1031 Strategies for Las Vegas Market

[Megan Roop]

Hi all, we recently sold a duplex in CA and want a 1031 exchange for a multi-family in the Las Vegas market. 

We are leaving CA for tax reasons and because the distance of maintaining properties was getting to be too much (there were not great property managers or contractors so we were having to travel back for everything).

We have made a few offers on 4plexes in Las Vegas but have not found the right property yet. 

I'm wondering if there are other strategies we should be looking at other than multi-family for this market.

We have a lot of experience with multi-family and we're good at it, but it's a different market here. The CAP rates aren't great, the vacancy rates are high, majority of multi-family locations are in areas with unreliable tenants.

Overall, it just seems like it's difficult to achieve reliable passive income here. 

We have found different non-profits to work with who guarantee rents, deposits, extra money for repairs, and money to turn over the unit between tenants. This is a different direction than what we have gone in the past, but feels like it could make a multifamily more doable here. 

Thanks in advance for any thoughts or ideas!

[Alex Olson]

Selecting other market besides Las Vegas would help. There are much better cities for cash flow out there. Of course I am partial to KC for a 1031 exchange market.

[Basit Siddiqi]

If you sold the property already and didn't engage a 1031 intermediary at the time of sale, it may be too late to do a 1031 exchange.

It is unclear whether you did engage one as you meantion selling the propertying and 'wanting' to do a 1031 exchange.

[Bill Brandt]

Here’s the post and DM I tried to send you yesterday but after 10 years and thousands of posts my “email hasn’t been verified” so I couldn’t post or DM. Anyway….

Personally I think SMF is the worst type of property for sale in Vegas. While I prefer newer homes with tile roofs and stucco siding in good residential neighborhoods. 90% of Vegas SMF is the opposite. If you insist on SMF, Try to find something as West as you can afford, away from the college and the AF base. I’ll try to look up the one California BP member that was a local expert/proponent and tag him for you if I find his name in an old message, but it’s been a long time. 

@Terry Lao is the name but it’s been 3 years since we talked. Interesting to see if he’s still around. 

[Jay Thomas]

You are spot-on about Las Vegas multi-family properties having lower CAP rates and higher vacancy rates, but there are still opportunities if you play your cards right. Consider expanding your search to emerging neighborhoods or suburbs, target niche markets like students or retirees for more stable demand, and renovate units for increased value and potential higher rents. Partnering with a local Las Vegas expert, like a realtor or property manager, can provide valuable insights. If multi-family isn't hitting the jackpot, explore alternatives like single-family rentals for potentially higher CAP rates, or consider commercial real estate options such as small retail or office spaces. While non-profit partnerships might offer guaranteed rents, carefully assess the terms and potential long-term impact on your investment goals.

[Jessie Dillon]

you could consider MTR'ing half the units!

[Bradley Buxton]

@Megan Roop

We are finding some solid investments in the greater Reno, NV area. All the tax benefits and proximity to CA. The constricted building, tech and manufacturing job growth with the Tesla factory and data centers, will drive demand, appreciation, and pricing up in the next few years. We specialize in finding 1031exchanges in the northern Nevada market. 

[Dave Foster]

@Megan Roop, I was just going to tag @Bill Brandt as Vegas is his backyard.  You're not alone in wanting to move your real estate out of CA via a 1031 exchange.  the Franchise Tax Board will let you defer their tax on your move out of CA.  But they will require you to file an annual report.  As long as you own that new property or do another 1031 when you sell you will never pay the deferred.  If you sell without a 1031 then CA "claws back the tax on the appreciation they think they are due.

But the 1031 exchange can be used to go into any other type of real estate anywhere else in the country.  So looking a little further abroad at some of these places folks are talking out isn't a bad idea either.

[Megan Roop]

@Alex Olson, thanks for your reply! We have KC on our radar. For this transaction, the timeline is going to be too tight. Would love to connect with you about this market in the future!

[Megan Roop]

@Basit Siddiqi, sorry for the lack of clarity. We are currently in the 1031 exchange process and engaged at time of sale.

[Megan Roop]

Quote from @Bill Brandt:

Here’s the post and DM I tried to send you yesterday but after 10 years and thousands of posts my “email hasn’t been verified” so I couldn’t post or DM. Anyway….

Personally I think SMF is the worst type of property for sale in Vegas. While I prefer newer homes with tile roofs and stucco siding in good residential neighborhoods. 90% of Vegas SMF is the opposite. If you insist on SMF, Try to find something as West as you can afford, away from the college and the AF base. I’ll try to look up the one California BP member that was a local expert/proponent and tag him for you if I find his name in an old message, but it’s been a long time. 

@Terry Lao is the name but it’s been 3 years since we talked. Interesting to see if he’s still around. 

@Bill Brandt - thanks for this info!

[Stephen Montez]

Quote from @Megan Roop:

Hi all, we recently sold a duplex in CA and want a 1031 exchange for a multi-family in the Las Vegas market. 

We are leaving CA for tax reasons and because the distance of maintaining properties was getting to be too much (there were not great property managers or contractors so we were having to travel back for everything).

We have made a few offers on 4plexes in Las Vegas but have not found the right property yet. 

I'm wondering if there are other strategies we should be looking at other than multi-family for this market.

We have a lot of experience with multi-family and we're good at it, but it's a different market here. The CAP rates aren't great, the vacancy rates are high, majority of multi-family locations are in areas with unreliable tenants.

Overall, it just seems like it's difficult to achieve reliable passive income here. 

We have found different non-profits to work with who guarantee rents, deposits, extra money for repairs, and money to turn over the unit between tenants. This is a different direction than what we have gone in the past, but feels like it could make a multifamily more doable here. 

Thanks in advance for any thoughts or ideas!

Hey Megan! Vegas local here and would agree with my fellow commentors in that Vegas is definitely tougher if you're looking for cash-flow generating properties. It's certainly more of an appreciation city as a whole but theres a couple of strategies that could be employed such as STR's/MTR's in the form of rent-by-rooms to make properties get much closer to cash flowing. 

I work primarily in the West/Summerlin area as well as NW Las Vegas and a good place to start would be around the hospitals in these areas if that is what you are looking for. Great neighborhoods and residents/traveling nurses would be the main target as far as renters. I'd also agree with your characterization of most Multifamilies here in Vegas -- hope those ideas point you in the right direction! 

[Leslie Pappas]

Hi Megan, I have a couple colleagues who live in West/Summerlin and they love it. Agree with what Stephen said about hospitals. On another note about the area, very positive news about Sony Studios project/mixed-use development.

https://www.reviewjournal.com/business/1-8b-sony-movie-studi...