The Prop Hound team · 2026-10-01 · Last reviewed 2026-10-01
Best US States for Canadian Real Estate Investors
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There's no single best state. Canadians who buy US rentals tend to split into two groups. One wants cash flow and will buy anywhere the numbers work, usually in the Midwest or the Southeast. The other wants a place they'll visit, so they choose Florida, Arizona or Texas and accept thinner returns for the sun.
The sections below cover what changes from state to state for a Canadian owner. The border-level tax rules that apply everywhere are in the main guide, so read that first.
What differs by state
A second tax return. You'll file a federal return no matter where you buy. States with an income tax usually want their own non-resident return on the rent too, which is more accounting cost. The first-year tax walkthrough shows where that return fits. States with no income tax skip that.
Property tax. It varies from under 0.4% of the home's value a year in Alabama to over 2% in parts of Texas, Illinois and New Jersey. On a US$150,000 house that's the difference between US$600 and US$3,000 a year, which can change a deal from good to marginal.
Landlord and tenant law. An eviction can take a few weeks in one state and several months in another. When you're not there to chase it, that matters a lot. Our landlord and tenant guide sorts every state.
Insurance. Florida and parts of Texas have seen steep premium increases. Get a quote for the specific house before you trust a cash flow number.
Distance. If you want to check on the property, direct flights from Toronto, Montreal, Vancouver or Calgary make a difference. Not every cash flow market has them.
A state-by-state look
| State | Why Canadians look | What to check |
|---|---|---|
| Florida | No state income tax, direct flights, familiar to snowbirds | Insurance costs, condo association finances, hurricane exposure |
| Texas | No state income tax, landlord-friendly law, large markets | Property tax, which averages around 1.5% and can reach 2% or more in big metro counties |
| Arizona | Landlord-friendly law, low property tax, snowbird familiarity | Prices in Phoenix are high now, so cash flow is thin |
| Ohio | Low prices, high rent-to-price in Cleveland and Cincinnati | Old housing, property tax and a state return |
| Indiana | Indianapolis has low prices and a cap on rental property tax | A state income tax of 2.90% in 2026, plus county income tax, so ask an accountant what applies to rent |
| Tennessee | No state income tax, low entry prices in Memphis | Neighborhood variation and insurance |
| Alabama | Very low property tax, cheap houses in Birmingham | A smaller market that can be slow to sell |
| Michigan | Detroit's prices are among the lowest | Very high property tax rates and rental registration rules |
Tax rates and rules move, so confirm any figure above before you act on it.
Where the cash flow is
Our own data on ten cash flow markets lives on the markets page. The cities on it are in Indiana, Ohio, Tennessee, Alabama, Missouri, Michigan and Pennsylvania. You'll see the median price and median rent for each, along with an estimated cap rate. Most of the best rent-to-price ratios sit in the Midwest and the Southeast, and the cheapest places have older housing and more repairs. Markets under US$200,000 narrows it to the cheapest.
Florida, Texas and Arizona aren't on that list because their prices are higher. That's a trade many Canadians make on purpose. If you'll use the property yourself for a few weeks a year, you're not buying purely on yield. Personal use also changes how the CRA and IRS see the property, so tell your accountant if you plan any.
States many Canadians skip
California, New York and New Jersey have high prices, tenant-friendly law and rent control in some places. Illinois has high property taxes and some Chicago-specific rules, though the state bans local rent control. A remote owner can still make money there, but the margin for error is smaller. Evictions are slower, and a property manager who knows the local rules becomes mandatory. Most investors starting out from Canada look elsewhere.
Picking one
Start with the state's tax treatment and landlord law, since you can't change those. Then compare cities inside the state with the market picker, which ranks the ten markets we track by cash flow or growth. Run a real listing through the calculator using the actual property tax for that county.
Plan on a local property manager before you make an offer, and have your accountant confirm the state filing. The Canadian investor checklist covers both.
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