Looking for connections in Las Vegas

[Ryan MacArthur]

Hello everyone my team and I are venturing into Las Vegas area and looking to connect with people in the area to find small multifamily or sfh to invest in. Preferably off market stuff. Looking forward to meeting and connecting with you!

[Eric Fernwood]

Hello @Ryan MacArthur,

Flipping properties in Las Vegas can be challenging due to the often insufficient margin between a property in poor condition and one that is market-ready. However, if your goal is to have dependable passive income that keeps pace with inflation and that you will not outlive, then Las Vegas is an excellent location. Keep in mind, though, that a property is no better than the tenant who occupies it.

When I first moved to Las Vegas, I spent a lot of time identifying a segment with a high concentration of reliable tenants. For me, a reliable tenant is someone who:

• Has stable employment in a market segment that is very likely to be stable or improve over time
• Pays all the rent on schedule
• Takes care of the property
• Does not cause problems with neighbors
• Does not engage in illegal activities while on the property
• Stays for many years

Once identified the segment I wanted to occupy my properties, I then determined what and where they were renting. From this, I was able to create what I call a property profile. At a minimum, a property profile defines the following characteristics:

• Location - Locations where significant percentages of the target segment live today.
• Property type - What type of properties are they renting today? Condo, high rise, multi-family, single family?
• Rent range - What the segment is willing and able to pay. Usually, this is about 30% of their gross monthly household income.
• Configuration - Two bedrooms, three-car garage, large back yard, single-story, two stories?
• Wants - Physical features that the segment values. For example, granite kitchen counters, bars on the first-floor window, or a three-car garage.

Once we identified these characteristics for the target segment, we simply purchased similar properties. So far we've delivered over 470 investment properties. Our average tenant stay is over five years, and we had six evictions from a tenant population of over 1200. So we know our property profile is on target.

I received two or more contacts from wholesalers each month. In 15 years, none of the properties they offered matched what we required. Even scanning the entire MLS, only about .4% of all properties are worth considering.

What many people do not understand is that there is almost a one-to-one relationship between a property and a tenant segment. The reason is that people have housing requirements and are unlikely even to consider properties that don't match all the requirements. Only a very narrow segment of properties will match all of a tenant’s requirements. See the image below.

Las Vegas has three major tenant pool segments. Below are the results from a study I did comparing monthly rent to the average number of years tenants remain in the property.

Vacancy cost is a function of how many years tenants stay in the property and the time to rent. On paper, Las Vegas C-class properties look like cash cows. However, once you subtract vacancy costs most are money pits.

Clients come to us to purchase highly dependable passive income properties they will not outlive. The only segment that will match this requirement is a subset of the segment I named Permanent on the above diagram. The narrow segment we target has also been extremely reliable. Even during the 2008 financial crash, our clients had zero decreases in rent and zero vacancies.

After choosing the investment location, the next most important decision is selecting the tenant segment. As mentioned earlier, your property is only as good as the tenant that occupies it. Once you identify a segment with a high concentration of good tenants, purchase similar properties. This approach eliminates the guesswork.