I currently live in Las Vegas and have 2 multifamily units, which do ok and are cashflow positive. However, it is only recently that I've been taking real estate investing a lot more seriously as I've been trying to read and listen about it as much as I can. Currently I'm interested in multi-family units between 350-500k. However, I noticed that I'm looking at like 5-6% cap rates, (though I'm pretty conservative with my expenses), and they appear to be in warzones. My questions would be:
1) Should I still be looking in Vegas for Multifamilies? Or is it time to branch out to other cities? What other cities?
2) Should I be looking for other types of investments in Las Vegas? Commercial (though usually out of my price range for now)? Airbnb/Vacation homes (though there is a lot disagreement about allowing short term rentals here)?
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
Look for value add multi-family and stop focusing on cap rates. Vegas is a strong market, with great job growth, population growth and still good rent affordability.
Rental Property Investor · Columbus, GA · Member since 2016 · 623 posts · 337 votes
7y
There are so many ways to approach this question and many will be good. If you want to do this on your own, you’ll most likely move more slowly, but it can be done. You’ll want to continue to build up your cash reserves and look for a bigger deal. If risk averse, you’ll want to take it slowly while you build your portfolio. There’s nothing wrong with this approach.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y
You’ll also want to redefine “war Zones”. Compared to many cities Vegas doesn’t have any “war Zones”. Maybe you mean poor neighborhoods? There’s a whole complex of nice fourplexes in that gated community at hacienda @ Maryland down by UNLV. I will agree Vegas isn’t great for small multi but that’s mostly because they are the opposite of the housing stock. (Stucco siding, less than 20 years old, pitched & tiled roofs)
Maybe look at one of the little trailer parks, at least as an eventual land play. Maybe 203 houses for the same price would bring in just as much rent with much less maintenance and drama.
SACRAMENTO, CA · Member since 2018 · 144 posts · 76 votes
7y
Hey Devin,
Have you looked into any out of state markets?
There are markets out of state where you can generate more cash flow with a good purchase price for multi-units and SFRs! I would definitely branch out and see what other options there are for you so you can get more out of it.
If you are looking for smaller multifamily properties in Las Vegas then one option may be to do direct to owner marketing in order to get some leads and potentially a better deal. Your other option would be to invest out of state.
I've spent so much time crunching numbers in Vegas, (maybe not creatively enough), I havent dabbled in other areas. Is there a location in the west or SW area you recommend as maybe a starting point?
Rental Property Investor · Teaneck, NJ · Member since 2016 · 567 posts · 291 votes
7y
@Devin Tang as an investor you need to grow and maybe move from duplex to 4-plex or maybe small commercial property (6-10 units).
If you do not have money for downpayment, may be you can consider teaming up with some that have a similar investment plans? You can go to meetup groups and look for a partner.
You can also invest out of state, and there are so many ways to do it (for example read the book by David Green about out of state investing).
I'm in accounting and finance, so basically a numbers person. The article summarizes Las Vegas appreciation for January double digits 12% vs national average of 4.7%. This number will slowly decline as inventory increases, as doubled in Las Vegas for about a 3 month supply. However, a 6 month supply is considered balanced. Thus, technically still in seller's market.
Las Vegas will continue to lead nation in appreciation, as these numbers are based on most current 12 months. Meaning as Feb'18 drops off, and Mar'19 gets added, the Mar'19 report will reflect the current 12 months. This means is you know the past 11 months, then the 1 month in Mar'19 cannot change numbers that much for year to date (YTD).
My suggestion is to stay in the hottest market in the nation, since you live there. Look for value added 4plexs near the strip, spring valley, and east of 95.
As @Bill B. mentioned, gated community at Hacienda and Maryland is a good choice. All units have a one car garage, which is a rarity.
Investor · Member since 2018 · 43 posts · 14 votes
7y
Just adding my two cents. Vegas has been absolutely terrific for me in terms of multi family. The past couple of months have been slow on listings but are already starting to pick up finally. I know my goal is to pick up another 2-3 properties this year then possibly look at another market but things are just too good right now for me at least. Most of the multi families here in Vegas are not in the most expensive areas of course but depending on how much value add is in the property you can definitely find a deal. The way it's looking by the end of this or next year pricing on these properties may be too high to get that cash on cash return that I look for.
My advice would be first to stop looking at Cap Rates. Cap Rates should not be the B all and end all of an investment decision because really a cap rate is only a measure of present value and does not take financing into account. So unless you are not going to raise rents, make improvements and are buying all cash, its pointless.
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
Look for value add multi-family and stop focusing on cap rates. Vegas is a strong market, with great job growth, population growth and still good rent affordability.
I understand adding value to multifamily homes and appreciation in Las Vegas. But from my understanding, though I'm still new to this, the 4-plex units here in Vegas are mostly C-D neighborhoods. Maybe others who own them here can chime in, but have rents really gone up in these units? Have prices gone up so high that a decent deal is hard to find? If rents are fairly stagnant in these units, can I expect to gain any sort of appreciation in these investments?