which market Dallas, Vegas, Phoenix ?

[Amir Rahmani]

Hey guys I have been lagging for the last year to do action until today I finally picked up the phone and started calling and I think I'm ready to devote as much as I can and do the flip 

so due to my capital limitation I can't do in LA the city I reside so I'm thinking about Vegas, Dallas or Phoenix.... I wanna pick either Vegas or Phoenix cuz it's closer and I can just drive there instead of Dallas since flying back forth can cost money 

but it seems the market in Vegas isn't that good right now 

what do you guys think ? any idea ? 

[Eric Fernwood]

Hello @Amir Rahmani,

I would compare all three cities based on the following criteria.

• Operating costs - Every dollar lost to operating costs is a dollar less for you to live on.
• Population growth - Never invest in a location where the population of the state or city is static or declining.
• Urban sprawl - Urban sprawl creates a situation where the growth of rent and property prices of existing properties is limited by the constant construction of new properties.

Comparing these three criteria will provide a reasonable comparison of the three cities for long-term real estate investment.

Operating Costs

Operating costs are a direct impact on profitability. Choose a location with low operating costs to minimize overhead expenses and maximize profits. The three most apparent costs are income taxes, property taxes, and insurance. Below is a comparison of state averages.

Note: In Arizona, I believe that there is no income tax if you own three or fewer rental properties. However, I included income tax in the comparison because the tax is minimal.

Sources:

• State average insurance cost
• Average property tax
• State average income taxes

To put this in perspective, below are the estimated annual operating costs for a $400,000 property in all three states.

Conclusion: If you purchase in Texas, you will incur far more overhead and have a lower return than if you purchase in Arizona or Nevada.

Population Growth

Population growth tells you a lot about a location. If a significant number of people are moving into the location, everything is going reasonably well. If the population growth is static or negative, there are serious problems in a location should be avoided. How are these three cities performing? Below is the population change between 2020 and 2022.

• Phoenix: +2.26%
• Dallas: −0.37%
• Las Vegas: +2.24%

Conclusion: The fact that Dallas is losing population would be a major concern for me. Prices and rents are driven by supply and demand, and where the population is falling, so is demand. Dallas does not seem like a good long-term investment location.

Urban sprawl

Urban sprawl is the unrestricted expansion of a city. Where there is unrestricted room for expansion, prices, and rents of existing homes rise slowly. If rents do not keep pace with inflation, your buying power will continue to increase and sooner or later you will be back on the daily with your treadmill. Below are links to time-lapse aerial views of the three cities

• Phoenix - Unlimited room for expansion so rents of existing properties will rise slowly.
• Dallas - Unlimited room for expansion so rents of existing properties will rise slowly.
• Las Vegas - Limited room for expansion. Las Vegas is a small island of private property in an ocean of federal land. Rents and prices of existing properties will rapidly due to limited supply.

Conclusion: Based on the potential for urban sprawl, I believe that rent and price growth for existing properties will not keep pace with inflation in Dallas and Phoenix. However, due to the shortage of land and rising population in Las Vegas, rents should keep pace with inflation.

Amir, I hope this is a good start for you.