PSA: Institutional Investors in Vegas + rents spiking rapidly

[Account Closed]

PSA: Vegas rents have spiked significantly the last 2-3 months due to high rental demand, low supply and institutional investors heavily investing in our market. The institutional investors have been listing homes for rent at a few hundred dollars over market which is quickly pushing up rent rates for detached SFRs across all neighborhoods of Vegas.

I gave an example a few months ago in North Las Vegas. Rents were hovering around $1,495 early 2021 for a standard 3 bedroom home under 1,500 sq.ft. That same style home now has market comps closer to $2k/mo. Progress Residential (parent company Pretium) seems to be taking the lead on pushing rent rates to historic highs in Vegas. 

Cash offers are back in full swing in Vegas and I'm seeing a trend of more 1031 Exchange money along with many more institutional investors + ibuyers. The institutional investors have been in Vegas on a small scale for many years but now they are swarming our market. The institutional investors seem to be focusing on any detached SFR under $400k. It doesn't matter the zip code or location....they are buying in all areas.

It doesn't seem institutional investors are slowing down anytime soon. The mom and pops and smaller real estate investors across the US now have Wall Street to contend with when trying to enter this asset class.

Here's a snippet from an article I read on multi-housing news (BFR platform stands for Build For Rent):

"capital has been flowing into the space from institutional investors since 2020.

Lennar Corp., one of the nation’s largest homebuilders, launched a $4 billion BFR platform with Centerbridge and Allianz Real Estate and other institutional investors.

The Great Gulf Group formed a SFR partnership with Westdale Real Estate Investment and Management and a global institutional investor with $200 million in equity to build 1,000 to 2,000 BFR homes a year. The partnership is initially targeting markets in Texas, Florida, Georgia, Arizona, South Carolina and North Carolina.

Avanta Residential, the SFR division of Hunt Cos., formed a joint venture with Iron Point Partners to develop BFR properties across the United States, Walker said.

He also listed eight significant investments in the SFR market dating back to May 2020 by Koch Industries, JP Morgan Asset Management, Brookfield Asset Management, Blackstone Real Estate, Nuveen Real Estate, two by Rockpoint Group and Pretium Partners and Ares Management.

In January, Pretium and a group of its investors, as well as funds managed by the Real Estate Equity and Alternative Credit strategies of Ares acquired Front Yard Residential Corp. in a $2.5 billion deal to take nation's second-largest SFR owner-operator private.

Within two weeks in October, Rockpoint Group entered into a $250 million deal with Resicap and a $375 million joint venture with Invitation Homes, the nation’s largest single-family rental owner, to deploy more than $1 billion into acquiring and renovating properties across the Southeast.

And Walker expects there will be more significant investments to come. “We think it is in the very early innings as an institutional class,” he said.

A vast majority of growth will be in 18 markets,” including Atlanta; Dallas; Phoenix; Charlotte, N.C.; Nashville, Tenn.; Tampa, Fla.; and Las Vegas. He said they would also be looking at Austin, Texas, and Greenville, S.C."