What hard money actually costs in 2026 — rates by deal type, what points really do to your numbers, and a full project costed line by line. Written by a brokerage that places these deals, not a lender selling one product.
Far more than the mortgage payment, and the gap is wider than most investors budget for. On a $400,000 rental, the difference between the cheapest and most expensive state on this page is over $16,000 a year in property tax alone — before insurance, before maintenance, before a single vacancy.
Most rental analysis stops at principal, interest, taxes and insurance, with taxes estimated at "about one percent" and insurance treated as a rounding error. In four of the twelve states below that assumption is roughly right. In the other eight it is wrong by the whole margin — enough to turn a deal that pencils into one that bleeds.
The pattern that matters: every state has one line item that behaves nothing like the national average, and it is a different line in each state. Florida's is insurance. Texas's is property tax. Massachusetts's is neither — it is legal exposure that never appears in a cap rate at all. Before you buy in a state you have not bought in before, find out which line is the outlier there, then get a real number for it.
The table below runs one hypothetical property — a $400,000 single-family rental, three bedrooms, reasonable condition, rented at market — through twelve states, and names the single line item that decides deals in each.
This is a structural comparison, not a shopping list. A $400,000 house is a modest property in Boston and an expensive one in Cleveland. The point is to show how differently the same money behaves depending on which side of a state line it sits.
| State | The line that decides the deal | What it costs on a $400,000 property |
|---|---|---|
| Florida | Insurance | Around $7,136 a year for $300,000 of coverage, against a national average near $2,543 |
| Texas | Property tax | About 1.40% effective statewide, or $5,600 a year. Harris County runs 2.1% to 2.4%, or $8,400 to $9,600 |
| Georgia | Assessment ratio | Taxed on 40% of fair market value, not 100%. The quoted millage rate means something different here than elsewhere |
| Ohio | The gross-to-net gap | Franklin County runs about 1.67%, or $6,680. Ohio taxes 35% of true value, and House Bill 920 caps revenue rather than assessments |
| Maryland | Licensing before income | Baltimore City about 1.72%, or $6,880 — plus lead registration and a rental licence that gate the tenancy, and therefore the rent |
| Michigan | Loss of the Principal Residence Exemption | Up to 18 mills of school operating millage added the day the house stops being owner-occupied. Michigan taxes taxable value, not market value |
| Pennsylvania | The Common Level Ratio | No statewide reassessment. Allegheny County's base year is 2012, bridged by a ratio published annually that governs appeals |
| Massachusetts | Legal exposure, not arithmetic | Pre-1978 property rented to a family with a young child triggers mandatory deleading under strict liability. Security deposit rules carry treble damages for three specific violations |
| Connecticut | The town line | Assessed at 70% of value, then taxed at the town's mill rate. Hartford at 69.95 mills is $19,586 a year. Greenwich at 10.125 mills is $2,835. Same house |
| Virginia | Internal spread | Assessed at 100% of fair market value. Richmond City at $1.20 per $100 against Henrico at $0.85 is $1,500 to $2,500 a year on comparable property |
| Colorado | Hail insurance, and a split assessment rate | Statewide premiums rose 57.9% between 2018 and 2023. Hail, not wildfire, is the primary driver. There is no single assessment rate to quote |
| Washington | The statutory rent cap — if it applies | Capped at 9.683% for 2026 and 10% for 2027. Single-family homes are exempt, as are buildings certified within the last twelve years |
Figures are central estimates drawn from state agency sources and industry reporting, current as of September 2026. They are a starting point for underwriting, not a quote for your property.
Texas, Connecticut, Ohio, Maryland and Michigan — but for four different reasons, and only one of them is the headline rate.
Texas charges you for the missing income tax every month. At roughly 1.40% effective statewide that is $467 a month on a $400,000 house before anything else. The state assesses at 100% of market value, and the protest process is a real lever rather than a formality: you can argue value and unequal appraisal together, and the deadline is 15 May.
Connecticut cannot be answered with a state-level number at all. The same house assessed at 70% of value is taxed at whatever the town's mill rate happens to be, and the spread from Hartford to Greenwich is $16,751 a year. County-level guidance is worse than useless — Connecticut abolished county government in 1960, and Fairfield County contains both Bridgeport at 27.95 mills and Greenwich at 10.125. Rates also lag the grand list by two years, so a falling mill rate can follow a revaluation that raised your assessment.
Michigan is misunderstood in both directions. The exemption a rental loses is the Principal Residence Exemption, which is a different thing from the Homestead Property Tax Credit, and it is worth precisely up to 18 mills of local school operating millage. Michigan also taxes taxable value rather than market value or state equalized value, which breaks most out-of-state underwriting.
Ohio is gentler than its rates look. House Bill 920 caps revenue rather than assessments, so a 32% jump in county valuations does not produce a 32% jump in bills. House Bill 126 ended school district counter-appeals against recently sold homes, which makes Ohio friendlier to buyers than most summaries suggest.
Florida, Texas and Colorado, and in Florida the insurance line is larger than the entire annual property tax bill in several other states on this list.
Florida runs near $7,136 a year for $300,000 of coverage against a national average around $2,543. Florida also has a non-homestead assessment cap of 10% a year, which resets on purchase and is lost if a renovation raises just value by 25% or more. The recapture rule means assessed value can keep climbing even when market value falls — which bites in markets that have softened.
Texas runs above $3,500 statewide before any flood policy, and Houston adds $1,500 to $4,000 for flood coverage in a FEMA zone.
Colorado is widely described as a wildfire market. The state's own regulator says hail is the number one driver of premiums. Wildfire is an availability problem rather than a price problem — it gets homes dropped entirely rather than merely made expensive.
One thing worth knowing before you underwrite anywhere. Property tax is the only major carrying cost that a buyer can influence after closing. Every state on this page has an appeal process, and the deadlines are short — Florida gives 25 days from the TRIM notice, Georgia 45 days, Texas until 15 May. Missing the window costs a full year.
Massachusetts and Maryland, where the risk is not that the numbers are high but that the property cannot legally earn a dollar until the paperwork clears.
Maryland gates the tenancy behind lead registration and, in Baltimore City, a rental licence. That means it gates the income. The inspection resets with every new tenant, and a new owner has 90 days from taking title, not from notice.
Massachusetts carries two separate exposures. The Lead Law imposes strict liability where a pre-1978 property is rented to a family with a child under six, with mandatory removal or covering by a licensed deleader. Interim control is the practical middle path — a Letter of Interim Control shields from strict liability for one year, renewable once, two years maximum.
On security deposits, the common statement of the rule is broader than the law. It is often said that any procedural violation triggers automatic treble damages. The Supreme Judicial Court held otherwise in Phillips v. Equity Residential Management, 478 Mass. 251 (2017): treble damages apply only to the violations the statute specifically names. There are three — failing to hold the deposit in a separate Massachusetts interest-bearing account, failing to return it within thirty days of the tenancy ending, and failing to transfer it to the buyer when you sell. That third one catches investors at closing.
They come from The Landlord's Cost Map, a book that runs the same $400,000 property through all twelve states, chapter by chapter, with every tax mechanism traced to the state agency or statute that governs it.
The Landlord's Cost Map: What a Rental Really Costs to Hold in Twelve States. Twelve state chapters, each leading with the one factor that decides deals there and ending with a checklist. Plus the mechanics most analysis skips — the three loan ceilings and which one actually binds, what belongs in a carrying cost, why gross yield lies, and where the seventy percent rule breaks. Three worked deals, start to finish. Roughly 30,000 words, 131 pages, every figure sourced and dated.
Paperback — $24.99 · Kindle — $9.99
Published by Dominion Publishing.
The fifty percent rule is a starting point, not an answer, and it fails hardest in exactly the states where the money is. In Florida the insurance line alone can consume a quarter of gross rent. In Hartford the tax line can exceed it. Build the number from actual line items for the specific state rather than applying a national ratio.
Usually one of three mechanisms. In Michigan the property lost its Principal Residence Exemption when it stopped being owner-occupied, adding up to 18 mills. In Florida the non-homestead assessment cap reset on purchase, so you are taxed on current value rather than the seller's capped basis. In Pennsylvania, a sale can trigger a school district appeal that resets the assessment.
It depends entirely on which rule you are asking about, and the definitions genuinely conflict. For housing finance purposes, single-family often means one to four units. Federal law passed in 2026 restricting large institutional investors defines a single-family home as a structure with two or fewer dwelling units, which means a duplex is included. Always check which definition a given rule uses before relying on it.
There is no single answer, which is the honest version of a question that gets answered dishonestly a lot. Ohio and Georgia tend to offer the widest gap between gross yield and purchase price. Massachusetts and Maryland carry the heaviest compliance burden. Texas and Connecticut carry the heaviest tax. The right question is not which state is best but which line item in a given state you are equipped to manage.
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