Las Vegas - best investment areas/zip codes?

Question

Bill B. · Answer

PLEASE let the 1 or 2% rules die. They were invented and are relevant in paces were houses are $50 grand.  There are zero markets where people pay $4,000 a month for a $200k house on a regular basis.  Heck I don’t get that on a $500k lake place in MN one of my best investments.

Last year I collected a little over $175k in Las Vegas rents. CONSERVATIVELY, the properties are worth $200k more than last year, probably the number is closer to $300k. But dang it all to heck, I’m only getting 0.7% rent to purchase price. Guess what, the numbers are about the same as last year, and the year before that and the year before that. I know you can’t count on appreciation as part of your income but it is one of the MANY sources of rental income that these people who quote the 1% or 2% rule should have heard at the same time but never seem to repeat.

People are making money as landlords in every city there are renters. If you put 20% down and your market squeaks out 3% per year appreciation your making 15% on your money. If it’s vegas and it returns 15% a year for 7 or 8  years straight, you’re doing alright. You’ve made 500% cash on cash if you broke even on the rental.

Sorry That got so long, but if you ignore 90%, PLEASE LET THE 1% and 2% RULES DIE...Lets move on and talk amortization, depreciation, and appreciation.

Time heals almost all real estate mistakes.

*The man who says something can’t be done is often interrupted by the man (or woman), doing it.

Bill B. · Answer

@jerry Pham

Since it seems everyone else ignored your question. Avoid the north east area as a whole unless you’re looking for c/d neighborhoods with tough management. After that, the east in general is older, smaller and little more worn.  Just north of the East/west portion of Hwy can be a little tougher too.

I’d only buy MFR if you’re looking anywhere near the strip or UNLV. SFR I’d look north of lake mead and west of MLK. I’m sure there are great areas in Henderson but I don’t have any experience there and the Southwest is all new neighborhoods as well. (They we’re just stating to build it out before the crash.)

LMK if you’re in town sometime and want to talk real estate. I have nothing to sell you but I do like to talk real estate with people who are interested.

Michael Y. · Answer

I'd look in the South West area. This area was stagnant a few years ago. Now it's off the ringer! If you can get short sales or foreclosures god bless you. Californians are selling their shoe box homes for a half mill then coming here paying cash and way over listing price. Look up my zip 89178. Let me know if you have any questions, good luck!

Bill B. · Answer

Rob, are you saying rents are stuck in that $1,000 range? That’s horrible. I don’t have anything that size that rents for sub $1350. I’m hoping you are also getting that range and are just considering a 35% rent raise in 6 years to be “about the same”. (I would consider 6% per year increase decent. In 25 years your rent will have basically quadrupled while hopefully you’ve paid off your loan.) Otherwise yes, you should sell them. For some reason people just don’t want to rent there?

Vegas is a weird city. That might be 10 miles from my house but I and most people in my neighborhood would consider that “clear across town” and only drive it for a friend or a special event. That rule about 80-90% of your driving is within 10 miles of your home might be 99% in Vegas.

Rob Brown · Answer

I've been a licensed real estate broker in Las Vegas, and an active investor myself since 1999. I personally buy in Summerlin, the southwest, or 89107. In the crash, I was buying houses in 89107 (I stayed south of 95 only) for around 50k all in that would rent for 1000 mo. Now, those same homes are going 175k if you get a good deal on a 4/2 or a 3/2 depending on the condition and the rents haven't gone up much since 2012 in that neighborhood if you want the best tenants you can get there. You have to go into rough areas to get 1%. I would only buy a plex deal if I was speculating on area improvement around UNLV / Maryland Parkway corridor or the Downtown area. Stay away from the D neighborhoods in Vegas, it is hard to manage. The last property I bought was in Summerlin a 3/2 1254 foot one story for 251k in late 2017 with a 4k seller credit fully remodeled and it is rented for 1395 so def not a 1%er. That being said, I could sell it today for 279k+ and the trajectory is up. I expect in a recession Vegas would dip as it always has and you'll be able to pick up a similar Summerlin property closer to 200-225k or 89017 closer to 125-145k again. Who is to say if the recession is next year or 2+ years out; I just keep buying cash flow positive good areas and stay liquid for downturns and you'll do well! Don't try to time it.

Jerry Pham · Answer

Thanks for the info @Brandon Carriere.  Like you said, finding a decent cash flow property is hard at today's prices.

Brandon Carriere · Answer

Really depends on what type of investment you're considering...

- If you're looking for buy and hold cash flow, buying at todays prices, you may not find much..  There's nothing other than maybe dumpy 4-plexes that will hit the 1% rule, and certainly nothing close to the more desired 2%..

- Speculating or buying for appreciation looks like a better bet for the next 6-12 months..  Inventory is still so low and that doesnt appear to be changing anytime soon..  How much upside there is going forward is debatable..  I wouldn't bet the farm on anything more than 10-20% before a plateau or correction, as the jobs/wages here may have a tough time sustaining anything more than that..

- Flips are a case by case basis.  Buying from the MLS will have very very razor thin margins, and thats assuming appreciation continues..  You're essentially paying over market value for anything purchased right now, and fixers are no different..  Everyone and their brother thinks they're an HGTV flipper, so even the dumps are selling for higher than they should be..

If I was forced to invest in this market currently, I'd look at the 125-175k range..  However, there's not much in that price range - mainly condo's and crappy houses in the more ghetto areas, but I think they will appreciate at a faster rate as they're the only easily affordable product out there and everyone will gravitate towards them..

Jerry Pham · Answer

Awesome, thanks @Bill Brandt

Louis Davis · Answer

@Jerry Pham it depends on what kind of return you are looking for. Vegas is a good market when you have good connections. If you are looking on MLS here then it will be hard to find any deals with good spreads. At this time, we are finding spreads of $70-$100k here in Vegas through multiple sources but because we are patient enough to wait for deals like that, we always have the cash available.  But if you have sources in California, you can produce even better returns. Zone in on an area and fire at that specific target. If you are looking all over, coincidentally you will find very little.

Thanks,

Louis

Jerry Pham · Answer

Thanks for the info @Terry Lao. At this point I'm just trying to get a general idea of the good areas of LV. Then I can target my search and analyze the numbers for what's available.

Las Vegas - best investment areas/zip codes?

Most Popular Reply