Would We Ever Invest in Tenant-Friendly States?

Summary

Podcast Summary: BiggerPockets Real Estate Podcast

Episode: Would We Ever Invest in Tenant-Friendly States?
Date: May 13, 2026
Hosts: Dave Meyer & Henry Washington

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Episode Overview

This episode dives deep into the perennial question facing rental property investors: Should you avoid "tenant-friendly" states, or does skipping them mean leaving money on the table? Dave and Henry break down what really makes a market landlord-friendly vs. tenant-friendly, how eviction timelines and regulations differ, the impact of rent control and licensing, and ultimately, how to weigh regulations against potential returns when crafting your investment strategy.

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Key Discussion Points & Insights

1. What Makes a State Landlord or Tenant Friendly?

• Main Variables:
  • Eviction Timelines: The ease and speed of getting problem tenants out is a major concern for most investors.
  • Notice Requirements: Different states require different notice periods before starting eviction—some as short as three days, others much longer.
  • “Just Cause” Rules: Some states require landlords to have a legitimate reason (“just cause”) to evict a tenant, adding another layer of protection for renters.
  • Rent Control: Limits on how much landlords can charge and raise rents, impacting cash flow and long-term returns.
  • Rental Licensing: Some markets require landlords to have permits or licenses (and sometimes inspections) to operate rentals.

Quote:
“Eviction speed is important because if you have a bad non-paying tenant and you’re in a market that it takes a year to put them out or more, that’s a lot of money you could be leaving on the table... That’s 50 grand.”
— Henry Washington [02:08]

2. Evictions and Notice Periods: Examples Across States

• Fast-Track States: Texas, Florida, Ohio, Georgia, Arkansas, Mississippi, Iowa (3-day notice, 3–6 week process)
• Slow-Track States: New York, New Jersey, California, Connecticut, Rhode Island, Vermont, Hawaii (up to 6 months)
• Most other states fall in the 4–8 week eviction timeline range.

Quote:
“If you go into it eyes wide open, knowing what the process is, you can mitigate that risk. But this is a considerable issue for certain people.”
— Dave Meyer [07:34]

3. Underwriting for Market Realities

• Key Advice: Don’t disregard an entire market just due to tenant-friendly laws. If timelines are longer, factor higher vacancy or eviction costs into your underwriting.
• Realistic Planning: Expect to occasionally inherit problematic tenants—buy with a plan for worst-case scenarios.

Quote:
“It’s essentially just another form of vacancy, right?”
— Dave Meyer [05:48]

4. Trade-Offs in Tenant-Friendly States

• Appreciation vs. Regulations: “Tenant-friendly” states often have the strongest demand, appreciation, and rent growth—think coastal metros or places with building constraints.
• Supply Constraints: These states often restrict new development, which drives up property prices and rents, but also exposes investors to tighter controls.

Quote:
“There are a lot of juice in those because you get a lot of appreciation. Like real true wealth is built through debt paydown and appreciation.”
— Henry Washington [09:02]

5. Rent Control: Impact and Opinions

• Both hosts are unequivocal: Rent control doesn’t work for landlords or tenants, and nearly every economist agrees. It reduces supply, increases long-run rents, and incentivizes landlords to spike rents at turnover.

Memorable Quote:
“There are almost no issues that every single economist I’ve ever read hates, but rent control is one of them… it doesn’t even help the people it’s supposed to help.”
— Dave Meyer [15:28]

• Political Reality: Despite negative evidence, politicians push rent control because it’s popular, not necessarily effective.

6. Rental Licensing & Inspections

• Becoming more common: Some cities require landlords to register and have periodic property inspections.
• Usually not expensive, but adds unpredictability—inspector subjectivity can lead to unexpected upgrade costs.
• Factor the risk and annual/licensing fees into your deal analysis.

Quote:
“Sometimes you meet a persnickety person who all of a sudden, you buy a rental property you thought was turnkey and now you’re investing 10 grand into renovating that property.”
— Dave Meyer [20:32]

7. Balancing Regulation with Returns

• Risk vs. Reward: Regulations pose risks, but often the best returns (appreciation, demand) are found in higher-regulation markets.
• Analysis Order: Don’t make tenant-friendliness your first screen—focus on returns, strategy fit, market familiarity, and only then account for regulation.

Quote:
“Landlord tenant friendliness is probably further down the list for me in terms of what I’m considering…I think people give it way too much attention.”
— Henry Washington [28:17]

8. The Critical Skill: Tenant Selection

• Best defense against regulatory risk is proactively selecting good tenants, not just relying on the law or your property manager.
• Underwrite for potential vacancies as a buffer, and always keep reserves.

Quote:
“We always want to find an excuse for not having to be good at the one thing we need to be good at… tenant selection.”
— Henry Washington [29:50]

9. Practical Advice for Navigating Regulations

• Get Informed: Know the rules in your markets, but treat them as one factor among many.
• Join Landlord Associations: These organizations connect you with local resources, education, and shared landlord experiences.

Quote:
“Go join your local landlord association…anything that’s going to happen to you as a landlord has happened to somebody else before.”
— Henry Washington [34:48]

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Timestamps for Key Segments

• Factors in Landlord/Tenant Friendliness: [01:37–04:36]
• Eviction Timelines & State Examples: [04:36–08:43]
• Appreciation in Tenant-Friendly States: [08:43–09:43]
• Rent Control Discussion: [13:51–19:02]
• Rental Licensing: [19:02–21:17]
• Balancing Regulation & Returns: [27:08–29:49]
• Tenant Selection Best Practices: [29:49–33:45]
• Local Landlord Associations: [34:48–35:58]

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Notable Quotes

• “Eviction speed is important... that’s 50 grand.” — Henry Washington [02:08]
• “I would be hesitant to invest in places with rent control.” — Dave Meyer [15:51]
• “It all boils down to risk and reward.” — Henry Washington [28:14]
• “Our job is to be very good at tenant selection.” — Henry Washington [29:50]
• “Treat it as a variable like you treat other variables in your underwriting and deal analysis.” — Dave Meyer [33:45]

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Tone & Takeaways

The conversation is candid, practical, and balanced—neither alarmist nor dismissive about regulation. Both hosts focus on data-driven decision-making, realistic risk management, and building skill as the foundation of long-term success. The bottom line: Don’t automatically exclude tenant-friendly states if the numbers work and you’re prepared; always underwrite for real-world risks, and prioritize tenant screening over external circumstances.

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Practical Steps Suggested

• Research Local Laws: Know them before investing or expanding.
• Underwrite Conservatively: Plan for potential delays or costs related to regulations.
• Join Local Groups: Leverage shared experience and resources.
• Focus on Tenant Quality: Your best defense against regulatory headaches.

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For investors considering new markets or debating how much tenant-friendly laws should influence their strategy, this episode offers a measured, actionable perspective.

Transcript

[A]

Is investing in a tenant friendly state a deal breaker? Or are investors who avoid them leaving money on the table? Landlord tenant laws vary dramatically across the country. Eviction timelines can range from a few weeks to over a year. Rent control can cap your cash flow and permit restrictions can slow down your rehabs or stop them completely. But there's also a flip side. The states with the strictest laws are often the most desirable places to live. They have strong demand, strong rent growth, and strong appreciation. So today we're breaking it down. What makes a state landlord or tenant friendly? Which states are the best for investors? And what can you do to protect your portfolio if you're already investing in a tenant friendly state? If you own rentals or you're about to buy your first one, this episode could save you a lot of money and prevent a lot of stress. What's up everyone? I'm Dave Meyer. He's Henry Washington. We're the co host of the Bigger Pockets podcast. Henry, how are you? What's going on, man?

[B]

I'm excited to talk about this because I technically live and invest in a landlord friendly state, but every time I look at like lists of the most landlord friendly states, my state doesn't make the list. And so I'd like to dive into a little bit about why I think this is landlord friendly and why or why not that actually matters.

[A]

All right, so Harry, what are some of the factors that you think about when considering whether a state or a city is landlord friendly or tenant friendly?

[B]

What comes to mind for me, and I think what comes to mind for a lot of investors when they're considering markets and debating whether it's landlord or tenant friendly is they're thinking about evictions. So how difficult is it going to be to get a problem tenant out of your property? Like that's what people are typically worried about or focused on. But you're right, that's just one factor I think that makes up whether a market is tenant or landlord friendly. Yes, Eviction speed is important because if you have a bad non paying tenant and you're in a market that it takes a year to put them out or more, that's a lot of money you could be leaving on the table. I, I was just talking with someone who has a tenant whose rent is $4,000 a month and it takes a year to evict them and they're in the state of New York, that's 50 grand. Crap. A ton of money.

[A]

That's insane.

[B]

Yeah.

[A]

So important variable, right?

[B]

Yeah, absolutely. Important variable. But I Think people only think about this one variable when they're trying to select a market, and there are so many others that even if this variable is in your favor in the market you choose, if several of the these other variables aren't, you could still find yourself in a position you don't want to be in. So evictions are just a part of the process. You also have different rules around what kind of notice a landlord is required to give a tenant before the eviction process starts. So the eviction process is truly like an official process. But the eviction process can't start until you have given the proper amount of notice. And so if you're in a state that has short timelines around giving notice, then that can help you get to the eviction process sooner. If you have to give a lot of notice to people, that just adds to the delays because the eviction process hasn't even started yet. You're just dealing with the notice, which is like the precursor before the eviction process starts. And then on top of that, there's states that have what they call just cause rules. Landlords have to have just cause to put a tenant out, essentially. In other words, you can't just go, hey, I changed my mind and I want to sell this property, so I'm canceling your lease in the middle of the lease in certain states. In some states you can. So yeah, some of these just cause rules can really put handcuffs around landlords. But in all honesty, I think just cause rules are like, their tenants should have some protections if they're living in a place. Like, I think that's a good thing in my opinion. Like you shouldn't just be able to put somebody out for no reason. But it is something you need to pay attention to. And then I think the other big one people think about is rent control. Oh yeah, there are some states where you can only charge a certain amount of rent within whatever the market rents are. And then once that rent is set, you then are only allowed to raise rents by a certain percentage in those markets. And those rules can vary from state to state.

[A]

Just to add some sort of data to what Henry was saying, like, if you look at Texas, Florida, Ohio, Georgia, their notice range for eviction is only three days.

[B]

That's Arkansas as well.

[A]

That might be a little short. I, to me, like, I, I get why they are. I wouldn't be worried personally about investing if they said you have to give two weeks notice.

[B]

Yes. I think that there's some intricacies though. Right. So in a lot of these markets where you can give three day notice, there are situations where you can and situations where you can't. So like in Arkansas, I can give you a three day pay or quit, but only if you've not paid rent, right? So if you've not paid rent or violated the lease in some sort, then I can give you a three day pay or quit and then that gives you three days to either get caught up or then I can start the eviction process. But if you're paid up, right, and I want to evict you for some other reason, I can't just serve you a three day notice. It's gotta be a 30 day notice.

[A]

So that makes sense. That seems somewhat reasonable to me. I personally like I live in Washington state. That is sort of on the other end of the spectrum. I think the key thing here is like, you know, when I talk to James, he owns a lot of rentals here. You just have to underwrite it. Like he plans for this stuff, right? You know, if you own a multi family, right, and you own 30 units, like you're probably going to have a non paying tenant at some point. So you just have to underwrite that into your deal. Which is why I wouldn't think about it so much, just prepare for it. It wouldn't be a deal breaker for me. It would only be a deal breaker for me if underwrote it with a higher vacancy. Like it's essentially just another form of vacancy, right?

[B]

Correct.

[A]

So it doesn't work with that higher vacancy rate. Then I just wouldn't buy the deal. But I wouldn't write off an entire market because of this.

[B]

Personally I mostly buy singles and small multifamily. So if I'm underwriting a deal and it's in a market where timelines are longer to evict a tenant, I'm going to prepare for the worst case scenario. Because as a real estate investor a lot of the times we're getting good deals because a current owner wants to get out of a headache, right? So they may know, yeah, I got a problem tenant in here. That's why I'm selling you this property. You go deal with it.

[A]

That's a good point.

[B]

And I'm going to give it to you at a discount. So you underwrite it so that you prepare. Like if it's going to take you a year, well, how much is rent? How many months are in a year? Add that up, add it into your underwriting so that you can take care of it when the situation comes. Like plan for the worst case scenario in your underwriting, then if you get it handled in just a couple of months through some other means, great. That's more cash flow, more return on your investment for you.

[A]

I will just say, like, if you are concerned about eviction timeline, like there is big differences in here. Like I sort of worked with AI here to sort these states into buckets. And what you see is there are states where the notice period is three days, total timeline to evictions, like three to six weeks. And those are some of the states I mentioned. Texas, Florida, Ohio, Georgia, Mississippi, Arkansas, Iowa. You know, it's a lot in the southeast and the Mountain West. Then on the total other end of the spectrum, there are a couple states that are just very slow. It could take up to six months. In states like New York, New Jersey, California, Connecticut, Rhode Island, Vermont, Hawaii, everything else is like kind of in the middle. You know, it's like you're somewhere between four to eight weeks. Like most states are kind of in that range. So if you are curious about this for your own market or markets that you're going into, check this out. Because I think that's the key to what Henry and I are saying is like, if you go into it eyes wide open, knowing what the process is, you can mitigate that risk. But this is a considerable issue for certain people. And if you just want, for example, if you're a turnkey investor and you don't want to get into some of the hairier parts of property management, you might want to go with some of those states that have a faster processing time.

[B]

And when you look at that list, a lot of those markets that are more tenant friendly markets are also markets where you get a lot more appreciation, where there's more demand. People want to live in New York and they want to live in California and coastal areas. And there's a lot of kind of, what's James call it, juice. There's a lot of juice.

[A]

Yeah, it's got a lot of juice.

[B]

Got a lot of juice in those because you get a lot of appreciation. And like real true wealth is built through debt, pay down and appreciation. Right. So like if I, if I'm thinking about investing in one of those markets, yes, I want to underwrite the deal appropriately so that I can afford to take care of whatever tenant situation I may be walking into. But that isn't all of the tenant situations that you may have to deal with. You may, you may also put your own tenant in there after you take care of a bad tenant. And that tenant doesn't turn out well. And then you could go a whole nother year where you're not getting rent. And so it's not just planning for the tenant situation you're dealing with when you buy it, but it's planning, planning like, how do I operate this?

[A]

One of the correlations you see is in a lot of the states where they're quote, unquote tenant friendly, they also have a lot of supply constraints. They don't allow development. You know, if you look at cities like Seattle, it's very hard to develop, or San Francisco or New York, or there's just not enough room in a lot of those places to develop stuff. And that pushes prices up. So it's just it. Again, all of these things are trade offs. There are two other regulatory things I want to talk about, which is rent control and another one that I don't hear people talking about, which is rental licensing. But we got to take a quick break. We'll be right back. Everybody has a space that's sitting there quietly, costing them money instead of making it a guest room holding random storage and a treadmill that hasn't been used in months. A second home that only gets used a few weeks a year, or your primary home while you're traveling, just sitting there, fully capable, producing zero return while you're away. It's actually a great opportunity to list your space on Airbnb and let it start earning for you. And if you've ever considered listing your place but assumed it would be too much to manage, there's an easier way. Now, with Airbnb's co host network, you can hire a vetted local co host to handle the details for you. A co host can create your listing, manage reservations, handle guest communications, and even provide on site support, giving you experienced help to take care of your home and guests without having to manage every detail yourself. So whether your space is empty on weekends, during certain seasons or most of the year, it doesn't have to sit idle. It can start producing extra income. It's a practical way to make more of the space you already have. Nice. When something around the house finally starts contributing, find a co [e-mail] host. Do you ever notice how every passive investment somehow turns into a very active lifestyle? Active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes 10% below market value in the best markets across the country without making real estate your second job? That's exactly what Rent to Retirement does. They're a full service turnkey investment company handling everything for you. In some cases, investors get 50 to 75% of their down payment back at closing, plus interest rates as low as 3.75%. They've partnered with BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com retirement to learn more. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of the smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly. That's why more real estate investors are turning to steadily they focus exclusively on landlords. Whether it's a single family rental, a BRRR Builders risk policy, or midterm holiday guests. You get fast quotes, flexible cover coverage, and protection for property damage, liability and even loss of rental income. Now is the perfect time to review your rates and coverage. Get a quote in [e-mail] landlordinsurance steadily landlord insurance designed for the modern investor.

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[A]

welcome back to the BiggerPockets podcast. Henry and I are here talking about the best, best and worst landlord states. People always ask me about this what's is this state landlord friendly, is it not? I think as we're discussing this, we're seeing it's not so black and white. There are regulations that you need to understand and mitigate, but it's all about finding the regulatory and return environment that is comfortable for you. Because regulation and returns don't always match the markets with the strongest, regulations don't necessarily have the worst returns. Sometimes you see quite the opposite. So we're breaking down individual issues to help you understand what markets might Align best with your strategy. Before the break, we talked about sort of like the bad tenant mitigation situation. But I want to talk rent control and I'll just say I am not a fan of rent control. I think there are almost no issues that every single economist I've ever read hates, but rent control is one of them. It's pretty tough to find a single academic study that supports the idea of rent control. In fact, most studies show that it increases rent. I'm not going to get into fully into this, but there's been many studies that show that rent control decreases the supply of rental properties, which means there's less rental units out there and more people are competing for fewer rental units. And although it can decrease or hold rent steady in the short run, long term, and there have been many, many studies of this, it shows that it pushes up rents. So for me, rent control not only impacts you as a business owner and the flexibility that I think you should be able to have to have pricing on your units, but it doesn't even help the people who help. Like, why is there rent control? It's a whole other topic. It's obviously just politically expedient for people. Like, they like the idea of it, but it's easy to sell the idea of it, but it doesn't work.

[B]

Yeah, that's what it is.

[A]

And so I just don't like it. And I would be hesitant to invest in places with rent control.

[B]

Personally, people like it because politically it's a way to get you some votes quickly. Because what, what people hear is if I'm a renter, rent's going to be cheaper, so I'll vote for that. Right. They don't truly understand the impact of what it is that they're voting for. And don't get me wrong, I think rents should be affordable. I think landlords have a role to play in making sure that rents are affordable. I also think states, local government and the federal government have a role to play in making sure that rents are affordable. I just don't think rent control is the solution.

[A]

I agree that I am not advocating for maximizing rent in every scenario. In fact, I think we've talked about a lot of times, I think raising rents modestly is actually a good win win business strategy in many, many scenarios. The reason when we're talking about landlord friendliness, tenant friendliness, that I would be hesitant to invest in one of these markets is one, a lot of times what rent control incentivizes landlords to do is raise rents more than they need to when they have turnover. Because a lot of the laws are, are that you can't raise rents on an existing tenant, but if there's turnover, you can raise rents. And so what the, what the studies show is that landlords then go above market rate.

[B]

Yeah.

[A]

Because they know if that tenant is going to stay in that unit, they need to mitigate the risk of not being able to keep up with expenses. And so they have to go above market rate, which is just worse for the tenant. And so, like, this is a reason I don't want to be put in a position where I have to be thinking about that.

[B]

Yeah.

[A]

The other thing is like, rent control doesn't work. Anyone who's intellectually honest and looks into it can see that it does not work. And so investing in a place where politicians are doing that just to get votes doesn't bode well, in my opinion, for what the regulatory environment is going to be for real estate investors in general. And so those are the reasons why I would consider rent control pretty seriously in your analysis.

[B]

And as I was researching for this episode just about rent regulation and where these things are happening, what I found was that the National Apartment association was tracking around 172 rent control bills that was back in the spring of 2025 and 131 active bills in the fall of 2025. And so these are potential rent control bills that are being looked at now. Most of them aren't being passed, but that's a lot of volume of that tells me there's a lot of politicians that are lobby for some sort of rent control. You know, I've heard about rent control since I started investing in real estate, and I haven't seen a lot of markets where it actually gets passed. But this research shows me that there is a lot of markets that are strongly considering it, so much so that they're drafting bills even though they may not be getting passed.

[A]

Politicians are reacting to the reality that rents are unaffordable. And that's hard. But the solution is to build more supply. Like that is just the solution. Unfortunately, because of the way elections work in this country, where people are reelected every two to four years, and because it takes probably five to 10 years to effectively build more supply, politicians don't focus on that. They focus on rent control. But I digress. Anyway, this is something you should think about in your analysis. One other thing I never see on these lists, but I have encountered in at least two of the markets I invest is in rental licensing. Do you have that? No, this is Something that exists in Denver, it exists in Michigan in certain places, but in certain markets now you need to apply for a license to be a landlord. And the idea, at least in the two markets I invest where I've had to apply for licenses, it's basically they send an inspector out to make sure that the property is safe.

[B]

Safe for.

[A]

And they collect a fee. Obviously I'm also fine with them making it safe. But it is another thing that you should factor in because I've had fine experiences so far. But just like with an inspector, when or an appraiser, you kind of don't know what you're getting.

[B]

Yeah, that's so true.

[A]

Right?

[B]

That's so true.

[A]

And so I've heard from my property manager, like I had one done a couple months ago and they were like, man, you got lucky. I thought they were going to tell you to change all these things. But like the property is safe, don't get me wrong. But like sometimes you meet a persnickety person who all of a sudden you buy a rental property that you thought was turnkey and now you're investing 10 grand into renovating that property. So this is something that has become more popular in recent years. Just like, you know, in a lot of places, short term rentals, you now need a license or you have to pay a fee.

[B]

Well, I just want to make sure that we define some of these words for our listeners so they don't get confused. Could you give us a definition, maybe a facial expression of what persnickety is?

[A]

I feel like I just outed myself as like a 1880s old grandpa just saying persnickety. So I mean, I think this is something to consider when you're evaluating landlord friendliness because again, like everything, there is a spectrum. You know, in Denver, for example, I think it's like 200 bucks to get an inspection. You don't need an inspection every year, but you do pay an annual fee per unit. But it's cheap. It's like, I think it's like 30 bucks a unit. So like it's not onerous. But you know, in Baltimore, in D.C. in Philly, in New York, they have pretty strict rentals. So this is just something to keep in mind. Like in Seattle, it's, I'm just looking at it. It's 115 bucks per the first unit and then $20 per unit after that. So it's not going to break your bank. You should put it into your underwriting. For me, the risk is more when you need an inspection, you should factor the potential for needed upgrades into your stabilization budget. Like when you're going out and buying something, you need to understand that someone's going to come in and tell you that you have to do something. I have not had bad experiences personally, but I am betting in the comments we're going to hear someone say that they've had bad experiences in this because of those persnickety people out there. All right, so those are many of the variables on the regulatory side that you should be thinking about. Again, it's, you know, sort of the whole bucket of things that happen when you unfortunately have to deal with someone who's not paying rent or has violated their lease inside some way. We've also talked about rent control and rental licensing as well. But at least in my mind, the regulatory side is one part, the return side is a whole other thing. Because just like everything, regulation offers risk and challenges and operations that you need to navigate. But like, sometimes it's worth it if the returns are there, right? So I think we should talk about like, how to balance the opportunity for return versus some of the regulatory things that you're going to need to navigate. So let's get into that. But we do got to take one more quick break. We'll be right back. If my house had a resume, it would probably say great at structure and not much else. I'm the one paying the mortgage. My house mostly just stands there looking supportive when you're away. It doesn't actually have to sit empty though. You can list your space on Airbnb. And now Airbnb has something called the Co Host Network, which makes it a lot easier to do. A co host is a local, experienced host who can help manage all the details. So hosting stays stress free and manageable. So instead of your home just sitting there while you're away, it could actually help bring in a little extra income. Find a co [e-mail] host billion dollar investors don't typically park their cash in high yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now the same passive income strategy is available to investors of all sizes thanks to the Fundrise Income Fund, which is more than $600 million invested and a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. Visit fundrise.com pockets to invest. Invest in the Fundrise Income Fund in just minutes. The fund's total return in 2025 was 8%, and the average annual total return since inception is 7.8%. Past performance does not guarantee future results. Current distribution rate as of 12312025 carefully consider the investment material before investing, including objectives, risks, charges and expenses. This and other information can be found in the Income Funds [e-mail] Income this is a paid advertisement There's a point where basically every investor realizes traditional financing stops scaling with you. At first it works. You qualify with your income, your job, your tax returns. But as you grow, that model starts to break. Now it's not really about your personal income, it's about the income from your properties. That's where DSCR Lending comes in, and it's why a lot of investors end up working with lenders like Host Financial. Host Financial qualifies deals based on property income, not personal income, so you're not dealing with W2s or tax returns or DTI constraints. And with 80 to 85% LTV, you can stay more flexible as you scale. It's just a different framework, one that tends to align better with how investing actually works. If you're buying rentals, refinancing, or growing your portfolio, go to host financial.com that's h o s t financial.com and see what you qualify for. Okay, we're going to shift gears for

[C]

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[A]

welcome back to the Biggerpockets podcast. Henry and I are here talking about landlord regulations like like rent control or rental licensing, or how long it can take to evict a non paying tenant or someone who has broken their Lease. And we've gone through each of those, what they mean, some tips on how to navigate those things. But I think we should talk about how much this matters and how to think about one, if you're trying to pick a market to invest in, how you should be evaluating them, or two, if you invest in, regardless of where you invest, how you should be thinking about some of these regulations. Because to me, just like everything in real estate, there is risk and reward, right? And so you got away the risk and reward. For example, not being able to evict someone who's not paying their, their rent for six months, that's a risk. Is it worth it in a market with no appreciation and bad cash flow? I think you know the answer. If that's in a market that has really strong fundamentals, maybe it is worth it, right? So I, I don't know. At least that's how I think about it.

[B]

I mean, it all boils down to risk and reward. And so first of all, if you're trying to pick a market, landlord tenant friendliness is probably further down the list for me in terms of what I'm considering. I'm first looking at how much money I'm trying to make, when I'm trying to make it. Next, I'm looking at what strategy I want to do that's going to get me to those numbers. Third, I'm looking at what, what markets do those strategies work in? And then I'm going to start to narrow down that list of markets. If I have like 15 markets that I can do this strategy in, I'm going to start narrowing down those markets. Still not by landlord tenant friendliness yet. I'm going to be looking at affordability of the market. I'm going to be looking at is it a place I want to go visit? I'm going to be looking at, is it a place I have some sort of superpower in? Do I know people have I lived there. All of these things come first to me. And then once I get it down to a list of maybe three to five places that I want to invest, then I'll dig into the landlord tenant rules and then determine how much of an impact I think that may have on me being able to get to my financial goals. And if, if it's way riskier, in other words, if the risk is high, that I'm going to have more problems that are going to cause me not to hit my financial goals, then I'm not going to choose that market. But if it's more of an even Risk to reward ratio, I'd probably still consider that market. And so I think people give landlord friendliness and tenant friendliness way too much attention. I agree, yes, you should pay attention to it. But it is not on, not even on my top five list of things that I'm focused on when I'm evaluating a market.

[A]

Same.

[B]

And then landlords, us, this is for us. We always want to find an excuse for us not having to be good at the one thing we really need to be good at in order for us to be good landlords. And that is tenant selection. Every single landlord, whether you're managing your properties yourself or you're outsourcing it to third party, our job is to be very good at tenant selection. It doesn't matter if you're renting in D class neighborhoods or A class neighborhoods. Just because you got an A class property doesn't mean you're going to get an A class tenant. You can have an F class tenant in an A class property. Happens all the time. You have to be good at tenant selection. And a lot of landlords don't take the time to figure out how to get good at that. And we rely on all of these outside sources to be good at it for us. We want our property manager to be good at it for us. We want the, the laws and local regulations to save us when we're not good at it. And that's not what they're there for.

[A]

That's such a good point. Yes, you need to think about it

[B]

and account for it. Yes. In the markets where it is a much more tenant friendly state. Yes, you need to underwrite for it. You need to have the cash reserves for when situations go bad. You need to have the proper real estate attorney to help you navigate through any of these situations. All of those things are things you need to have to prepare yourself. Yes, absolutely. But the one thing that needs to happen in order to keep you out of those situations is on you be better at selecting tenants.

[A]

No notes. First and foremost, this is something that happens sometimes. Unfortunately, I'll be honest, I've never evicted someone. I've threatened to evict people. I've had to file to evict people. But I've been fortunate in being able to do that because I've gotten good at tenant selection. Now I'm sure that will change at some point. You know, there's an inevitability to this thing if you're in this long enough stuff. But I will just say that you have a good deal of control over this what quote unquote a good tenant is, is also subjective. You need to get good at finding someone and putting them in a situation where they can succeed as a tenant, where they are going to pay. That means not demanding the highest amount of rent and finding someone who is stretching to get into that unit so you can make an extra 15 bucks a month. Right? Like that is not a good idea. Like if you are in a market, if you are buying A class properties in New York City and you're worried about tenant laws, you're crazy. Like you don't need to worry about that. You're renting it to someone who probably has a very high paying job and can pay the rent five times over. Like that is not a challenge. That is not something you should be thinking about. If you're buying C class property in a very unaffordable market where people are stretching themselves to get into your unit, then you should take it a little bit more seriously. Right? That's where you should be underwriting these things. But as Henry said, it's like pretty low on my list. I think much, much, much more about the things I know I'm going to encounter. What are the rents, what are the taxes, what are the insurance? That stuff that happens every year, Every month. Every month, Right. Like that. Something you're just always dealing with. Think about that. Think about your team. They're going to help you navigate these things way more than the law. Right. Like you should be thinking about, do I have a great property manager? Henry mentioned a lawyer. Like if you have great people who are helping you screen tenants and figuring these things out, you can rely less on the regulation. If you are just throwing people into units, which I hope you're not, then you probably should be worried about this stuff.

[B]

Stuff.

[A]

I'm not saying they don't matter. It does. But I think Henry's right. Is it top five variables I think about? No. Maybe makes the top 10, but I'm not even sure it does. But that said, I think what we're trying to get across here is like it is about you and your business model. Like I was just saying, like if you're buying certain class of property, it's probably not that important. But as you are formulating your strategy, whether you're picking a market or you're figuring out what types of deals to buy in your market, do some research. You should know what's going on in your market. You should have this information when you're making these decisions. But treat it as a variable like you treat other variables in your underwriting and deal analysis. At least for me, none of these are true deal breakers. Rent controls like the closest for me. But if the numbers worked and I really liked other stuff, I would even consider that. But it really just comes down to being able to to see the big picture, right? Take these variables into account with everything else and formulating your strategy accordingly.

[B]

And everyone here's just a piece of advice I think everyone should follow in any market, but especially if you're in a very tenant friendly state, Go join your local landlord association. There's typically a statewide landlord association that has branches in certain pockets, whether in cities or counties that have smaller branches. So find your local landlord association. Join the local landlord association. Dues are typically pretty inexpensive, but that will surround you with other landlords. Real estate's been around forever, guys. There are people who've owned property for decades and decades and decades and anything that's going to happen to you or your business as a landlord has happened to somebody else before. So if you're part of these landlord associations and you find yourself in a sticky situation now, you've got a group of people who have probably dealt with the situation ten times over before and they can help you navigate the situation. They can also help you prevent certain situations. But it's just a good way to have better resources on your side. And I don't think enough landlords are part of their local landlord association, but that's just easy, easy low hanging fruit for you to be able to navigate some of these situations.

[A]

All right, well, that's what we got for you guys today. Hopefully this was helpful for you all as you think about where to invest, what type of deals to do. This is a popular topic. People really like talking about it and it is an important variable. But hopefully, as you see, it's one thing to consider among many as you're evaluating deals and figuring out your portfolio strategy. Henry, it was great seeing you, man.

[B]

You too, bud.

[A]

Good talk and thank you all so much for watching this episode of the Bigger Pockets Podcast. We'll see you next time. Thank you all for listening to the BiggerPockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform.

[C]

Platform.

[A]

Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico, content and editing is by Exodus Media. If you'd like to learn more about real estate investing, or to sign up for our free newsletter, please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. Investing you should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Biggerpockets, LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.