All Forum Posts by: Eric Fernwood

Hello @Khaled El Dorry

We’ve completed over eighty 1031 exchanges and I can make a few suggestions.

• Although it is possible to coordinate the sale of multiple properties simultaneously, it is not an easy task. One option is to offer the properties for sale with a “closing date to be determined.” This may limit your pool of buyers and could result in a slightly lower sale price. However, it is the most effective way I know to have all properties close nearly simultaneously.
• The odds of everything going right with multiple properties are small. Therefore, I would suggest planning on purchasing two or more properties. This will make coordinating the sale of the relinquished properties easier.
• You are not allowed to use the proceeds from the relinquished property to pay for renovations. Some of our clients have opted to pay capital gains tax on a portion of the proceeds and use that money for the renovation.
• Not all purchase contracts include 1031 exchange verbiage. Obtain the correct verbiage from your exchange agent and include it in the agent-to-agent remarks, specifying that the 1031 text must be included in offers..
• If you need the name of a 1031 exchange agent, I can recommend three who are very good. If you would like their contact information, please DM me.
• If you do all the properties with one agent, ask for a discount.
• Be aware of the 45-day identification period. Although you only need to provide details for three potential properties, there is no guarantee that you will be able to secure those specific properties. We coordinate the purchase of the replacement property with the sale of the relinquished property. For instance, we recently had a client who was selling a property and buying five replacements. Once the seller had the relinquished property under contract, we made offers on the replacement properties. As long as the replacement properties do not close before the exchange property, this approach will work. It has allowed us to close on the replacement properties within about two weeks of the start of the identification period. By using this approach, if something does not work out with one of the replacement properties, we still have enough time to contract another one and stay within the 45-day identification period.

Hope this helps.

…Eric

Hello @Lisa Talbot,

When choosing an investment location, it's important to consider both short-term and long-term factors. The initial return can be estimated using typical return calculations, but these only predict how the property is likely to perform on the first day under ideal conditions. They don't provide any insight into the property's likely future performance.

In my opinion, what happens in the next 10 to 30 years is more important than how it performs initially. Your financial future depends on the long-term economic growth of the city where you invest. Here are some location considerations to keep in mind.

Population Growth

Population growth or decline determines where property prices and rents will increase, stagnate, or fall. Below is a table showing population change between 2020 and 2022 for the cities you listed and I added Las Vegas, which is where I live. Source

Moving to another city can be emotionally and financially costly. Typically, people move only when things become unbearable in their current location. Detroit, Houston, Philadelphia, and St. Louis have had a decline in population. Due to this, I would not consider these locations because prices and rents are driven by population growth.

Overhead Costs

Every dollar lost to overhead is one less dollar available for living expenses. To illustrate the cost differences between cities, I compiled overhead costs for the listed cities.

Sources:

• State income tax rate
• State average insurance rate
• State property tax rate

To put this in perspective, below are the annual operating costs for a $400,000 property with a taxable $15,000 annual cash flow. I sorted the cities by overhead cost.

To have the same net cash flow, a property in Springfield would need to generate $7,051 ($10,595 - $3,544) annually than a property in Las Vegas to have the same cash flow.

Overhead costs make a huge difference when selecting a location.

Rent control and Evictions

Some states and metro areas have implemented various kinds of rent control. Rent control may prevent you from increasing the rent fast enough to keep pace with inflation. It may limit your ability to select the best tenant. It may make evictions of non-performing tenants difficult or impossible. Never invest in any location with rent control.

I researched the time it takes to evict a non-paying tenant for each city. Please note that the times shown may have changed due to court backlogs caused by the eviction moratorium.

• Springfield - “The entire process from notice to set-out can run from 4 weeks to multiple months depending on your specific situation.”
• Houston - “Evicting a tenant in Texas can take around one to three months, depending on the type of eviction. If tenants request a continuance or jury trial, the process can take longer.”
• Detroit - “On average, it would take anywhere between for a complete eviction process.”
• Cincinnati - I found no clear timeline. From what I read, 2 months to several months. If anyone has a better answer, please post it.
• Philadelphia - “…from eviction notice to removing the tenant, could take roughly 2-4 months”
• St Louis - Several months. “It takes about 30-60 days before a landlord can start filing an eviction. If the case is about failure to pay rent, then they have to wait 1 month before they can start filing an eviction lawsuit.”
• Las Vegas - One month.

I view nightmare evictions like I view cancer. The odds of getting cancer are relatively small, but if you do get it, it is devastating, and "odds" mean nothing.

Summary

The location is the most important investment decision you will make. Take the time to evaluate locations based on long-term factors such as population growth, overhead costs, and the landlord-friendliness of the city.

Hello @G Pyros,

Thank you Bill for your kind remark.

As I am not familiar with any other market, I will explain how I determine the appropriate rental period for the properties we target in Las Vegas. Our target properties are mostly A-Class and are rented through the MLS.

Considerations:

Location

When evaluating properties, we usually limit our search to properties within a mile of the subject property. We also consider nuisances. For instance, a property located next to I15 is not comparable to a property located 1/4 mile away from I15, as shown in the aerial image below.

Below is an example of two subdivisions that are not comparable. The subdivision bordered in green has a much higher $/SF than the subdivision bordered in red. Although they are physically close and similar in size, they are not comparable.

Property condition is another factor. Below are two similar properties. The top property has tile floors and is highly upgraded and the other has carpet and not upgraded as much. The upgraded property rents for ~$200/Mo more than the lower property due to the condition and takes about 50% less time to rent.

Configuration

Even if two properties have the same total square footage and were built in the same year, configuration factors can make them dissimilar. For example, you could not compare the property shown below to a single or two-story property.

In Las Vegas, certain types of properties should not be used as comparables for most one and two-story homes. These include:

• Split level or tri-level homes
• Properties with short driveways
• Properties with a master bedroom smaller than 12 feet in any dimension
• Properties located near power lines
• Single-family homes with only a one-car garage
• Homes with tandem garages (where two cars are parked nose to tail)
• Properties with lot sizes less than 3,000 square feet

Seasonality

Depending on the time of year, the same property may take longer to rent than at different times of the year.

If we are in a slow period, I may look at time to rent in a high-demand period and balance the two.

“Recent”

In a slowly changing market, it may be possible to look back as far as 120 days. However, in a quickly changing market, even 60 days may be too long.

Inventory

A property can have a short time to rent when there is a shortage of rental properties may take much longer to rent when there is a lot of inventory available.

After Renovation

If the subject property is not in good condition, we typically choose comparables that are in a similar condition to the subject property after it has been renovated.

The Process We Use to Determine Time-To-Rent

1. We look for comparable properties that rented within the last 30 to 60 days within one mile of the subject property.
2. We eliminate properties that have issues or are not actually comparable.
3. We select or eliminate properties based on the after-renovation condition of the subject property.
4. We generally stay in the size; generally ±15% of the subject property SF.
5. For the segment we target, the lot size is not relevant as long as long as long as the lot size >3,000SF
6. We stay within ±5 years of the age of the subject property, if possible.
7. We try compare single-story to single-story and two-story to two-story.

Some Additional Thoughts

• If we find a significant variance in time to rent, it is likely that we did not select truly comparable properties.

• If a property takes longer to rent than expected, check the quality of its photos. For instance, based on the quality of the photos provided below, I would expect this property to take longer to rent.

• There is no online source for rental information. Most are wildly inacurate.

• Determining time to rent takes experience. I recommend finding an investment realtor in the market you are considering and work with them.

• Property managers are generally not great at estimating time to rent.

I hope this helps. Reach out if you would like to discuss this further.

Hello @Becca F.,

Good questions as always.

I broke my response into a few sections.

Seller Concessions

Whether you can get seller concessions depends on the specific property. While we occasionally get seller concessions, it is not something you can count on. In Las Vegas, inventories are extremely low, and prices for the segment we target have increased by 10% since January. Good properties go under contract in three or four days, so there is no incentive for sellers to offer concessions. If you go to a market where the population is decreasing and there is little buyer demand, then you can likely receive concessions. However, prices and rents are driven by increasing demand (population growth) so the rents would not keep pace with inflation. In the long term, you can not afford low-cost markets.

30% Down

Clients often choose to put down 30% or more because it results in lower interest rates and, sometimes, lower upfront costs. Additionally, interest-rate buy-downs are more cost-effective with a higher down payment. Therefore, the decision to make a larger down payment was based on a spreadsheet calculation, rather than emotions.

Regarding your comment about a higher down payment resulting in more money out of pocket, you are correct. However, if you are able to put 30% down and buy the rate down cost-effectively to 5.99%, you may actually be better off than putting 25% down and paying 7.75%.

Hard Money Loans

I have limited experience with hard money loans, with probably fewer than 10 clients having used them. In my opinion, the main issue with hard money loans is their cost and short duration.

For instance, the last hard money loan a client used had a 5% origination fee, market rate plus 5%, and a 12-month term with the interest amortized over 20 years. Although there were options for 18 and 24 months, the cost was significantly higher for these longer durations.

For fix and flips, hard money may be the only option because the property may not be financeable. The risk here is that if the renovation or sale of the property does not go well, you could have a serious problem.

DSCR Loans

I have limited experience with DSCR loans too. Probably five or less. Sometimes, DSCR loans can be an excellent option. It all depends on the rate and terms.

ARM Loans

A 5/1 or a 7/1 could also be a good option. It depends on how long the interest rates will remain high. Several of our clients believe that interest rates will come down before the presidential election. They are basing this on the belief that if the interest rates are not down to 5% or less, the Democrats will lose the Senate and the presidency. I'm not so optimistic. My best guess is that within three years we will be down to 5%.

So, if you believe that interest rates will decline significantly in 3 to 5 years, a 7/1 interest-only loan may be a good alternative.

Flipping

Flipping can be a profitable business, but it requires knowledge and favorable market conditions. Otherwise, you could lose a lot of money. Each month, I come across one or two partially remodeled properties for sale or remodeled properties selling for little more than they were purchased for. These indicate another victim of the "instant profit" flip.

Profitability flipping is difficult even for large corporations. Zillow attempted it, lost a significant amount of money, and ceased flipping operations. OpenDoor appears to be facing similar problems, but they continue to flip properties.

If anyone would like a free guide I wrote on profitable flipping, DM me.

Summary

Becca, I hope this helped.

Hello @Stephen Sokolow,

YouTube and other sources can provide general information. However, you will be purchasing a specific property in a particular location. The best source for mid-term rental information is a local investment realtor.

I conducted a study last year in conjunction with a few clients and produced a white paper. If you would like a copy of this free white paper, DM me.

Below are some of the results of our study:

• Short-term rentals and mid-term rentals are fundamentally different. Short-term rentals mainly cater to vacationers. During difficult economic times, fewer people tend to take vacations. This is why many short-term rentals in Las Vegas were sold during the COVID-19 pandemic. In contrast, mid-term rentals are primarily driven by business necessity. For instance, there is currently a nursing shortage across the US, and traveling nurses help to alleviate it. Our research shows that traveling nurses usually start with a 13-week contract that may be extended. They require a place to live, which is why mid-term rentals are driven by necessity.
• The primary consumers of traveling nurses are hospitals with trauma care levels one and two and neonatal intensive care hospitals. Properties should be within about 5 miles of such hospitals. However, the property must be in a safe location, which is sometimes further away than 5 miles from the hospital.
• There are two primary places to market furnished rentals, the MLS and sites like Furnished Finder. Our research showed that furnished properties rented through the MLS have a $.60/SF to $.70/SF incremental rent above non-furnished long-term rentals. On Furnished Finder, the incremental rent appears to be about $1.20/SF.
• Having a property manager handle the mid-term rental is important. We are working with a property manager who will handle midterm metals at a reasonable rate.
• Always buy a property that would also be a good long-term rental. You need the backup option in case the mid-term rental market changes.

Stephen, this above should get you started. DM me if I can help.

Hello @Rachan M.,

We use three strategies to achieve first-year positive cash flow, often in combination. The prerequisite is choosing a performing property. If you do not select a performing property, there is nothing that can be done to achieve first-year positive cash flow.

This document outlines three strategies for achieving positive cash flow in the first year. The strategies are as follows:

Interest Rate Buy-Down

You can pay an upfront fee to reduce the interest rate on your loan. Below is an example comparing the benefits of an interest rate buy-down.

In this deal, the interest rate was reduced from 7.75% to 5.99% by paying 2% of the loan amount upfront: 2% x 70% x 370000 = $5,180.

The buy-down rates and requirements seem to change almost every day. So, we implemented the process illustrated below.

Once we have a property under contract, we send the client's preapproval and a property description to multiple lenders for their current interest rate buy-downs. After receiving responses from multiple lenders, I review the options and present the best five or ten to our client. During a Zoom meeting, we select the best option for them. The client then closes with the selected lender.

Increased Down Payment

Increasing the down payment is an option to avoid negative cash flow in the first year. Here's an example: I calculated the percentage of the down payment required to achieve net zero cash flow with a 7.50% interest rate. The down payment needed for net zero cash flow was 36%.

After-Tax Returns

When it comes to tax savings, it's important to keep in mind that you may have negative cash flow throughout the year. However, you will recoup those losses and more through tax deductions when you file taxes.

Note: Depreciation is calculated as follows:

• Annual depreciation = $360,000 x 80% / 27.5 = $10,473
• Monthly depreciation = $10,473 / 12 = $873
• Depreciation is a credit and I included it in recurring expenses

Combine multiple strategies.

We usually combine multiple strategies. For instance, the following model incorporates interest rate buy-down, a 30% down payment, depreciation, plus maintenance, and vacancy.

Rachan, I hope this gave you some ideas.

@Malieka Henry

Mid-term rentals (MTRs) have generated a lot of interest lately. In this document, I will share a portion of a study I conducted with some of our clients. While some statements are specific to Las Vegas, most should work anywhere. I also included a SWOT analysis for MTR in Las Vegas.

Profitability Depends On…

Mid-term rental profitability depends on four factors:

• Keeping the property filled
• The ability to charge significantly more for furnished housing
• Active support of tenants, so we get good reviews.
• The right renovation components to keep maintenance and turn cost low.

Success Factors

I believe the following are key success factors:

• Location - Not just near hospitals, MTRs must be in a safe and attractive location, with direct access to freeways, retail, and entertainment.
• Appearance - The property must be attractive, clean, and a good place to live. I recommend installing automation as one differentiator from other properties.
• The furnishings must be durable and attractive to tenants.
• Quality photos and a property-specific website that provides extensive detail about the property, the area, fun things to do, etc.
• Flexible lease terms. Apparently, nurses get 13-week assignments with potential extensions. We want to accommodate this easily.
• Promoting the furnished rental on various sites, including nurse staffing sites, the MLS, FurnishedFinders, and others.
• Cost-effective local management to ensure that service issues are handled quickly and efficiently. Especially for new guests, 24-hour support may be needed. [The property manager we work with has a $250 start-up fee, 8% of the collected rent, and a $300 tenant placement fee. They also handle maintenance, utilities, tenant turns, including cleaning and touch-up if needed, contracts, inventory, utility billing, and more.]

SWOT Analysis

When evaluating an opportunity, I utilize SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Although SWOT is typically used for analyzing a company's position, it is also effective for analyzing opportunities.

Below is my SWOT analysis of mid-term rentals.

Strengths

• We can find properties in highly desirable communities with HOAs because MTRs require a minimum 30-day rental period. Most associations have a 30-day minimum rental period. According to FurnishedFinder.com, the average stay is 92 days.

• FurnishedFinder.com appears to be a primary source for marketing furnished properties. I believe there is a $99 fee to list a property.

• There is a national shortage of nurses, which will mean increased demand for contract or traveling nurses.

• If we select properties that are also good LTRs, we have a fallback option.

• The following is from furnishedfinder.com. With most furnished properties renting for more than $2,500, MTR seems to be a way to significantly increase cash flow.

  

Weaknesses

• Ensuring that the property is continuously occupied will largely depend on factors such as the unit, its location, furnishings, and related marketing materials. I provide a more detailed description of this under the Opportunities section.

Opportunities

• If MTRs are proven to provide superior income to LTRs, we can easily replicate success.
• Based on my observations of websites, MTRs appear different from LTRs. We can differentiate our offering by providing a simplified and easy start for guests. This includes gaining access and loading the necessary applications to control the garage door and other capabilities.
• The MTRs I've seen on websites only have simple photos, without a specific location. If we create a website for each property, featuring photos, a video walk-through, a guide to local attractions, shopping, weekend activities, and other unique features, I believe it will be easy to differentiate our offering.

Threats

• Decreased demand for traveling nurses. This does not seem likely due to the national nurse shortage.
• The market is flooded with competition. If this happens, we will likely convert the property to a furnished or unfurnished LTR.
• Due to Airbnb and VRBO now requiring short-term licenses in Las Vegas for properties to be listed on their sites, unlicensed properties may turn to renting their properties out as mid-term rentals. This could significantly increase competition.

Technology Requirement

Keeping vacancy costs low and high guest satisfaction high will depend upon the proper use of technology. Below are examples.

• Access control - Install remotely programmable smart key locks on external doors, such as on the door to the garage and the front door. Ensure that there is a way to change access codes for each new guest. Additionally, provide guests with the app and access code programmatically before their arrival date so that they can access the property. This will also enable the property manager to handle remote showings. We would use a service like Rently.

• Garage control - The system must be able to programmatically change the garage access code for each guest. Additionally, it should allow the property manager to remotely open the garage door for receiving items when there are no guests on the property. The best option appears to be myQ protocol opener. May also wish to have a digital keypad for allowing access to the garage. Below is an example of such a keypad. This will enable the property manager to grant access for deliveries and tradespeople.

• Smart TV - The access point for all information will be the smart TV. The smart TV will link to the website for this specific property.
• WiFi - Enable guests to quickly log onto Wi-Fi through a QR code.
• Ring-type doorbell - This is both a security feature and a way to track individuals entering and leaving the property.
• Property-specific website - Develop software that generates a property-specific website displaying distances to nearby shopping centers, airports, freeways, entertainment, and other relevant locations. (This is something we would provide to our clients.) This website would have appropriate links to information on all devices.
• Security - External camera(s), especially at the entrance, that records and retains video (cloud) for an extended period. This is desirable/necessary for overall security.
• All the technology must be integrated and operate seamlessly in the eyes of the guest. This may require additional software development. This is something we would provide to our clients.
• CO and fire detectors that also send notifications to the property manager.
• Smart thermostat - This allows the property manager to control the temperature settings when the property is unoccupied. And, to cool the property down before a new guest arrives.

Hope this helps someone.

Hello @Joanne Gonzalez,

You are in a difficult position. I hope this post helps.

Below is a decision tree for property one. If I did not cover all the cases, let me know.

Some recommendations:

Work with a property manager - No matter how much you believe you can save by managing your own property, it is likely that you will end up losing more. Selecting reliable tenants is a skill that takes years of experience to acquire, and only a few property managers can consistently do this. In Las Vegas, I am aware of only two such property managers.

Condo considerations

The following is true for Las Vegas; I do not know if all apply where you are. The net is that condos are poor investments compared to single-family properties.

• Short tenant stays - Condos usually attract tenants who stay for around two years. These tenants are typically mobile individuals who do not have children tying them to a particular location. In comparison, the average stay in the single-family and townhouse properties we target is over five years. So, condo vacancy costs are much higher than with SFR.
• High HOA fees - Condos typically have high HOAs, making it difficult to get a reasonable rate of return.
• Condos have a lot of competition - In Las Vegas, condos compete with apartments for tenants, which keeps condo rents low. After all, would you rather rent a 20-year-old condo, or a newly built apartment with multiple pools, a theater, a running track, an exercise room, and free WiFi?
• Financing limitations - While residential financing is available for most condos, investment financing may only be available if the complex has 50% or higher owner occupancy. None of the complexes I've investigated meet this criterion. Investors will most likely have to pay cash for most condos. Single-family homes and townhomes are easily financed.
• Condo cross-unit maintenance issues - Condos are in close proximity to other units, which can lead to unwanted interactions. For example, if the unit above yours has a leak, it can damage your unit downstairs. Unfortunately, you may have no way to compel the upstairs owner to fix the leak or pay for your damages. It can also be difficult to get in touch with the owner. Meanwhile, the problem in your unit may worsen, particularly if the leak causes mold to grow.
• The close proximity of neighbors - Your tenants are likely to complain about noise, cigarette smoke seeping through their unit, and other issues. Unfortunately, there may be little you can do to resolve such neighbor problems.
• Maintenance cost - Condo associations typically maintain the exterior of the properties, but you are still responsible for maintaining the interior and everything else, including the HVAC. In our experience, the annual maintenance costs for condos, single-family homes, and townhomes are about the same. However, this may not be true in other climates.

Location Selection

The location is the most important investment decision you will make. Your financial future is tied to the economic growth of the city where you invest.

There are too many cities to evaluate so I recommend a different approach. Start with an initial set of candidate cities (metros with a population greater than 1M) and then eliminate cities that fail any of the additional requirements.

• Metros with a population greater than 1M. Small towns may rely too much on a single business or market segment. Wikipedia
• Both state and metro populations are increasing. Do not buy anywhere if the state or metro populations are static or decreasing. Wikipedia
• Low crime - High crime and long-term appreciation and rent growth are mutually exclusive. Do not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.
• Inflation compensating - Every time you go to the store, the same basket of goods costs more and more dollars. In order to have the additional dollars needed to pay inflated prices, rents must rise faster than inflation. Therefore, a critical location selection metric is that rents and prices are rising faster than inflation. Rents tend to lag behind prices, so you can use the appreciation rate if you do not have historical rental data. Zillow Research
• Low operating cost - High operating costs can turn what appears to be a profitable property into a money pit. The three most apparent costs are income taxes, property taxes, and insurance. Insurance - ValuePenguin, Metro Property Taxes - LendingTree, State Property Tax Rates - Rocket Mortgage
• Low disaster risk - Natural disasters, such as tornadoes, can destroy entire communities, including jobs, shopping, and housing. If a tenant loses their home, they will immediately move to a new location with jobs and a place to live, instead of waiting one year or more for the property to be rebuilt. Even if your insurance covers the cost of rebuilding, it may be difficult to find new tenants because people have already moved away. Communities hit by natural disasters may take years or never fully recover. Meanwhile, your expenses, such as mortgage, taxes, insurance, and maintenance, will continue. To avoid this, choose a location with low-cost homeowners' insurance, which indicates a lower risk of natural disasters. Insurance - ValuePenguin
• Rent control - Some states and metro areas have implemented various kinds of rent control. Rent control may prevent you from increasing the rent fast enough to keep pace with inflation. It may limit your property manager's ability to select the best tenant. It may make evictions of non-performing tenants difficult or impossible. Never invest in any location with rent control.

At this point, you will have a small number of potential cities. The next step is to find a local investment team.

Hope this helps. Reach out if I can help.

Hello @John Anderson

The deals that make sense at any time include:

• Deals that will provide a long-term, reliable, passive income that keeps pace with inflation.
• Real estate is not a get-rich-quick scheme. It is a process for achieving financial independence over time, without having to quit your day job. Because real estate is a long-term investment, the initial return is not as important as what happens over the long term.

We employ three basic strategies to enable clients to achieve positive cash flow, in addition to selecting performing properties. In most cases, we combine two or more of these strategies. The three categories are as follows:

Interest Rate Buy-Down

You can pay an upfront fee to reduce the interest rate on your loan. Below is an example comparing the benefits of an interest rate buy-down.

In this deal, the interest rate was reduced from 7.75% to 5.99% by paying 2% of the loan amount upfront: 2% x 70% x 370000 = $5,180.

The buy-down rates and requirements seem to change almost every day. So, we implemented the process illustrated below.

Once we have a property under contract, we send the client's preapproval and a property description to multiple lenders for their current interest rate buy-downs. After receiving responses from multiple lenders, I review the options and present the best five or ten to our client. During a Zoom meeting, we select the best option for them. The client then closes with the selected lender.

Increased Down Payment

Increasing the down payment is an option to avoid negative cash flow in the first year. Here's an example: I calculated the percentage of the down payment required to achieve net zero cash flow with a 7.50% interest rate. The down payment needed for net zero cash flow was 36%.

After-Tax Returns

When it comes to tax savings, it's important to keep in mind that you may have negative cash flow throughout the year. However, you will recoup those losses and more through tax deductions when you file taxes.

Note: Depreciation is calculated as follows:

• Annual depreciation = $360,000 x 80% / 27.5 = $10,473
• Monthly depreciation = $10,473 / 12 = $873
• Depreciation is a credit and I included it in recurring expenses

Combine multiple strategies.

We usually combine multiple strategies. For instance, the following model incorporates interest rate buy-down, a 30% down payment, depreciation, plus maintenance, and vacancy.

John, I hope this gave you some ideas.

Hello @Branden Jordan,

Broad statements do not apply to specific markets. In this post, I will focus on the situation in Las Vegas.

2008 vs. Today

2008:

• 90 months of inventory
• The number of available jobs plummeted leaving a significant percentage without work.
• About all that was on the market were REO properties and short sales.

Today:

• 2.4 months of inventory and falling.
• Only a small percentage of Las Vegas properties purchased in 2022 or later are underwater.
• According to Monster and Glass Door, there are between 26,000 and 31,000 open jobs.
• The current number of distressed single-family homes (06/28/2023):
  • Bank Owned (REO): 12
  • Short Sale: 10
  • Foreclosure Stated: 13

I see no comparison between 2008 and today.

What are we seeing in the property segment we target? See the charts below.

Sales - Median $/SF by Month

Prices have continued their upward trend since January, driven by shrinking supply and steady demand. Year-over-year $/SF is down 9.8% due to a large increase in $/SF in April 2022.

Sales - List to Contract Days by Month

The median number of days on the market continues to drop rapidly. This indicates strong demand despite high-interest rates.

Sales - Availability by Month

This chart displays the average daily number of properties available for sale in a given month. The quantity of homes on the market is decreasing, which will drive up prices.

Sales - Months of Supply

The inventory is now less than one month, while a balanced market typically has a 6-month supply. Scarcity traditionally leads to an increase in prices.

Jobs

Jobs are the heartbeat of any city. Currently, Las Vegas has between 26,000 and 31,000 open jobs. There is between $18B and $26B for new projects under construction, which will create more jobs and bring more people to Las Vegas. And, more are coming.

Source: Thousands of California businesses have fled Golden State for Las Vegas

Conclusion

From what I can see and read, Las Vegas is currently performing well and is expected to continue improving in the future.