How to Choose a US State for Investment: Property Tax, Landlord-Tenant Law, Eviction Procedure and Insurance - A Comparison of Key States

1Why is the choice of state more important than the choice of city?

Because for real estate purposes the US is effectively fifty separate legal systems. Tenancy law, the eviction procedure, property tax, state income tax, the licensing of management companies and even closing practices are set at the state level, and sometimes at the county or city level. Two apartments identical in price and rent can produce a completely different result because of a border line.

Israeli investors often choose on the recommendation of a marketer or because of a low entry price. But a low price often reflects high property tax, expensive insurance or a weak rental market. The right approach is to examine the state against a fixed set of parameters, and only then to look for a city and a neighborhood.

2Which parameters should you compare between states?

1. Property tax - the effective rate, the assessment mechanism, and whether there is a limit on the rate of increase for an investment property.
2. State income tax - whether the state taxes the rental income of non-residents, and whether there is withholding on sale.
3. Landlord-tenant law - rent control, a “just cause” requirement to end a tenancy, limits on security deposits.
4. Eviction procedure - the length of the notice, the competent court, and the practical time until possession is returned.
5. Insurance - exposure to storms, flooding, fire and hail, and the availability of private insurers.
6. Restrictions on foreigners - state laws that restrict acquisition by citizens of certain countries.
7. Transaction practices - whether closing is handled through an escrow company or an attorney, and whether title insurance rates are regulated.

3How much property tax do you pay, and what changes for an investor?

Property tax is generally the largest ongoing expense after financing, and it varies greatly: according to Tax Foundation data (as updated in September 2024), the effective rate on owner-occupied homes ranges from about 0.28% in Hawaii to about 2.3%-2.4% in Illinois and New Jersey. These figures refer to homes whose owners live in them - an investor often pays more.

The reason: in most states, discounts and limits on assessment increases are given to the primary residence (Homestead). In Florida, for example, for an owner-occupied home the increase in assessed value is capped at 3% or the rate of increase in the index, whichever is lower. For a property that is not a residence, including an investor's rental property, the limit is 10% a year, and it does not apply to school system taxes. The implication: in a rising market, the investor's property tax will rise faster than that of the neighbor who lives in his home.

Texas has no personal income tax at the state level, but property tax is relatively high - about 1.6% on average according to a secondary analysis of Tax Foundation data published in March 2026 - and the assessment is updated every year. In such states it is important to include in the calculation also the option of appealing the assessment, and the expected increase after purchase, when the assessment is updated to the transaction price.

4What does the eviction procedure look like in each state?

The eviction procedure is the real test of “landlord-friendliness”: how much time passes from the day the tenant stopped paying until the property returns to your hands. The table summarizes the starting point in each state; in practice, the length of the procedure also depends on the workload of the local courts and on the tenant's opposition.

5What do you need to know about rent control?

Most states in the central and southern US prohibit rent control or do not impose it, while on the West Coast and in the Northeast there are state and municipal arrangements. California is the main example: the tenant protection law (AB 1482) limits the annual increase to 5% plus the rate of increase in the regional index, and no more than 10%, and requires just cause to end the tenancy of someone who has lived in the property for at least 12 months.

Single-family homes and privately owned apartments may be exempt from the law, but the exemption is conditioned on giving the tenant appropriate notice, and it does not apply when the owner is a corporation or an LLC one of whose members is a corporation. In other words, the holding structure a foreign investor chooses directly affects the law that will apply to his tenant. In addition, many cities in California apply stricter arrangements, and in New York and New Jersey there is extensive local and state legislation protecting tenants - so a city-level check is required there.

6How much does insurance cost, and which risks are not covered?

Insurance is one of the variables that is easiest to get wrong in a remote calculation, because the price quote usually arrives only at the end of the process. The differences between states stem mainly from exposure to natural disasters.

• Florida - hurricanes and wind make insurance more expensive and require a dedicated storm-damage deductible. The market is stabilizing: Citizens, the state insurer of last resort, reported in March 2026 about 336,000 policies, a 76% decline from the peak of 1.41 million in October 2023, and an average reduction of 8.8% in homeowners insurance rates for 2026. Even so, insurance is a significant component of the return.
• Texas - exposure to hail, storms and wind damage in the coastal area, and a deductible that is sometimes calculated as a percentage of the property's value.
• California - fire risk, and difficulty obtaining insurance in certain areas.
• Flooding - everywhere - according to FEMA, most homeowners insurance policies do not cover flood damage, and a separate policy is required. A National Flood Insurance Program policy generally has a 30-day waiting period, so it should be purchased before closing and not after.

7Are there states that restrict acquisition by foreigners?

Yes, but not for Israeli citizens. In Florida, the 2023 law SB 264 restricts the acquisition of real property by persons and entities connected to China, Russia, Iran, North Korea, Cuba, Venezuela and Syria, and some of the restrictions apply only to China. In Texas, SB 17 took effect on September 1, 2025 and restricts ownership and long-term leasing of real property by actors from countries designated as endangering national security.

For an Israeli investor the relevance is mainly in partnerships: if one of the entities has a partner or rights holder from a country included in the restriction, the entire transaction may be affected. These laws are also subject to legal proceedings, so their status should be checked at the time of the transaction.

8What does a summary comparison look like?

The table describes general trends and is not a ranking. A “landlord-friendly” state with high property tax and expensive insurance can produce a lower net return than a protective state with strong appreciation. The choice depends on the strategy: current cash flow, value enhancement, or long-term holding.

9What to do before signing, and how we accompany you

Before choosing a property, it is worth choosing a state on the basis of a calculation that includes the property tax as it will be after the purchase, a real insurance quote including flood, an analysis of the eviction procedure and the tenancy law that applies, and a holding structure that fits state law and tax in Israel. We help Israeli investors build this comparison before they fall in love with a particular deal, and we accompany the review with attorneys, insurance agents and tax advisers in the chosen state.

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The information in this guide is general in nature and does not constitute legal or tax advice on any specific transaction. Every transaction is assessed on its own facts.