For real estate investors, securing long-term tenants can feel like hitting the jackpot. Not only does it reduce turnover and marketing costs, but it also cuts down on repair expenses. But here’s the million-dollar question: how do landlords find these elusive long-term renters? The key is understanding which states create environments that encourage residents to stick around. Recent data has revealed states with impressive tenant retention rates, making them prime candidates for investment.
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Understanding Tenant Retention Rates
As we navigate the ever-evolving real estate landscape, it’s crucial for investors to grasp the importance of tenant retention. The numbers speak clearly: IRS data from 2020-2021, alongside insights from a 2023 National Movers Study, highlights that some states possess qualities that make them particularly attractive for residents. Factors like pleasant weather, affordable housing, and robust economic growth contribute to what’s being called “sticky states.” Looking ahead to 2025, as rent growth slows in urban centers and borrowing costs rise, pinpointing these states will be essential for staying profitable in real estate investments.
Top Sticky States for Tenants
Take Texas, for instance. This state shines with an impressive 82% of native-born residents choosing to stay, according to the Federal Reserve Bank of Dallas. Texas’s economic vibrancy, coupled with its tax benefits, makes it a magnet for both locals and newcomers—especially those relocating from states like California and New York. The job market here is diverse, spanning sectors from energy to technology and logistics, which keeps rental demand high. Areas like Dallas are particularly attractive, showing a consistent appetite for rentals.
Further supporting this trend, the Federal Reserve’s findings emphasize Texas’s economic resilience. Residents are drawn to the familiarity of their communities, while the state’s cultural richness and affordability play a significant role in tenant retention.
North Carolina’s Raleigh area is also making waves, emerging as a hotspot for families on the move. Local demand is on the rise, driven by increasing rents and a tight housing inventory. The Research Triangle, home to several universities, has become a strong employment hub, making long-term investments in the suburbs of Charlotte and Raleigh exceptionally promising.
Emerging Markets with Strong Retention
Georgia is another state worth noting, boasting a tenant stickiness rating of 74.2%. While Atlanta is the economic powerhouse, cities like Savannah and Macon are gaining momentum, thanks to their affordability and quality of life. Major institutional investments are pouring into Georgia, with firms like J.P. Morgan Asset Management recognizing the potential for building rental communities across the Southeast. This kind of confidence from significant financial players suggests a bright future for Georgia’s rental market.
Despite recent dips in the Atlanta housing market—where investors have been snapping up 65% fewer homes than at its peak—the city’s fundamentals remain strong. Yes, high interest rates and falling rents might deter some, but for savvy investors, this could mean opportunities to snag properties at a discount.
California and Utah: Unique Cases
Now, let’s talk about California, which, despite the narrative of mass migration, retains a surprising tenant retention rate of 73%. The hefty costs associated with moving, particularly from rent-controlled cities like San Francisco and Los Angeles, make staying put a financially wise choice for many residents. Plus, California’s position as the largest economy in the U.S. continues to drive housing demand, making it an enticing investment even with higher entry costs.
Then there’s Utah, boasting a retention rate of 72.9%. Known for its robust job markets in tech, finance, and healthcare, cities like Salt Lake City and Provo are experiencing rapid growth. With an anticipated job growth rate of 4.5% in 2025 and a projected population increase of 1.9%, Utah is shaping up to be a compelling option for real estate investments.
However, a word of caution for potential investors: not all cities within a state will showcase the same retention rates. It’s vital to conduct thorough due diligence, identifying markets with stable economic foundations and consistent job growth. This approach is crucial for securing those long-term tenants that every landlord dreams of.
