Las Vegas condos versus detached: similar rent, dissimilar prices

[Erik K.]

Hello, are you familiar with the Las Vegas rental market? If so, I have a mystery puzzle for you.

Looking on Zillow, I notice that 3-bed condos ask for only slightly lower rents than 3-bed detached houses ask. However, Zillow shows condos with asking prices close to half what is asked for houses.

Do the cheap condos require the owner to occupy them, and only the expensive ones are rentable? Or is there some other explanation?

Thanks for your ideas!

[Michael Tully]

@Erik K. Something else that might be a factor is that in Vegas, most of the cheaper condos (if not ALL of them) used to be apartments and were "converted" by selling off all the units to individual owners. For someone looking to buy a home, condos in Vegas still have an apartment feel to them and so the demand is smaller since people who are buying are usually trying to leave the world of renting/apartments. If it weren't for the HOA fees, renting condos would be great! However, in areas that are desirable you're going to see HOA fees from $250 and up which eats your cashflow. As well, as others have said, you have many restrictions in these condo communities, such as restrictions on how many rentals are allowed (if any) and other restrictions on your property. Plus you still have to worry about having someone above/below you which has definitely got to impact the price of the property. It's got to be a great feeling to purchase your first home and then find out your neighbor above likes to stomp everywhere or that you have to tiptoe anywhere you walk in your place so as not to anger your neighbors below you. (I feel bad for those living in a second floor unit in some of the 3 story condo buildings here in town.)