All Forum Posts by: Bill Schrimpf

@Dave Meyer - Thanks! Your On The Market podcast about "Lock-In" got me thinking about this and my local market.

We get a front-row seat to a real-life, unscripted Master Class on residential real estate supply and demand. I am a student, just as you are. The market is changing.

Supply is super low; demand is high, and the market is on FIRE, or it used to be! 30 days ago, listings at all but the highest price levels received several offers over asking price in a weekend, and buyers made concessions like skipping most inspections and paying the sellers closing costs to be competitive!

Pricing "strategy" for a new listing in Reno-Sparks over the past several months has been bananas! The not-so-strategic, strategy was to pull 45 days of comps, take the highest, add thousands, maybe tens of thousands, and that is the listing price. It worked.

In April 2022, 75% of transactions were financed, and 25% were cash, says the Reno Sparks Association of Realtors. With fantastic speed, mortgage interest rates moved from about 3% to about 5.25%! Assuming a buyer with good credit wanted to finance a median-priced home in Reno-Sparks with 10% down, the monthly payment increased by $700! That number has a real impact on household budgets and loan underwriting. Today, 13.4% of active MLS listings in Reno-Sparks have a price reduction. Demand is dropping.

What about new listings, e.g., supply? For those considering selling their house, what will they do next? Sell their current home that likely has a 3% interest rate to buy another at 5.25% or higher? Not unless they need to! Sellers won't sell until it makes sense for their household circumstances and budget. New home builders struggle with labor, lumber, and global supply chain issues. Supply stays tight.

This real estate agent, real estate nerd, non-economist, who does not own a crystal ball, has a gut feeling for the next few months. My gut says the Reno-Sparks market will remain a hot seller's market; however, we will stop skipping across the sun's surface! Supply stays tight, but demand drops. The day's question is how much and how fast demand declines.

As a Realtor®, I often am asked when is the right time to sell or buy. My answer remains the same. The best time depends on what is best for your family and your situation. Timing the market (and interest rates) for more than a few months often leads to regret.

For those of us that have been skipping across the sun in the few months, where do you think the market is going?  

@Jameson Schwab - Check out Terry Redmon for CPA and Cheri Hill fur business entity formation.  Both are very well rounded pros but have different specalities.

@Osvaldo Segura -  House hacking is definitely doable right now, particularity if your can swing a hammer or pay for some remodeling! As you know, its a sellers market right now but I cannot count the number of times I have heard people lament about not buying 2 years ago... Cash is king, but about 20% of all transactions are cash so that leaves about 80% financed.

@Alexander Yates - Congrats on your deal!  You make a good point about getting in and making something happen!

Why are you changing your strategy?  Do you need the cash?  If a tenant is moving, rehab and bring the unit rent to market.  Depending on the lease and the local market, you can raise rents regardless...

@Bryan L. Ramirez - Hi Bryan - Welcome to the thread. Where in NV are you looking? For FHA, you may run into maximum loan limit for multi-fam depending on the area. This LINK will take you to the FHFA page that describes limits; at the bottom is a link to a spreadsheet that shows multi-fam (up to 4 units) and the limits by county.  As an investor, if you can avoid FHA, do it.  The rates are higher and usually have private mortage insurange.  That being said, FHA can provide a great path to getting started.

Limits for the Reno area...

@Charlie Lockwood - What city are you in?  Generally, Sparks is more reasonable with these these conversions.  I have not done one but if your a DIY person, you can do your own everything, including permits and drawings.  Had a friend do a major basement conversion.  Some of this drawings were pencil sketch on graph paper but he ended up using the free license for Sketchup.  It's actually pretty cool once you watch some getting started videos on how to use it.  https://www.sketchup.com/ . Hope that helps a little!

Hello @Garrett Brown -If house hacking with some roommates and some appreciation is your thing, then you will likely be able to find something with a little patience and perseverance! The market is super tight right now. Houses that are in decent shape and not WAY overpriced, just overpriced a little, are going under contract in a few days. Rents are not far behind. One thing is for sure, prices have been going up. October 2020 median price of a house in the Reno area was $455k; October 2019 it was $399k.  

If you are dipping your toes into being a landlord right now, you should know that COVID has changed lots of rules. I suggest you make sure your up to speed on the new rules. Here is a link to Washoe County website regarding evictions

@Bradley Cladianos -

Good questions! This answer is a bit of a cop-out but "it depends". I can tell you, I work with investors in Reno that are successful house hackers, but every situation is different. The primary factors that drive success are determined by your finances (down payment, mortgage insurance, credit score, etc.). A snapshot of the "small multi-family" market for last month shows 43 listings at an average of $233k/door. Hope that helps.

@Account Closed -   

The real question is how does a property owner or property manager place a tenant? Since the NV moratorium on evictions will come to an end in about 30 days, there will be lots of people looking for a place to live in 60 days that still cannot pay rent. What does a property manager do?

I suspect the sunset language will be amended and extended.

The language basically says if your renting a single unit (SFR/condo) or live in half a duplex, the law does not apply. So, anyone that is not in SFR's or house hacking a duplex cannot make a financial decision on renters! That leaves lots of other small-time investors in jeopardy.

I fully agree that its important to be compassionate but what about the owner that needs to pay a mortgage! It does not help the renters if the 4-plex is foreclosed and wrecks the owners credit.

Wow - Clark County NV has made source of income a protected class.  According to the FAQ they provided, property owners are not allowed to say "two years of steady emplyment required".  How will property owners handle this situation in Vegas?

Clark County Source Of Income FAQ