Long term rentals in Las Vegas, NV market

New to Real Estate · San Francisco, CA · Member since 2020 · 44 posts · 25 votes

Hey BP, I have been aggressively focused on the Las Vegas, NV area as a possible investment for a single family. My goal is holding for the long term with steady cash flow. I found after analyzing multiple deals in the area, the better deals would cash flow between the $30-$100ish range and CoC range of 1%-5%. Thats with 20% down, with conservative expenses each month. Has anyone else experienced similar numbers in this market? Again, I am looking long term, would this be a good investment?

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Terry Lao

Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes

@Josh Rodriguez

@Alex Alanis

Seems I can answer both your questions at the same time. The Las Vegas market is still a relative bargain compared to bay area and Southern California. The LV SFR investment is still a good long term investment. We are looking at list median price of $300k. However, the rents will only be $1500-$2000, depending on area. The best scenario is break even and appreciation via long term hold. However, the alternative is 4plex. This would increase your cashflow and net best case $500 per month. You will need to find 4plexs with you can value add like make improvements and raise to market rents. You can expect to pay $300-500k for a 4plex depending on condition and area.

There are 4plexs with and without HOA. If with HOA, can expect to pay around $650 per month. Try to find HOA's that include water, sewer, and trash. Those without HOA will still have to pay around $300 for this service. There are pros and cons for HOA's.

Terry

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Alex Alanis
Sacramento, CA · Member since 2019 · 12 posts · 5 votes
6y
@Josh Rodriguez I've been looking at that market for multi-family, but the HOA fees are so high. What's been your experience with HOA fees in that market?
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Brad Bellstedt
Real Estate Agent · Las Vegas, NV · Member since 2017 · 279 posts · 133 votes
6y
In the long-run, they'll all make money, right? But it's really about getting the MOST money return for the money you put out. CAP rate and ROI fluctuate with the demand for and maintenance of the property. A property in a D neighborhood will have a higher CAP rate and ROI but will also include more turnover and more maintenance costs. (I'm seeing 7+ CAP rates here) You'll find that you'll get a lower CAP in nicer neighborhoods with more desirable and new homes and more desirable schools. You'll have lower turnover and lower maintenance costs but you'll have to purchase that property for more to compete with primary home buyers which is why you get a lower CAP.
The best returns I'm seeing for SFR's is going to the BRRRR route. You can find/purchase a better deal, really tenant proof and take care of the property to set it up for less future maintenance costs when you do the renovations, and then get a decent rent and get a good portion of your money back, providing both a boosted CAP rate and COC return. Something to consider if you have the means to pull off such a transaction.
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Terry Lao
Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
6y
@Josh Rodriguez

@Alex Alanis
Seems I can answer both your questions at the same time. The Las Vegas market is still a relative bargain compared to bay area and Southern California. The LV SFR investment is still a good long term investment. We are looking at list median price of $300k. However, the rents will only be $1500-$2000, depending on area. The best scenario is break even and appreciation via long term hold. However, the alternative is 4plex. This would increase your cashflow and net best case $500 per month. You will need to find 4plexs with you can value add like make improvements and raise to market rents. You can expect to pay $300-500k for a 4plex depending on condition and area.
There are 4plexs with and without HOA. If with HOA, can expect to pay around $650 per month. Try to find HOA's that include water, sewer, and trash. Those without HOA will still have to pay around $300 for this service. There are pros and cons for HOA's.
Terry
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Josh Rodriguez
OP
New to Real Estate · San Francisco, CA · Member since 2020 · 44 posts · 25 votes
6y
@Alex Alanis
Personally, I usually stay away from deals that involve HOA fees. Simply because I have found, from analyzing multiple deals, that the cash flow is decent but also not the greatest compared to other markets. However, I only ran numbers on SFRs in this area and not multi family, so your numbers may work even with HOA fees, depending on your projected monthly expenses. Im also curious to see what you have found as far as multi family and if the numbers work in this market? Let me know if possible. Thanks
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Josh Rodriguez
OP
New to Real Estate · San Francisco, CA · Member since 2020 · 44 posts · 25 votes
6y
@Brad Bellstedt
Thank you for that advice. More questions for you, since you're from the area. What are your overall thoughts as far as SFRs in the Henderson, NV area? What type of class would you consider this area to be? And would you consider this or any other area to be "the best" to invest in for the long term?

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Josh Rodriguez
OP
New to Real Estate · San Francisco, CA · Member since 2020 · 44 posts · 25 votes
6y
@Terry Lao
Thank you for the info. Very helpful. At the very least, I am willing to break even or with very little cash flow since I am looking long term. Do you know what the current rate of appreciation is for this market or where I can find this information?
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Terry Lao
Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
6y
@Josh Rodriguez
All the information can be found online, but there are so many ways to analyze and interpret this information. Cash Shiller is a good way to track appreciation by cities, but publications are always two months behind. Local realtor associations are a good source, but often give positive outlooks due to inherit bias.
The best single metric for appreciation is the median SFR price from year to year. Meaning measuring the change from Dec'18 to Dec'19 as a dollar amount and as a percentage. Therefore, I just keep my own analysis, forecast, and actuals.
Below is my analysis for the Las Vegas SFR median home price. Now, even if you look at the information below, how would you interpret and gain any insight compared to other markets?
Terry
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Brad Bellstedt
Real Estate Agent · Las Vegas, NV · Member since 2017 · 279 posts · 133 votes
6y
@Josh Rodriguez There are two Hendersons. One is the nice, new Henderson everyone thinks of that includes Green Valley, Seven Hills, MacDonald Highlands, Anthem, Inspirada, Cadence and the surrounding areas. This place is on FIRE for demand! Those areas range from A+ to B (roughly) with good schools, great food options, shopping, and the usual better neighborhood features. CAP rates will be low as they are in any high demand area but because that part of the Vegas Valley is closest to California, that's where we are seeing a TON of expansion and growth. I heard last year Cadence was the fastest growing new community in the nation due to the continued mass exodus of people from California who are selling a house for 3X what they are buying for in LV. A lot of the investors I've spoken to who are looking to do long (like lifetime long) term buy and hold will do so in the Henderson area or in Summerlin. The thought is, because of the schools and infrastructure of the neighborhoods there will always be a high demand (rent) in these areas and for that reason, these areas will also be maintained to a higher level than less desirable areas. They are willing to buy these properties at a very low cash flow (2-4% CAP rates) to get in the game for future returns. (Rents go up, more appreciation, better refinance terms, etc.)
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Dana Wappler
Investor · AZ NV CO · Member since 2020 · 9 posts · 4 votes
3y
Stumbled on this old thread looking for specific areas to focus SFR and Multifamily long term holds in the LV area. I have 4 SFR now and am curious how everyone in this thread feels today? Seems you were all spot on with New Henderson. (I moved there myself from CA) The appreciation has been incredible to watch. Acquisition prices have been steep but we all see the market shift happening right now in 2022. Curious what some of you more experienced investors are seeing. Im looking for SFR or small multifamily where ideally I can BURRR a cash flowing, long term hold, with a focus on appreciation. Cheers
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