Vegas Market Research

36 Replies

Hi, my wife and me will be coming out to Vegas from San Francisco next week to do some market research on single family homes. We're looking to meet local real estate agents / investors to learn as much as possible. 

We're looking for areas with the right balance between appreciation potential and rental rates. 

General knowledge from visiting. Looked at investing in downtown Vegas 3 years ago but backed out.

I’d finance with 20-30% down. Single family 200-400k.

@Nathan Lands

IMHO, the lower you stay on that range the better you’ll do. (I.e. 2 x 200k rentals will bring in more rent with less risk than 1 x $400k property. )

If you have time I’d be glad to talk real estate while you’re in town. I’m not a realtor trying to sell you something, I just love to talk real estate. 

Las Vegas is easily 5 distinct neighborhoods. The strip, NW,NE,SE,&SW of the corners of HWY 95 and Decatur. Toss in Henderson if you want as a 6th. I personally stay to the NW and away from the East and North East but people are doing just fine almost everywhere in the valley if not everywhere...

Try to limit your market by thinking of requirements, I narrowed my market by area/zip code and then said... 1500-2500sf, 2+ garage, 3bed+ 2bath+, less than 20 years old. That at least gives you a starting point to start looking for deals. 

Bill, from purely a cash flow standpoint, have you found some property types generally more successful than others? I’m running numbers on some listings now and am finding it difficult to break even on a 20-30% down payment with financing after taking into account expenses.

So I've been doing some preliminary research for Vegas, and someone I spoke with recommended single story homes with 3 car garage. Any veterans out there have any experience for or against?  Thanks in advance.

@Ian Tan

3bed/2bath or 4/2 let’s you rent to families and families who want an office/den/adult space but not larger families which may or may not be more destructive to your properties. 4/3 is pry ok. 

I personally prefer 3 car garages in my residences, but only 1/3rd of my properties have 3 cars as it really limits your selection. Most (80%?) of vegas homes have 2 car garages. (That soooo many people fill with crap and then park in their driveways for some reason?)

Let me run the numbers on my properties at current values and see if any of them would cash flow. (Ps. I think if you break even today you’d still be a net winner in 5-10 years with higher rents, appreciation, loan pay down etc...most people I talk to can’t change their life with $100/mo cash flow or even $250/mo so if it’s $0-$250 it’s virtually the same.)

Are you planning on using property manager? What kind of mortgage rates are you being quoted? Lmk those 2 things and I’ll run a couple properties for you. 

@Bill Brandt Thanks for the input. So when I was running some numbers, I was using 20% at 4.612% 30-year fixed. I factored in property management at 10% as well as capital expenditures, maintenance, sewage, etc.

Granted, I am aware that the tenants will likely cover their own utilities; plus I don't live in Vegas, so my estimates may be a lot more conservative than what the actual average amounts might be. But every bit of insight helps.

@Ian Tan

Here are a few of my properties with the lowest values today and their numbers. I’ll PM you the addresses so you can check neighborhoods and comps. if any look good to you, you should be able to find some houses for sale with the same specs, in the same neighborhoods with similar values according to Zillow. And you’ll know what kind of rent/expenses to expect.  My insurance is 300/300 to conform to my umbrella policy so yours should be same or less. Good luck and feel free to to hit me up with anything you find and I can give you my 2 cents worth. 

#1 my only “town home” half a duplex. Gated community, 3/3/2car 1512sf built 2006 

Monthly costs Hoa 66, insurance 57, management 89, taxes 58 rents for $1125 

$212k value = $170k loan @ your 4.612% = $873 total $1143 (minus $18/mo)

In the last year I had to paint the trim ($500) and fix clothes washer ($237)

#2 preferred single story model, not Gated community, 3/2/3 car 1456sf built 1993

Monthly costs Hoa 0, insurance 44, management 90, taxes 64 rents for $1125

$250k value = $200k loan @ your 4.612% = $1027 total  (minus $100/mo)

In the last 2 year I have had zero repairs 

#3 non-Gated community, 3/3/2car 2200sf built 2007

Monthly costs Hoa 57, insurance 46, management 98, taxes 74 rents for $1375

$264k value = $210k loan @ your 4.612% = $1078 total $1353  (plus $22/mo)

In the last year I had to replace the stove ($590) and fix a sewer line blockage ($125)

In north Las Vegas sewer is included in garbage,recycling/water bill from the city. in Las Vegas I bill the tenant for sewer per the lease (about $250/year)

@Ian Tan

I see that you met Bill, and he knows his SFR, and has done well. I noticed in above posts, you keep mentioning cashflow. Based on current prices, SFR will maybe get you $100-200 positive (best case) and worst case break even. Thus, leaving you the price appreciation angle.

If you want cashflow, with the appreciation, you should consider 4plexes. Can finance like a SFR, and gives you more cashflow. Getting right 4plex will get you 500-600 montly net cashflow with 25% down.

The key is inventory, a simple matter of supply and demand. I just did a search on Redfin for available SFR in Las Vegas and number available was 4169. Then did a search on available multi's (duplex, triplex, 4plex) in Las Vegas and number available was 85. A ratio of 85/4169 = .02%.

So it comes down to what is your goal?

Terry

@Terry Lao Thanks for your input.

Cashflow is definitely a priority. I had originally looked into multi-family units as a possible stepping stone into commercial real estate down the road but was dissuaded by some of the online reports I found regarding crime statistics in the neighborhoods I was canvassing. The numbers on the page were attractive, but the "slumlord" horror stories I've also come across pushed me into being more receptive to other property types, thus my inquiries into SFRs.

Have you had positive experiences with the 4plexes you’ve found in Vegas?

@Ian Tan

You still did not state what your goal was? Norm is if going for appreciation then SFR. If going for cashflow then multi's. That said......

My experience has been in 4plexs in Las Vegas. I was going for cashflow thus made choice in multi's. The ROI was about 10-15% in class C areas. I did not expect such huge appreciation, even more so than SFR. Ex. 4plex bought near strip in Apr'16 for $170k, comp now $320 to 340k. I believe this is due to the small amount of inventory of multi's vs. SFR. For every 100 SFR, there is 2 multi's. A ratio of .02%. This is a prime example of supply and demand...........econ 101.

Terry

@Terry Lao

My apologies, I thought your question was rhetorical. My original goal was multis for the cashflow. But since Las Vegas is new territory to me and my preliminary research suggested multis might be too risky , I was exploring the idea of appreciation instead.

Your example is pretty amazing, however, so it's given me more to consider.

@Ian Tan

Your goal dictates which type of property you should get. I reading your comments above and you are looking at SFR and comment how low their cashflows are. Well, by definition, if you are look at SFR, then your cashflows are low are break even because you are looking for appreciation. Now, if you start looking at multi's and comment that they are in bad areas, then you don't know Las Vegas very well. Most multi's will be older 1960-1970, and in the east LV and north las vegas. However, you can cherry pick the areas and there are some near chinatown (west), north west ( near the 95 freeway), and near the strip.

In hindsight, my goal would be to choose the type of property that makes me the most money.

Terry

Originally posted by @Ian Tan :

Does anyone have any recommendations for property inspectors?

 Check out Apollo Inspections. They have been great on the properties I’ve picked up in Vegas. Feel free to tell them I referred you 👍.  They are a great husband and wife team. Can give you their contact if you need just shoot me a pm. 

Don’t worry. He never reads my posts. It clearly states that I’m using today’s values for you because you can’t buy 7 years ago like he knows I did. I guess I shoulda shown the numbers at a total purchase price of under $350k for all 3?  Just so OP could feel bad? But thanks for reminding me I made that $350k as well as the cash flow. Just another guy that has said investing in Vegas has been bad for the last year because it’s only up 15% and it will be still be saying it’s bad next year. 

I never understand why they even bother posting if they aren’t going to read others posts. I really loved the “pushing Vegas comments...” who’s pushing it? I don’t sell real estate, I’m not willing to sell my properties, I don’t make ONE $ if someone buys in Vegas or buys in Hawaii. I must have a “secret” reason for “pushing Vegas”. It’s weird I would show such low performing examples then. 

He probably didn’t read the initial post either. The one that said “hey we’re going to look at Vegas next week we’d like some info...” maybe someone shoulda popped in with a “I sell real estate in the Midwest you should buy there instead...” since that totally ignores OP’s questions as he often does. 

Vegas inventory update..  We're up to around 7100 single family homes currently active on market..  Thats increased from about 4500 just a couple months ago..   We were between 3000-4500 for years..  The shift appears to be starting..  

Yup. Finally a 2 month supply? it’s gotta help. New homes sales are setting records in quantity and prices too. Hopefully higher interest rates, kids back in school, and upcoming holidays will get buyers to slow down and take a break. It would be nice if a house on the market at a reasonable price didn’t have 5 offers the first week. (At least in the price ranges I deal with, sub $300k.)  Didn't that report say most of the housing sitting on the market were over $450 or $500k? (Something about double the median price I thought.)

I don’t need or even expect a buyers market, but how about anything other than a screaming seller’s market?

Ps. Found one of the articles I was thinking of. 4550 end of July. 5800 end of August. Now you're saying 7100 on September 6th. +1300 in the last 6 days. I wonder if the sellers will pull their listings when the figure out it's not April any more or just let them rot on the MLS? I assume less than 10% have to sell.

Weird they all waited until school was back in session to list their houses.

https://www.reviewjournal.com/business/housing/las-vegas-home-sales-show-signs-of-slowing/

7100 SFH today 9/7/2018? Where is the source you get the data from?

I have been keeping track on the numbers from Redfin. 

As of today, Redfin show that Las Vegas SFH inventory have reduced from 6555 SFH on 9/1/2018 to 6357 SFH today 9/7/2018.

At the same time, the pending SFR has increased from 3003 on 9/1/2018 to 3960 today 9/7/2018.

What does it tell us?  More pending sales means more sales in September. 

Increase inventory help to increase the number of sales at the same time.  

Pending sales has jumped 30% in 7 days!

Great news!