgia: Atlanta posted seven consecutive quarters of positive absorption with three-day eviction timelines.

• No. 5, Alabama: Its second-lowest property tax rate at 0.41% means a $350,000 property costs just $1,435 annually versus $7,735 in New Jersey. Auburn and Tuscaloosa posted 7.4% and 7.0% rent growth, respectively.

• No. 4, Indiana: Indianapolis offers $220,000 average home prices with 16.5% gross rental yields. The state's low 3.6% unemployment rate and below-average 3% state income tax create stable investment conditions.

• No. 3, Arizona: Phoenix rents surged 72% from 2010-2022 due to housing shortages, with current 9% gross rental yields. Scottsdale, Chandler, and Gilbert rank among the nation's most livable markets.

• No. 2, Florida: No state income tax and 0.84% property taxes keep operating costs manageable. Three-day eviction notices, no rent control, and massive South Florida demand create multiple revenue opportunities.

• No. 1, Texas: Lightning-fast evictions, no state income tax, and home values that rose from $299,000 to $378,000 since 2021. Electronic eviction filings enable remote management while corporate relocations drive sustained demand.

Notable Shifts: Colorado's No. 10 ranking is surprising given recent tenant-friendly legislation, including 2024 "just cause" lease renewal requirements. Arizona's No. 3 position despite above-average home prices reflects massive rent growth (72% in Phoenix since 2010), outweighing affordability concerns. Traditional landlord-friendly states like Tennessee and South Carolina are notably absent, suggesting recent regulatory changes are reshaping these rankings.

On the other side of the conversation, here are the top 10 least landlord-friendly states, using the same criteria.

• No. 10, Connecticut: Brutal 1.92% property tax rates.

• No. 9, Massachusetts: Eviction cases can cost upwards of $80,000 and stretch two years.

• No. 8, Minnesota: St. Paul has a restrictive 3% annual rent increase limit.

• No. 7, Maryland: Major counties cap rent increases at just 3% plus inflation.

• No. 6, Illinois: Forces landlords to accept voucher payments regardless of collection history while facing two-year eviction backlogs.

• No. 5, Washington: Serial squatter cases lasting three years and costing $80,000+ highlight enforcement challenges. Statewide rent increase restrictions, just cause eviction requirements, and complex notice procedures create multiple legal hurdles.

• No. 4, Oregon: Rent increases above 10% in Portland trigger $4,500 relocation fees owed to tenants. Sealed eviction records prevent thorough tenant screening, while strict regulations drive landlords elsewhere.

• No. 3, New Jersey: Over 100 local rent control jurisdictions create a complex regulatory maze, while the nation's highest 2.49% property tax rate crushes cash flow. Just cause eviction laws compound difficulties.

• No. 2, New York: Statewide rent control and stabilization laws lock in pricing regardless of improvements, while 2024's "Good Cause Eviction" law requires legal justification for lease termination and enables tenant challenges.

• No. 1, California: Rent control caps at 5% plus inflation or 10% maximum, combined with income tax rates up to 13.3% on rental income. Squatter protection laws enable two-year, $250,000+ eviction battles.

Notable Trends: Recent legislative changes significantly impact these rankings, with Illinois rising to No. 6 after 2023's income source discrimination ban and Minnesota climbing to No. 8 following St. Paul's 2021 rent control implementation. The 2022-2024 period has seen accelerated tenant protection laws pushing previously moderate states higher up the "worst" lists.

THE BOTTOM LINE

Regulatory environments can make or break rental property returns. While landlord-friendly states offer streamlined operations and stronger cash flow potential, restrictive markets increasingly favor tenant protections over investor profitability. In a high-interest rate environment where operational costs are surging, investors are focusing capital where the rules work in their favor, avoiding states with significantly higher operational costs and legal complexity.

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💰 CRE TRENDS
RENT GROWTH RISERS, FALLERS, WINNERS, AND LOSERS

For the first time since tracking began, national average apartment rents have declined across all unit types, with one-bedroom units down 0.7% YoY to $1,520 and two-bedrooms falling 0.3% to $1,905. This shift comes during peak summer leasing season, as property owners prioritize occupancy over aggressive pricing amid strong renter demand and above-normal retention rates.

Biggest Winners: 

• San Francisco led the nation in rent growth, with one-bedrooms surging 13.3% YoY to $3,400 and two-bedrooms jumping 16.3% to $4,780 — nearly reaching pre-pandemic levels. The revival stems from AI-driven hiring, stricter return-to-office mandates, and renewed urban living appetite. Downtown neighborhoods like Mission Bay, SOMA, and Hayes Valley all posted double-digit annual growth.

• Syracuse saw one-bedroom rents spike 11% YoY, while Cincinnati gained 12% and Milwaukee rose 10.9% as Midwest markets showed unexpected strength.

Biggest Losers: 

• Jersey City suffered steep drops with one-bedrooms down 17.8% YoY and two-bedrooms falling 15%.

• Knoxville posted dramatic declines of 15% for one-bedrooms and 10.7% for two-bedrooms.

Other notable fallers included Des Moines (-13%), Salt Lake City (-12.9%), and Aurora, Colorado (-13.6%), as mountain and midwest markets corrected from pandemic highs.

🎙️ THE BEST EVER CRE SHOW
HIDDEN PROFIT KILLER: THE MULTIFAMILY ‘DEAD ZONE’

Patrick Grimes, a former robotics engineer turned real estate investor, joined Matt Faircloth on the Best Ever CRE Show this week. Among his many insights was a specific theory that's reshaping how he evaluates deals. There's a profit-killing dead zone, he says, between single-family homes and large apartment complexes that most investors unknowingly step into.

The Dead Zone: Patrick believes there's "literally nothing" profitable between 3-bed/2-bath single-family homes and 80-plus-unit apartment buildings, citing that properties in the 40-60 unit range get crushed by a perfect storm of inefficiencies:

• Management Fee Squeeze: These properties typically pay 12-18% management fees but don't have on-site staff, meaning you're "chasing somebody who you potentially don't own their time" for every maintenance issue.

• No Economies of Scale: You're paying top dollar for maintenance and leasing without the volume to negotiate better rates.

• Debt Limitations: Non-recourse debt typically isn't available until you hit 80-plus units, when, Patrick says, "the assets are large enough, they've reached this critical mass where the lenders are saying, we can value this based on its net operating income."

His Workaround Strategy: Rather than avoiding multifamily altogether, Patrick’s solution is to buy two properties that together total 80-plus units. This approach lets him spread leasing office payroll across both properties while achieving the critical mass needed for better debt terms and management economics.

📣 "At 80 units or above, you get to an economy of scale which finally outweighs that stability because now you can have on-site property management,” Patrick says. “You can renovate unit after unit, and you can get non-recourse debt … plus, [the property management] works for you — they're calling you, they're looking after you.”

🎙️ Listen to Patrick’s full episode here.

📷 CRE IN PICTURES
A TELLING IMAGE OF THE STATE OF AMERICAN MALLS

If you needed a reminder of the state of American malls, look no further than the image above. The mall, once the vibrant heart of suburban life from the 1970s to the early 2000s, has been hollowed out by e-commerce and changing consumer habits. COVID-19 accelerated the decline as anchor stores like Sears and Macy's closed, creating a destructive cycle without foot traffic. What remains are scenes like the one above, with a roped-off “prize” car in the form of a 21-year-old Corvette among empty corridors — a time capsule of fading American consumer culture.