New SFH in Reno as first investment rental property?

Question

Newbie here. Has anyone looked at some of the new SFH in the communities around Reno, Nevada? the prices are around the mid 300k. What do you guys think of them as a buy and hold investment?

Brian Moore · Answer

Hi Johnny, I'm an out of state investor who closed on my first Reno investment in December and I'm happy to report a positive experience thus far. As some folks have stated in this thread, the appreciation play of a $300-400K SFR will likely be neutral on cashflow. I went the other route and chose a 2 unit with that same budget in a part of Sparks that was one of the more affordable parts of town. I wouldn't call it a 'rough' area (not a lot of crime) but all dwellings are 60-100 years old with the occasional run down property on each block. That being said cashflow has been great; $800/month (before factoring in Capex or maintenance expenses) which in my experience are great numbers given the proximity to CA. Also note that this was an MLS deal and I had a 1031 exchange about to expire, so I'm very happy with the outcome given these circumstances. My 2 unit won't appreciate like a SFR but I'm bullish on the TRIC driving appreciation to the area as a whole and my property is just off I-80 so very proximal for the growing workforce (i.e. renters) that the Industrial Center will bring. Best of luck and feel free to reach out for any questions or referrals.

Perry R. · Answer

Hey Johnny,

I live in Reno and I'm quite familiar all the neighborhoods. I've lived here most of my life but am originally from San Francisco. I have four rentals in various parts of town. I would be more than happy to give you feedback on any areas you're looking at. I'm not a realtor but a retires SAP guy that happens to own some real estate. Schools are a big factor in attracting good renters.

Perry

Brandon Cable · Answer

Hey Johny,

Ive lived in the Reno area most my life and have owned a couple homes for my primary residence. Ive been analyzing deals for several months now from the mls, trying to find buy and hold rentals. Strictly looking at cash flow and cash on cash return, there hasnt been great options, not to say there not out there but just sharing what ive found so far. However, the appreciation is excellent. My personal home has gone up 65k in just 2 years. Hope this is helpful

Best of luck to you

Brandon

Steven Scheetz · Answer

I live in Reno too.  Making a cash flow play here is pretty tough at housing prices where they are now.  Average rents tend to be at or only slightly above what a 75% LTV mortgage would cost you.  So essentially one month of vacancy could wipe out your entire year's cash flow.  Also Reno/Sparks tends to have pockets all over the place.  For instance just a few blocks to the south of my house, homes have been selling for 700k to $1M, but just a few blocks to the east of me, they are selling for 350k or so.  So dialing in an accurate ARV requires someone familiar with all the little pockets.  "Within 1 mile" doesn't really cut it here.  You have to look at the specific neighborhoods.

However, as an appreciation play, it's a pretty solid bet.  Even though the housing prices have somewhat plateaued in the last year or so, people seem to be fleeing the metro cities of California in droves for one reason or another.  So houses don't tend to stay on the market for very long.  Places like Reno, Vegas, Phoenix will likely be the beneficiaries of the continued mass exodus.  Reno's also doing some really rad stuff.  The city has really kind of found its voice as a destination town for outdoorsy activities with lively culture, a somewhat laid-back livability.  We've largely shed the reputation of "The Poor Man's Vegas" from about a decade ago.  We're 45 minutes away from Lake Tahoe, which will always be a destination hotspot for tourism.

I love my city. I'm proud to live here.  However, I will say if you're going to invest from out of state it is crucial that you work with someone here locally with boot on the ground, who is familiar with what's going on development-wise, and which pockets of neighborhoods that could be the difference between a $350k house versus $1M house.

Gloria C. · Answer

Thinking outside the box....

Considering all the special events in Reno/Carson that will come back am wondering if anyone would be interested in partnering for AirBnB.  I have the property, what could you offer?

Virginia Marphis · Answer

@Johnny Chewi

Great if you can get in the first phase. Depending on HOA fees, sounds like a steal!

I’m a realtor in the area. Which ones are you looking at??

Lana Sheta · Answer

@Johnny Chew — tagging on to what @Alex Ficco said— Reno is mostly an appreciation play at this point, unless you rent by the room, in which case, cashflow is still very possible.

Demand far outpaces supply with room rentals. Rooms with shared bathrooms easily rent for 600-650 and master bedrooms rent for 775-900. Reno has a ton of young professionals and students who are financially responsible but want to save a bit on rent by renting a room instead of a whole apartment.

I have a 4/2 that I bought in August 2019 and rent out to students and young professionals. It nets ~$1100 in cashflow monthly and exceeds the 1% rule. Those numbers are a bit more challenging to find now, but not impossible. I've seen a couple properties in the 300-400K range with decent cashflow potential.

If you don't mind a somewhat more management intensive property, then room rentals are a really good option.

Virginia Marphis · Answer

Johnny,  I'd love to offer you a free consultation via Zoom.  We can discuss the pros and cons of SFH investments in the Reno area and what you're looking for in return. Cash Flow, Appreciation, Value add.   The market is competitive in that price range and I'd love to interview for the job to be your boots on the ground, realtor.  Either way, I'm happy to help.

Alex Ficco · Answer

The cash flow game is tough in Reno right now, especially if you're trying to find a "1%" deal or anything close to it. We just bought a 4/2 SFR near the university as a flip. We are converting it to a 6/3 to hold, as we will be able to rent it by the room. Numbers look good for a cash-out refi. You may be able to do something similar to get closer to your goals.

Marian Huish · Answer

Possibly @Gloria C. but not clear on what you’re offering!?  Do you already own a property you’re needing help w/ for STR?  Or trying to buy one?

New SFH in Reno as first investment rental property?

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