Any strong opinions about Las Vegas for SFH?

Question

Hi folks. I’m still in learning mode but starting to focus on specific markets for buying my first SFH to put to use as an investment/long term rental property.

Las Vegas is one of the markets I’ve been interested in. I know several people there and it’s easy to get to for me (I live in California). I feel like I haven’t seen a whole lot of discussion of LV on BP and I’m wondering if people don’t think it’s a good place to buy / attract renters.

Would anyone be willing to share strong opinions one way or another? Or point me to resources they’ve found useful re: Las Vegas REI?

Thank you!

Eric Fernwood · Answer

Hello Account Closed,

As others have stated, the Las Vegas market is very strong. Here is how I see Las Vegas from an investors point of view:

• No state income taxes.
• Pro business government actively seeking growth and diversification business opportunities.
• Average property tax: 0.55%
• Time/cost to evict: <30 days and $500
• Economic activity: Currently, $24B under construction (and more announced), which will create thousands of new well paying jobs and bring more people to Las Vegas. Remember that this is a town of 2M population so $24B investment has a tremendous impact.
• Google is building a $600M data center. Facebook moved their servers to Las Vegas as have other providers.
• Commercial energy cost: California: $0.​19/KwH, Nevada: $0.08/KwH. Also, Las Vegas is one of the few cities in the US with dual sources of power, critical for servers and electricity dependent industries like data centers and Internet switching.
• The fiber optic bundle connecting Southern California to the East Coast runs under Las Vegas Boulevard, which is why Switch Company, one of the largest data centers in the world is located in Las Vegas.
• 87.5% of Clark County is federally owned. Today, the amount of vacant buildable land is <28,000 acres, much of which is not viable for residential development. Consumption rate is about 5,000 acres/year. See the GIF below​. The areas in brown are federal land. The time-lapse only goes through 2018 and there was a large amount of development in 2019 so even less land is available now. I believe that the shortage of land and increasing population almost guarantees prices and rents will rise.
• Many people moving from California to Las Vegas. Currently >30% of properties sold in Las Vegas are to California addresses.
• Affordable. The best price range for single family investment properties is between $250,000 and $350,000.
• Return with 25% down is usually between 3% to 5% after all expenses including management, insurance and debt service.​ Add about 2% for a cash purchase.​
• Average appreciation over the last 9 years: 11%. This year is likely to be above 6%
• Rents increasing rapidly. 4.5% last year, and we expect it to be higher this year due to the inventory shortage.
• Landlord insurance on a $300,000 property is about $450/Yr.

In summary, Las Vegas is a good market for investors today and should remain so for the foreseeable future. If you would like more details on our view of the market, please see our 2020 Annual Investor Outlook under our BP Member Blog.

Dan Mumm · Answer

Vegas has an extremely robust rental market. Gigantic tenant pool, average SFR's here rent in 1-2 weeks and typically get applications coming in within days. There's a lot of strong economic factors, no state income tax, influx of California residents, great weather, relatively new construction of homes, no snow/landscaping cleanup really necessary, don't have to deal with termite damage.

Brad Bellstedt · Answer

Vegas is a really strong market that has seen back to back years of roughly 13% appreciation (Like 2016 and 17) and has leveled out to about 6% in 2019. We see a ton of investment here in the higher end and more desirable neighborhoods but the cap rates are 3-4% typically. Desirable schools and amenities so low vacancy and the houses here are generally not that old relative to most of the country especially in these neighborhoods. (Like 1990s at or newer) In less desirable B/C neighborhoods you can expect about a 4-6% cap and 6-8% roughly in the C-/D neighborhoods. I'll post the market stats I collect for the entire Las Vegas valley (Including Summerlin, Henderson, Las Vegas, North Las Vegas, Lake Las Vegas, Paradise, and Boulder) below for you to take a look at.

Account Closed · Answer

Thank you so much, @Brad Bellstedt, @Dan Mumm, and @Eric Fernwood

I REALLY appreciate the insight and info.

I am going to make a trip out to LV in a few weeks, and I'm going to plan to take a look at a few neighborhoods and a few houses for sale

Sean Poulos · Answer

@Eric Smith

This may help in your decision on Vegas.

https://www.redfin.com/blog/booming-real-estate-markets/?fbclid=IwAR16-AteS4RgI75UnOSA89edNGC_29tm3KifT81ORhFhK3HMQ2MEYOAjstg

Emma Fitzgibbon · Answer

I am asking about both

Bill B. · Answer

SFH is on Fire in vegs, rising prices, lower inventory, rents increasing, almost zero vacancy. But it sounds like you’re asking about mobile homes. You might want to start a new thread. This one has single family homes in the thread title.

Emma Fitzgibbon · Answer

Any COVID updates to the LV housing market? I know unemployment is one of the highest in the country. Anyone anticipating a drop in home prices or changes for renters?  I noticed a good amount of mobile homes for sale in vegas on redfin, anyone know about that market or does the lot rent suck up most of the potential profits?? thanks

Brad Bellstedt · Answer

Those headers stand for Active, Act(N) is a new way I am measuring what is active, Under Contract, UC(N) is a new way I am measuring what is under contract, Expireds, X(N) is a new way I am measuring what is expired. (Are you getting that the (N) means, I am trying something new? Good, I'll skip those going forward) Withdrawn, Sold, Average Days On Market, Median Days On Market, Sales Price Average, Sales Price Median, Price Reductions, List Price to Sales Price Ratio, and Weeks of Inventory.

Any strong opinions about Las Vegas for SFH?

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