What kind of numbers are you using for buy and hold in Vegas?

[Brad Bellstedt]

Hello everyone!

My name is Brad and I am a local Realtor here in Las Vegas with 5 years of full time experience. I'm looking to work with more investors here in our local market. I've read The Millionaire Real Estate Agent, The Ultimate Guide to Working with Investors, and plan to read The Millionaire Real Estate Investor in the next week or so. I've run more than 100 properties (from condos, to SFR, to multifamily) through the BP calculators for buy and hold investments and a friend of mine who works with a couple of investors advised me what numbers to use for my calculations.

My questions are:

What % of rent are you budgeting for vacancy?

What % of rent are you budgeting for maintenance?

What % of rent are you budgeting for CapX?

What CAP rates are you willing to purchase at? (I know at one time it was 10, then 8, then 7 but I see a lot of investment properties being purchased for under 7)

I know these numbers will be different in different markets so I'm trying to nail these down for the Vegas market. Any advice is greatly appreciated. 

Thank you,

[Dan Mumm]

Vacancy: 1-3% (very robust rental market for average product here)

Maintenance: 3-5% (most inventory is new with lower maintenance cost than other markets)

Capex: Most variable, I add the cost of all the components, divide by the age to budget an annual amount. For example, water heater costs $1200, lasts 8 years, = $150/yr or $10/mo. Add this for all of the components. In Vegas, pay close attention to AC and water heater as they do not last as long. Roofs last longer here than most markets since mostly tile.

Residential trades at well under a 7 cap, sometimes 3-4 cap.