Las vegas Flippers and Rental Investors
Nashville, TN · Member since 2020 · 14 posts · 8 votes
Las vegas Flippers and Rental Investors
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Eric FernwoodBusiness Member
Realtor · Las Vegas, NV · Member since 2014 · 1k+ posts · 1k+ votesHello @Jordan Goulet,
There are investment properties with excellent cash flow available but, as always, you have to pick good properties that target the right tenant pool. We currently have 7 such properties under contract.
As always, the tenant pool is critical, especially in turbulent times like today. Based on what I am hearing, owners of C class and most B class properties are hurting because of the COVID eviction moratorium in addition to the normal high turn-over rate. In contrast, out of a population of +160 A Class properties our clients purchased from us, 5 tenants that are delinquent on the rent will be evicted if they do not catch up. This is worse than the 2008 crash. At that time we had zero reduction in rent, zero vacancies and no evictions.
Below is what we are consistently seeing, and we do 5 to 10 such properties each month.
- Single family price range: $250,000 to $350,000
- Townhouse price range: $200,000 to $260,000
- Return: 4% to 8% with 25% down financing including debt service, taxes, insurance, management, and reasonable maintenance and vacancy provisions.
- Average tenant stay is 5 years and the average turn cost is about $500. Time to turn a property, about one month, sometimes less.
- To date, we have had 6 evictions in the last 14 years from our single family and townhome properties. (For C Class (we have very few), on average there are 3 to 5 evictions/skips a month.)
- Time to rent after renovation: 5 to 14 days
I am working on our annual Las Vegas 2021 Investor Outlook and below are a couple of stats that you may find interesting. The full report will be out mid January.
- Rents increased about 9% YoY.
- $/SF increased about 7.9% YoY.
So, if you buy the right properties that target the right tenant pool, now is a fantastic time to invest in Las Vegas real estate. Especially so with the low interest rates. The challenge is finding these properties. Good Class A investment properties represent about 0.4% of the total available properties. We can only find them because we developed our own data mining software. Manually, it would be difficult since not only are good properties few and far between, they go under contract within days. So, there is little time to act.
FERNWOOD Team, KW VIP Realty520 Reviews
6 Replies
It’s a hard market to get in to for buy and hold. You really have to have at least a 5-10 year horizon. Prices have increased more than 10% for more than 10 years. Rents are increasing pretty quickly as well (top 5 in the nation most years) but day 1 numbers won’t be good or probably even cashflow positive.
I’ve only got about a dozen properties here so take these examples with a grain of salt. They have been held for between 5 and 10 years
Average purchase price $125k
Average value $300k
Average rent $1500/mo $18k/year
Average income $12k/year
Average cashflow $10k/year
I did mostly 10-15 year loans so I’m down to 4 loans left already and will be paid off in the next 5.
While $150k/year income (with a property manager I probably work 2-4 hours per month dealing with the properties) is nice. The nearly $2mil in appreciation is the game changer if I ever want to sell one or refinance out some cash.
I could have/and maybe should have bought more than a dozen properties but most of this was done before bigger pockets and real estate podcasts were a thing. I owned more property than anyone I knew, and it was more than I needed. Now people buy a dozen their first year.
The big deal was I didn’t need 30 or 40 properties. 12 is a very manageable number. A number I got to in 5-6 years. My wife was a nurse at UMC through covid and as nice as their retirement plan is, the rentals are what made her retirement possible.
Treat your rental properties like a 401k. Relatively tax free wealth growth that doesn’t provide cashflow until you’re done growing it and you’ll be able to live off its returns.
- Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes5y
@Jordan Goulet The Las Vegas/Henderson rental market is strong but home prices have gone up. If you are considering investing in rentals here I would suggest planning for the long-term. I would also think about buying properties that need some work and have potential for rent growth. I am not really about timing the market (I personally hold long-term and suggest the same to my clients) but if rental rates continue to grow your returns can look much better.
- Nashville, TN · Member since 2020 · 14 posts · 8 votes5y
@Michael Robbins i was wanting long term it seems great for the vegas market! thank you so much for you input! Will take that into accountability!
- Nashville, TN · Member since 2020 · 14 posts · 8 votes5y
@Bill Brandt i loved reading that thank you for your input! Will consider the long-term buy and hold!
- 5yEric FernwoodBusiness MemberRealtor · Las Vegas, NV · Member since 2014 · 1k+ posts · 1k+ votes
Hello @Jordan Goulet,
There are investment properties with excellent cash flow available but, as always, you have to pick good properties that target the right tenant pool. We currently have 7 such properties under contract.
As always, the tenant pool is critical, especially in turbulent times like today. Based on what I am hearing, owners of C class and most B class properties are hurting because of the COVID eviction moratorium in addition to the normal high turn-over rate. In contrast, out of a population of +160 A Class properties our clients purchased from us, 5 tenants that are delinquent on the rent will be evicted if they do not catch up. This is worse than the 2008 crash. At that time we had zero reduction in rent, zero vacancies and no evictions.
Below is what we are consistently seeing, and we do 5 to 10 such properties each month.
- Single family price range: $250,000 to $350,000
- Townhouse price range: $200,000 to $260,000
- Return: 4% to 8% with 25% down financing including debt service, taxes, insurance, management, and reasonable maintenance and vacancy provisions.
- Average tenant stay is 5 years and the average turn cost is about $500. Time to turn a property, about one month, sometimes less.
- To date, we have had 6 evictions in the last 14 years from our single family and townhome properties. (For C Class (we have very few), on average there are 3 to 5 evictions/skips a month.)
- Time to rent after renovation: 5 to 14 days
I am working on our annual Las Vegas 2021 Investor Outlook and below are a couple of stats that you may find interesting. The full report will be out mid January.
- Rents increased about 9% YoY.
- $/SF increased about 7.9% YoY.
So, if you buy the right properties that target the right tenant pool, now is a fantastic time to invest in Las Vegas real estate. Especially so with the low interest rates. The challenge is finding these properties. Good Class A investment properties represent about 0.4% of the total available properties. We can only find them because we developed our own data mining software. Manually, it would be difficult since not only are good properties few and far between, they go under contract within days. So, there is little time to act.
FERNWOOD Team, KW VIP Realty520 Reviews - Nashville, TN · Member since 2020 · 14 posts · 8 votes5y
@Eric Fernwood that info helped a lot and showed me how to scale the right properties at the right places. Thank you so much !
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