What States Have the Highest Return on Investment?

Return on investment (ROI) is a financial metric used to evaluate the efficiency or profitability of an investment. It helps individuals and businesses understand the performance of their financial commitments. This metric is a fundamental tool for comparing different investment opportunities, providing a standardized measure of potential gains. The concept of ROI is relevant across various financial decisions, guiding choices about where to allocate resources.

Measuring Return on Investment in Different Contexts

Understanding return on investment requires defining the specific metrics used across various investment types. For real estate, ROI often considers property value appreciation and rental yield. Property value appreciation measures the increase in a property’s market value over time, while rental yield reflects the income generated from rental properties as a percentage of their cost.

For broader business and economic investments, ROI is assessed using a different set of indicators. These include gross domestic product (GDP) growth, which measures the overall economic output of a state. Job growth rates indicate employment expansion, signaling a robust labor market and economic activity.

The rate of new business formation points to entrepreneurial vitality and a favorable environment for startups. Overall economic stability, reflected in consistent growth and low unemployment, contributes to a positive business investment climate. Venture capital investment levels also serve as an indicator of a state’s attractiveness for innovative and growth-oriented businesses.

States with High Real Estate Investment Return

Real estate investment returns are significantly influenced by location-specific dynamics, including population shifts and local economic strength. States experiencing substantial population growth often see increased housing demand, which can drive property value appreciation. A strong job market contributes to this demand, as more people move to an area for employment opportunities.

Over the five-year period from 2019 to 2024, U.S. home values collectively rose by approximately 55%, indicating an average annual appreciation of 8-9%. Certain regions, particularly Western and Sun Belt states, experienced even faster appreciation, with some exceeding 10% annually. States like Arizona, Florida, Georgia, Tennessee, and North Carolina demonstrated strong cumulative gains during this period.

More recent data from late 2024 to early 2025 indicates continued appreciation in various states. Connecticut and Rhode Island led the nation with an 8.4% gain each in house prices between the first quarter of 2024 and the first quarter of 2025. New Jersey followed closely with a 7.8% gain, while Vermont and Wyoming also showed strong year-over-year increases. These states, particularly those in the Northeast, often benefit from limited housing supply and higher incomes capable of supporting increased home costs.

Beyond appreciation, rental yields are another component of real estate ROI, representing the annual income from rent relative to the property’s cost. Many investors target a rental ROI ranging from 8% to 12%. This return can be influenced by factors such as property purchase price, ongoing maintenance costs, property taxes, and insurance.

States with High Business and Economic Investment Return

States demonstrating high business and economic investment returns often exhibit robust overall economic growth, strong job creation, and a supportive environment for commerce. These conditions attract new ventures and foster the expansion of existing businesses.

In terms of GDP growth, Idaho experienced the most significant five-year growth from Q1 2019 to Q1 2024, with its real GDP expanding by 23.3%. Florida followed with a 22.8% real GDP growth over the same period, and Arizona also posted strong figures. More recently, in the first quarter of 2025, South Carolina led the nation in real GDP growth at 1.7%, driven by gains in real estate and rental and leasing. Florida, Alabama, Arkansas, and North Carolina also showed positive GDP growth during this period.

Job growth rates further highlight states with thriving economies. Utah has consistently shown strong job growth, adding a significant number of new jobs across various industries. States such as Alaska, Minnesota, Wyoming, New Hampshire, and Georgia also demonstrated strong job prospects in 2024, often creating higher-paying jobs in sectors like advanced manufacturing and finance. Nevada, Texas, and Florida also recorded high levels of job growth in the 2022-2023 period.

New business formation is another indicator of a healthy economic climate, reflecting entrepreneurial activity and potential for future growth. Wyoming notably ranked highly in entrepreneurship, with a high number of business applications per capita and strong startup survival rates. Florida, California, and Texas consistently lead in the total number of new business applications filed monthly. States like Montana, Utah, and Delaware also show strong entrepreneurial strength based on factors such as job creation by startups and high first-year survival rates.

Venture capital investment levels signify a state’s attractiveness for innovative and high-growth companies. California consistently leads the nation in total venture capital investment, attracting billions of dollars annually, largely due to its concentration of tech and AI startups. New York, Massachusetts, and Texas also rank among the top states for venture capital funding. Over the past decade, Wyoming, Idaho, and Alaska have shown the most rapid growth in venture capital funding, indicating emerging entrepreneurial ecosystems.

Overall business climate rankings also point to states with environments conducive to investment. Texas frequently ranks highly due to its robust infrastructure, strong economy, and a relatively competitive cost of doing business. Florida, Georgia, North Carolina, and Virginia are also consistently recognized for their favorable business environments, often characterized by lower tax burdens and supportive regulatory frameworks.