New SFH in Reno as first investment rental property?

19 Replies

Newbie here. Has anyone looked at some of the new SFH in the communities around Reno, Nevada? the prices are around the mid 300k. What do you guys think of them as a buy and hold investment?

Hey Johnny,

I live in Reno and I'm quite familiar all the neighborhoods. I've lived here most of my life but am originally from San Francisco. I have four rentals in various parts of town. I would be more than happy to give you feedback on any areas you're looking at. I'm not a realtor but a retires SAP guy that happens to own some real estate. Schools are a big factor in attracting good renters.

Perry

Hey Johny, 

Ive lived in the Reno area most my life and have owned a couple homes for my primary residence. Ive been analyzing deals for several months now from the mls, trying to find buy and hold rentals. Strictly looking at cash flow and cash on cash return, there hasnt been great options, not to say there not out there but just sharing what ive found so far. However, the appreciation is excellent. My personal home has gone up 65k in just 2 years. Hope this is helpful

Best of luck to you

Brandon

I live in Reno too. Making a cash flow play here is pretty tough at housing prices where they are now. Average rents tend to be at or only slightly above what a 75% LTV mortgage would cost you. So essentially one month of vacancy could wipe out your entire year's cash flow. Also Reno/Sparks tends to have pockets all over the place. For instance just a few blocks to the south of my house, homes have been selling for 700k to $1M, but just a few blocks to the east of me, they are selling for 350k or so. So dialing in an accurate ARV requires someone familiar with all the little pockets. "Within 1 mile" doesn't really cut it here. You have to look at the specific neighborhoods.

However, as an appreciation play, it's a pretty solid bet.  Even though the housing prices have somewhat plateaued in the last year or so, people seem to be fleeing the metro cities of California in droves for one reason or another.  So houses don't tend to stay on the market for very long.  Places like Reno, Vegas, Phoenix will likely be the beneficiaries of the continued mass exodus.  Reno's also doing some really rad stuff.  The city has really kind of found its voice as a destination town for outdoorsy activities with lively culture, a somewhat laid-back livability.  We've largely shed the reputation of "The Poor Man's Vegas" from about a decade ago.  We're 45 minutes away from Lake Tahoe, which will always be a destination hotspot for tourism.

I love my city. I'm proud to live here.  However, I will say if you're going to invest from out of state it is crucial that you work with someone here locally with boot on the ground, who is familiar with what's going on development-wise, and which pockets of neighborhoods that could be the difference between a $350k house versus $1M house.

@Johnny Chew - Good question! The market is moving crazy fast right now. Homes that are properly priced in the mid $300's go under contract in a few days. Its not too hard to get moderate cash flow in years 1-3 and generally only gets better as rents have incresed 6% or more year over year for nearly a decade. Consider staying away from the HOA's and condos if your using leverage. As far as buy and hold, I do not have a crystal ball but the experts say economic outlook for Northern Nevada is good. Rental rates increades 1% in April, even with all the Covid rules! Take a look at Old Southwest and Northwest Reno. Both are generally regarded as desreable for owners and renters.

All good comments here...  I have many investors trying to get in and waiting for prices to drop so they can get a better return, however, I don’t see that happening anytime soon!  Reno is still experiencing a housing shortage with all the new jobs coming (see TRID), and due to tax incentives and Covid-related reasons drawing transplants to NV.  I’m at the Lake in Incline Village and see Reno as the best place to invest right now.  My advice is to get in while you can as I only see prices and rents going up. Get in now to benefit from the low mortgage rates & appreciation and your returns will follow!