Las Vegas market question

28 Replies

From the few people I have spoken with from Las Vegas have generally said that the market is good for buy and hold and not so much for flipping right now.  Is this true from others experiences.  I am new to Real Estate and am trying to learn as much as I can right now.

How are others finding deals in Vegas for SFRs and multifamilys?  Any help would be great.

Hi Sutton,

what kind of cap rate would you expect for buy and hold in Las Vegas, and would you be looking at single or multi family?

Prices have gone up a lot in Las Vegas in the past 6 to 12 months and the cap rate you can expect on single families are less than they used to be...

Jean

Vegas prices have been going up year after year since the end of 2011. 

2012-2013 we saw huge appreciation around 30% annually.

2014 and 2015 we have seen a slow down in appreciate although we are still appreciating just not at the scary rate of 30%.

Rental rates have not changed very much over those years so with the cost of purchasing being so much higher and rental rates not changing much the CAP rates of 12% etc are VERY hard to find now. If you are ok with 6-8% you can still find that.

Flipping is not bad or impossible it is just hard to find deals that have enough meat on the bone to still turn a profit after covering all expenses. In most cases if you are looking to flip you will want to find off market deals. The MLS properties tend to sell for just under appraisal value leaving you very little room to turn a profit after the closing costs, commissions, and rehab costs.

I hope this is helpful.

I'm also looking at the Las Vegas market and I'm a bit confused when it comes to the expenses, especially when considering HOA fees.

From speaking with an agent out there, he says that his personal investments have around $400-500 cash flow per month. I think that this only accounts for HOA fees & 100% cash paid at purchase.

Would you consider other expenses, like repairs/maintenance, capital expenditures, etc. (like in the rental property analysis tool) when looking at a Vegas property?

@George Chang

The HOA cost really depends on where you buy. There are communities where you'll pay $250/month, and condos can also be in that range, and that really kills your cash flow. However there are other communities where you will pay $30/month or $50/month and that is much more bearable.

My homes in Las Vegas are newer (ie less than 15 years old) and then I have very little maintenance. Just a water heater every 10 years, garage door springs, and the insikerator that breaks...

Jean

@George if I were you I would account for all expenses and repairs and vacancies. An investor/agent that doesn't account for those things is not giving you an accurate CAP rate or ROI. Many times this is done because they want the deal to sound better than it is so that you will buy asap. Once you buy it and you realize the returns are not yeilding what you expected you get upset and never want to use the agent again. I don't do business like that. I would rather over estimate expenses etc so that you know what you are walking into and if you spend less that year than projected you are happily surprised.

@Sutton Zolner @George Chang

Some very interesting discussions have come up in this thread. There are a few points that I will comment on:

• Las Vegas returns
• Maintenance and rehab costs
HOA fees

Las Vegas Returns

I see a lot of people talking about rate of return but not taking into account all the cost factors for each location. For example, property taxes in Dallas Fort Worth are about 2.5%. In Las Vegas typical property taxes are .86%. There are no state income tax in Nevada or Texas, but in California you could pay 9% or more state income tax. The formula we use for comparing returns is:

ROI = ((Rent - Debt Service - Management Fee - Insurance - Real Estate Tax - Periodic Fees) x (1 - State Income Tax))/(Down Payment + Closing Costs + Estimated Rehab Cost)

As an example, suppose you found the identical property (not realistic, I know) in Austin, Indianapolis and Las Vegas. And, assume that you get the same rent for each and had no rehab costs. Below is a summary of the property specifics:

• Purchase price $150,000
• Rent: $1,000/Mo. or $12,000/Yr.
• Financing: 20% down, 4.5% interest, 30 year term. Resulting debt service is $608/Mo. or $7,296/Yr.
• Down Amount: $30,000
• Periodic fees: $0 (for simplicity)
• Management fee: 8% or $12,000/Yr. x 8% = $960/Yr.
• Rehab cost: $0 (for simplicity)
• Closing cost: 0% (for simplicity)

Below are three cities with tax rates and landlord insurance costs:

Note:
State income tax source
Insurance rate source. Note that this site contains national average homeowners insurance rates. I could not find a similar site for landlord insurance. Landlord insurance is typically 10% to 20% more expensive than homeowners insurance. The $710 rate shown here for Las Vegas is higher than what our clients pay, but I will keep it here just for comparison reason.
Property tax source

Calculating ROI for each of the three cities:

Austin: ROI = (($12,000 - $7,296 - $960 - $1,625 - 1.9% x $150,000 - $0) x (1 - 0%))/($30,000 + $0 + $0) = -2.4%

Indianapolis: ROI = (($12,000 - $7,296 - $960 - $802 - 1.07% x $150,000 - $0) x (1 - 3.4%))/($30,000 + $0 + $0) = 4.3%

Las Vegas: ROI = ($12,000 - $7,296 - $960 - $710 - 1.07% x $150,000 - $0)/($30,000 + $0 + $0) x (1 - 0%) = 5.8%

The point of the above is that differences in state income tax, property taxes and landlord insurance can have a huge impact on return. 

Another huge difference are the applicable laws and regulations concerning rental real estate. For example, clients tell me that in California if a tenant knows how to play the legal system it can take up to one year to evict them. In some eastern states you can not evict tenants during the winter, period. In Las Vegas, typical evictions take less than 30 days and cost about $500 if you use a full service agency. While I know of no way to include eviction cost risk in an equation, the cost of eviction will become all too real if it happens to your property.

Remember, all calculations such as ROI or cash flow are really only snapshots of the market at one moment in time. Typical hold times for real estate is 7 plus years so what is happening in the foreseeable future can have a huge impact. Some examples:

• Population - If people are moving out of an area, housing prices and rental rates are likely to fall. If people are moving into an area, then property prices and rents are likely to rise. Also, don’t forget about urban sprawl. You could have a stable metro population while a location within the metro area has a falling population.

• Job Quantity and Quality - For example, in many parts of the US manufacturing and similar jobs are going away and what remains are service sector jobs. Service sector jobs tend to pay less than manufacturing jobs so the families of these workers have less disposable income. Less disposable income means that they cannot afford to pay the level of rent they did in the past.

There are other factors I could mention but these are two of the largest factors to consider. Las Vegas is landlocked by federal land and has limited expansion space so urban sprawl is not a significant issue. In other cities it is an ever present factor to consider.

Las Vegas is projected to have about 1.5% annual population growth for the foreseeable future

Maintenance and Rehab Costs

Due to the climate, the predominate construction in Las Vegas consists of:

• Stucco exterior
• Desert landscaping (rocks)
• Metal windows and doors
• Concrete block fences
• Tile roofs
• Concrete slab foundations

The result is a low cost of ownership. Typically our clients budget $1,000/Yr in maintenance but average closer to $600/Yr.

On rehab costs, it is impossible to give a “fits all” guess. Typically, we are seeing between $4,000 to $5,000 rehab on $200,000 properties here in Las Vegas. These properties average about 1,800 SqFt so you could say that the cost/SqFT for rehab is $4,500/1,800SqFt = $2.5/SqFt. In a recent article on buying properties in Detroit, the estimate was between $75/SqFt to $100/SqFt “and that’s just for bare-bones repairs, and it doesn’t include anything structural like a roof or foundation.” (What It’s Actually Like To Buy A $500 House In Detroit

HOA Fees

Most class A properties in Las Vegas are in an association. While association fees vary all over the place depending on the area and amenities (guard gated, community pools, etc.), most of the properties our clients buy are in the $25/Mo. to $45/Mo. range. While you will get some benefits from the HOA, we view the HOA fees as asset value preservation fees. One bad house in a subdivision can hurt property prices and rental rates. For example, I was looking at a house a couple of weeks ago in a subdivision with no HOA and saw that the residents at one property were essentially operating an auto repair service out of their garage. Cars (some obviously derelict) were parked all around the area. Is this always the case with subdivisions without HOA's? No. We developed analytics for estimating how likely such a subdivision is to remain as it is. We have no problems with stable subdivisions without HOA fees but subdivision stability has to be considered.

I hope I addressed some of the concerns expressed in this thread.

Thanks for the detailed analysis @Eric Fernwood

I am very familiar with the Indianapolis and Dallas-Fort Worth markets. Lived for 13 years in Indy, and moved January 2014 to Dallas to start a new real estate business here.

One thing I'm curious about Las Vegas, is what the rental rates are with corresponding home prices.

For instance, in DFW, you can get rental rates of $1000 per month with an investment of about 80-110k (no HOA fees). I've even found properties for less than that that rented for $1050.

How much would a home cost in Las Vegas, that rents for $1000?

Hello @Anderson Schulle ,

Based on what I know about the cost of single family homes in DFW you are looking at class C properties. With class C properties in Las Vegas you can buy a property for between $100,000 to $120,000 and generate $1,000 to $1,100/Mo. in rent. So, on the surface, I think Las Vegas is about 10% more expensive than DFW when considering class C. I will compare your property to an equivalent property in Las Vegas later but first I want to emphasize that there are other factors to consider.

All typical return measurements (ROI and Cash Flow for example) are only snapshots in time; how the property is likely to perform today. Hold times for investment real estate is typically 7+ years so what is likely to happen in the local area in the foreseeable future is very important. Many factors can alter a property's market value and rental rate over a 7+ year period. Two such factors are local job quality/quantity and urban sprawl. I can not comment on local job quality/quantity since I do not have your local market knowledge. I can say that if the per capita household income (adjusted for actual inflation) is decreasing in a location, over time property values and rents will tend to decrease.

In an unbounded metro area like DFW urban sprawl is likely to be a major factor. Over time, urban sprawl can turn a once good investment into a money pit. In every major city I’ve seen there are areas which were once good areas and, due to urban sprawl, have become distressed areas, which is where most class C properties are located. Some major sources of urban sprawl include: rising crime, changing employer/job locations, people wanting newer floor plans, newer homes, larger lots, etc. If people have the income, they will tend to move to areas where they can buy properties that better match their desires. And, as people with higher incomes move out of an area, those left behind will likely have lower incomes (less real purchasing power) so over time property prices will tend to fall as will rents. Know that urban sprawl is a localized factor. A metro area’s population may be stable or increasing while areas within the metro area can be decreasing. In fact, properties with the highest returns are most likely to be in declining areas since rents lag population migration and actual buying power. Over a 10 year period this can be a serious problem for investors who own properties in such areas. This is where your local knowledge is critical to investors.

Las Vegas is one of the few cities in the US which has virtually no urban sprawl because it is totally land locked by federal land (which is unlikely to come into private hands). In fact, only about 11% of the entire state of Nevada is in private hands. See the Las Vegas metro map below and you can see how little residential land is available for development.

If I look at real return, the property you mentioned vs. an equivalent property in Las Vegas, the returns are quite different. Below are some of the major costs for DFW and Las Vegas which I will use to compare returns.

Data sources:

• Landlord insurance for DFW: https://goo.gl/LhiJMt
• Property taxes: Fort Worth is located in four counties: Tarrant, Denton, Parker and Wise. According to the Tax Foundation the three year average property tax for Tarrent is 1.88%, Denton is 2.07%, Parker is 1.88% and Wise is 1.88% so I used 1.88% in my estimate.
• Actual property taxes in Las Vegas range from 0.72% to 0.86% depending on the local tax district so I used 0.86% in my calculations.
• Actual landlord insurance in Las Vegas for a $110,000 property is approximately $500/Yr.

Using the following formula I will compare returns:

ROI = ((Rent - Debt Service - Management Fee - Insurance - Real Estate Tax - Periodic Fees) x (1 - State Income Tax))/(Down Payment + Closing Costs + Estimated Rehab Cost)

For the property you mentioned:

• Purchase price: $100,000
• Monthly rent: $1,000/Mo.
• I will assume zero rehab, zero closing costs for simplicity.
• Debt service: assuming 4%, 20% down and 30 year fixed, the debt service on a $100,000 property would be approximately $382/Mo.
• Management fee: 8%
• I assumed 100% occupancy for simplicity.
• Neither Texas nor Nevada have state income taxes so I used zero for both.

ROI = ((1000 x 12 - 382 x 12 - 1000 x 12 x .08 - 1580 - 100000 x 0.0188 - 0) x (1 - 0%))/(100000 x .20 + 0 + 0)

ROI = 15%

For the Las Vegas property:

• Purchase price: $110,000
• Monthly rent: $1,000/Mo.
• Landlord insurance: $500/Yr.
• Debt service: assuming 4%, 20% down and 30 year fixed, the debt service on a $110,000 property would be approximately $421/Mo.
• C class properties in Las Vegas rarely have any HOA fees so I assumed zero.
• I will assume zero rehab, zero closing costs for simplicity.
• Management fee: 8%
• I assumed 100% occupancy for simplicity.
• Neither Texas nor Nevada have state income taxes so I used zero for both.

ROI = ((1000 x 12 - 421 x 12 - 1000 x 12 x .08 - 500 - 110000 x 0.0086 - 0) x (1 - 0))/(110000 x .20 + 0 + 0)

ROI = 21%

So, if you look at real return, a 10% more expensive property in Las Vegas actually generates a 40% higher real return.

If I look at cash flow using the following formula, the differences become more pronounced.

Cash Flow = (Rent - Debt Service - Management Fee - Insurance - Property Taxes - Periodic Fees) x (1 - State Tax Rate)

For the DFW property you mentioned:

Cash Flow = (12000 - 4582 - 960 - 1580 - 1888 - 0) x (1 - 0)

Cash Flow = 2,990/Yr.

For the similar Las Vegas property:

Cash Flow = (12000 - 5041 - 960 - 500 - 946 - 0) x (1 - 0)

Cash Flow = 4,553/Yr.

So a 10% more expensive property in Las Vegas generates approximately 50% more cash due to cost factors like landlord insurance and property tax rates.

I next estimated the maximum amount you could pay for a property in Las Vegas, renting for $1,000/Mo. which would generate a 15% return. The answer is $123,200. The math to do the calculation is beyond the scope of this response but the result is below. (Note the increased debt service, landlord insurance and taxes due to the increased purchase price). 

ROI = ((1000 x 12 - 471 x 12 - 1000 x 12 x .08 - 525 - 123200 x 0.0086 - 0) x (1 - 0))/(123200 x .20 + 0 + 0)

ROI = 15%

However, $123,000 properties are more likely to rent for $1,050/Mo. So, if I use $1,050/Mo. rent, the maximum price you can pay for a property renting for $1,050/Mo. and generate a 15% return would be $129,700 or about 30% more than the same property in DFW due to higher property taxes and landlord insurance costs in DFW. In states where there are income taxes, the difference is even greater.

In summary, just looking at ROI or Cash Flow without considering all the costs can be very misleading. At the end of the day, what matters is what actually goes into your pocket today and what is likely to go into your pocket for the foreseeable future.

Anderson , I hope this answered your question. Please post another message if I missed anything.

@Eric Fernwood

  are tax rates in Texas and LV  based on full purchase price like CA.. or are they based on the assessment which is ( like here in Oregon 30 to 40% less than what you actually paid for the property)... So guess to be fair and apples to apples you would need to know that the TExas properties assessed values and thereby the computed tax is the same as the LV properties..

however I have heard many an investor moan loudly of Texas Prop tax.s  and Texas foundation issues.  you don't have that expansive clay in Vegas like Texas and MS LA.

that stuff is brutual.. if your home has not had foundation work when you buy it.. its not if its when your going to get stuck with a foundation leveling job that will wipe out 2 to 5 years of your cash flow  Poof  all gone. !!... I have spent hundreds of thousands on this in MS on homes I repossessed.. they were cracked like humpty dumpty eggs  :(

@Bud Leiser

Bud, you are correct, my partner and I are(were) both engineers. You are the first to guess that!

@Jay Hinrichs

Jay, as always your comments are insightful and reflect your deep experience. Always enjoy reading your posts.

My partner is a Las Vegas Realtor but lives in Austin TX so we have some familiarity with how the Austin property taxes work. And, I assume that DFW is about the same. Her property tax rate is 2.2%. The way her taxes are initially determined (at time of sale) is the local tax district rate x the purchase price. So, for a $100,000 property (if such a thing existed in Austin!) the calculation would be $100,000 x 2.2% or $2,200/Yr. It is then recalculated each year based on the county's assessment of current market value.

In Las Vegas, the process for calculating the tax rate is at best arcane (being kind here). The tax rate is recalculated in December of each year based on industry standard replacements minus depreciation x some magical factor plus the land value. To avoid all the mystical calculations, we determine the effective rate by calculating the actual percentage based on a few thousand recent sales. We find it ranges between 0.72% to 0.86%, depending on the tax district. If you want to really get the details, here is the place to start.

On expansive soil, there is some in Las Vegas but it is in a relatively small area. I have not personally had any foundation issues. I suspect that the lack of foundation issues is largely due to the hard as concrete "soil" we have and the level of the water table. I read that at the airport, the water table is 90 feet down and the airport is one of the lower areas in the city.

@Eric Fernwood

  that's what I figured... each taxing authority has a different formula..

Yazoo clay in MS is the killer.. ADobe in Dallas is their bugaboo  not sure on Austin.

I spend some time in Vegas and acutally will be buying a winter home there is all looks like desert sand type of soil...

I have one SFR in Vegas. No HOA, paid 108 in 2011, now looks like it would go for 150 - 160. Rents for $1,000. Might be able to get some more, but tenants have been good for a couple of years now, so I do small 2% increases and hope they stick around.

Once maintenance item I have not seen mentioned is the AC unit. Mine blew last year, and that was a $4,100 bill to get the crane out and install a new package unit on roof. The AC was 30 years old, but I am the lucky guy to get the bill.

Mine is in Henderson were the schools are better and the crime is lower than some areas.

Walter, AC aside... would you mind sharing your general cash-flow breakdown on the property? Do you think someone could buy that same property now at current prices and cash-flow? Seems like it would be a pretty thin margin....

@Sutton Zolner

Bring a flipper myself that migrated from CA to NV, my opinion is that it is very hard to find a 'good flip' in Las Vegas right now. The competition is very high and many companies are over-bidding on properties, because they have crew on the payroll and need something for them to do. Since we've moved here, we have bid on half a dozen flips and they have sold for 90% - 100% of the current ARV. Clearly, not a good way to make $$$. Instead, we are now purchasing rental units, as there are still quality properties that will cash flow around 7% - 8%.

@Bryan Christopher

You'll be hard pressed to find SFR in Class A neighborhoods that will cash flow at current prices. Prices have come up ~30% or so in the last few years. The value seems to be in the Class B or Class C places, which are still selling at reasonable prices.

-Christopher

@Bryan Christopher , @Sutton Zolner

There are still good properties in Las Vegas. We have been able to find class A properties that cash flow well. The challenge is (always) how to find them because you may have to consider hundreds to find one good property, which is why we developed software for finding good properties. We typically start with between 7,000 to 10,000 properties and our software will get us to under 50. Based on our experience, we eliminate more than half of these properties. The resulting class A properties have a real ROI (more about real return later) between 5% and 9%. Rehab is typically less than $5,000.

For balanced cash flow and appreciation, the basic characteristics we use include:

• Single family
• Two+ garage
• Three+ bedrooms
• Two+ baths
• Within a minimum and maximum lot size
• Built after specific year
• Average time to rent below 20 days
• One or two levels
• Association fees below a specific amount

We eliminate from considerations most properties based on a number of negative characteristics (we have about 50 such "negative" characteristics) including:

• Known bad floor plans
• Subdivisions with rent restrictions
• Known undesirable subdivisions
• Properties with traffic or access issues
• Properties with excessive drive times
• Master bedroom too small
• Ratio of lot size to the home's foot print
• Tandem garages
• Close to nuisances

For high cash flow properties (usually class B or C) the requirements are quite different and these are usually town homes, condos and occasionally older small single family homes. These generate a 9%+ real return and cash flow greater than $400/Mo. and average time-to-rent of less than 20 days. 

Real return - I see a lot of people assuming a 5% return in Austin is the same as a 5% return any where else. This is absolutely not the case. I'm repeating below some of the materials I posted earlier in this thread:

The formula we use for calculating return is:

ROI = ((Rent - Debt Service - Management Fee - Insurance - Real Estate Tax - Periodic Fees) x (1 - State Income Tax))/(Down Payment + Closing Costs + Estimated Rehab Cost)

For cash flow:

Cash Flow = (Rent - Debt Service - Management Fee - Insurance - Property Taxes - Periodic Fees) x (1 - State Tax Rate)

Below is a contrived example of the exact same property renting for the exact same rent in three different locations. This is of course impossible but the point is to show the impact of landlord insurance and property taxes on return.

Here is a summary of the property I will use:

• Purchase price $150,000
• Rent: $1,000/Mo. or $12,000/Yr.
• Financing: 20% down, 4.5% interest, 30 year term. Resulting debt service is $608/Mo. or $7,296/Yr.
• Down Amount: $30,000
• Periodic fees: $0 (for simplicity)
• Management fee: 8% or $12,000/Yr. x 8% = $960/Yr.
• Rehab cost: $0 (for simplicity)
• Closing cost: 0% (for simplicity)

Below are three cities with tax rates and landlord insurance costs:

Note: the data from the above comes from the following sources:

State income tax source
Insurance rate source. Note that this site contains national average homeowners insurance rates. I could not find a similar site for landlord insurance. Landlord insurance is typically 10% to 20% more expensive than homeowners insurance. The $710 rate shown here for Las Vegas is higher than what our clients pay, but I will keep it here just for comparison reason.
Property tax source

Calculating ROI for each of the three cities:

Austin: ROI = (($12,000 - $7,296 - $960 - $1,625 - 1.9% x $150,000 - $0) x (1 - 0%))/($30,000 + $0 + $0) = -2.4%

Indianapolis: ROI = (($12,000 - $7,296 - $960 - $802 - 1.07% x $150,000 - $0) x (1 - 3.4%))/($30,000 + $0 + $0) = 4.3%

Las Vegas: ROI = ($12,000 - $7,296 - $960 - $710 - 1.07% x $150,000 - $0)/($30,000 + $0 + $0) x (1 - 0%) = 5.8%

Calculating cash flow for each of the three cities:

Austin: Cash Flow = ($12,000 - $7,296 - $960 - $1,625 - 1.9% x $150,000 - $0) x (1 - 0%) => -731/Yr or -60/Mo.

Indianapolis: Cash Flow = ($12,000 - $7,296 - $960 - $802 - 1.07% x $150,000 - $0) x (1 - 3.4%) or = $1,291/Yr or $107/Mo.

Las Vegas: Cash Flow = $1000 - ($600 + 8% x $1,000 + .086% x $150,000 / 12 + $710 / 12 + $0) x (1 - 0%) or = $1,744/Yr. or $145/Mo.

As you can see from the above examples, property taxes, state income taxes, insurance and other factors can make a huge impact on profitability. You need to take all these factors into account when you are considering purchasing a property and especially when you are comparing properties. 

In summary, there are good properties in Las Vegas, the problem is finding them. Also, when you are comparing returns between two properties in different locations you have to take into account all the significant recurring cost factors. Don't just assume that x% in one location is the same as x% in another location.

Invaluable information, Eric. Really, really cool...

You mentioned town homes/condos in your Class B/C discussion. Does this mean you generally won't consider them in your class A searches? There's a strong anti-HOA sentiment on BP and I believe there's good reason for some of that. I'm still in the hunt for my first REI, and I've honed in on Vegas for a long time. There seem to be a lot of interesting condo opportunities, but yes... in many cases when I run numbers it seems HOA eats up your cash-flow.

Just wondering if you had a general feeling on condos/TH's in general out there...

Also, the cash-flow possibilities you're mapping out in your posts. What price ranges are you looking at? (As a rule, which are hitting the mark.)

Thanks again. 

@Eric Fernwood

Originally posted by @Bryan Christopher :

Walter, AC aside... would you mind sharing your general cash-flow breakdown on the property? Do you think someone could buy that same property now at current prices and cash-flow? Seems like it would be a pretty thin margin....

I paid 108 in 2011 with 20% down, 30yr fixed at 4.5% (I am a nobody and can still get the nice gov loans.) I have no HOA and maintenance has been a few hundred a year save the AC blow up.

My PITIM is about $630 so with $1,000 rent, it is not a bad return as long as there are no maintenance blow outs.

WIth today's prices, I would say you can still cash flow, but the room for error and profit is much thinner.

Thanks for the reply and very informative posts, @Eric Fernwood

The only assumption you got wrong for DFW in your reply to me, is that the under 100k price range only gets us C class properties. There are still some good pockets, specially in Tarrant County, where you can find very affordable B class properties in desirable neighborhoods. So we do get 8-9% real returns here (using your formula), even with the higher property tax and higher insurance.

@Bryan Christopher ,

A very good question. I will start by saying that when I owned properties in Houston and Atlanta, they were four-plexes. Some single family in Houston too. All things being equal, I personally prefer multi-family dwellings if the market is right. What is best depends on the individual market at the time you are buying, your goals, your cash and financing.

Single family homes could be the best property today but specialty small commercial might be the best in 2 years. There is no single simple answer. And, what is best today will likely not be the best 5 years from now. 

Everything I am about to say only applies to Las Vegas, today; in 12 months the market could be different. And, what is the best investment also depends on your cash, credit and willingness to take reasonable risk. Below are some examples: 

If you are looking for 5% to 7% real return (see my post on real return) and probable appreciation and you have $50,000 and you qualify for 20% down conventional financing, I would recommend:

1) Select single family class A properties in the $175,000 to $220,000 price range.
2) Select town homes in the $150,000 to $200,000 range.

I do not recommend condos in this price range because very few condos in Las Vegas are finance-able. There are much better ways to use cash than tying it all up in one property. After all, by definition the return on equity is always zero.

If you have $100,000 and are looking for 9% to 12% and you care little about appreciation (other than tracking with inflation), I would suggest a few of the older condos and town homes. Many of these generate $400 or more per month and cost less than $80,000.

If you are mainly looking for appreciation and returns in the 2% to 4% range are OK, class A single family homes in specific areas in the $220,000 to $350,000 range would be a good buy. This sort of investment is perfect for higher income earners who are building up a retirement income stream.

If you have $400,000 to $600,000, specialized commercial properties are good. We are working on a $2.4M 50 unit apartment complex that, with some renovations, will be very profitable (6% to 7.5%). However, the real value of the property is 5 to 10 years from now. Based on city of Las Vegas plans and talking to the major stake-holders around the property, we expect the property to double or triple in value when it is re-purposed to offices in the future. 

I could go on about goals and what is most likely to match these goals but I think I made my point in that there is no "one size fits all". And, the best answer for one person might be a disaster for the next. Plus, one or two years from now the market could change due to the market itself, changes in financing rules or tax regulations or ????? 

On HOA's, Las Vegas is unique in that most of the class A properties are built with HOAs. We like HOAs in the $20/Mo to $50/Mo. range. Tenants love the appearance and tend to pay a little higher rent that non-HOA subdivisions. In subdivisions with no HOA, you frequently see things like someone operating an auto repair shop out of their garage. We see reasonable HOAs fees as asset value protection. However, HOA's could be an absolute waste of money in another city. It all depends.

Wherever you plan to invest, it is critical that you have a trusted team who knows investments and has a deep understanding of the investment market. This is very different than a traditional agent selling homes.

Bryan, I jumped around quite a bit in this post. I hope I answered your questions. If not, post again or give me a call.