All Forum Posts by: Brian Walters

 What part of town in Vegas is the unit?  I've been researching Vegas condo investments and always interesting in connecting with others doing the same.

@Dallas Tung, looks like a great deal.  What part of town is this in?

That's not entirely true.  The city has issued licenses, they are just very limited, hard to get, and there are a lot of restrictions around how it can be used.  There are less restrictions in North Las Vegas and Henderson.

The city is very protective of the big casino/hotel operators, and rightfully so.

Quote from @Eric Fernwood:

Hello @Marco Ramirez,

I believe Las Vegas is an excellent long-term investment location. While I could list several reasons for this, I will limit myself to two.

Land shortage - Las Vegas is a small island of privately held land in an ocean of federal land. 87.5% of Clary County is federally owned. 85% of Nevada is federally owned. See the aerial view below of Las Vegas in 2020.

As you can see, room for expansion is limited. In the near future, Las Vegas will only be able to expand through redevelopment. In some areas, this has already happened.

Population growth is steady at 2-3% and is projected to continue to grow (https://247wallst.com/city/las-vegas-nv-will-be-among-the-fastest-growing-cities-by-2060/.) So the demand for housing is increasing.

The combination of limited room for expansion and increasing demand almost ensures that prices and rents will continue to rise for the foreseeable future.

We've evaluated condos many times over the years and always decided against them for the following reasons:

• Short tenant stays - Condos typically attract tenants who stay for about two years. These are mobile people with no children to lock them to a location. In comparison, the average stay in the single-family and townhouse properties we target is over five years.
• High HOA fees - Condos typically have high HOAs, making it difficult to get a reasonable rate of return.
• Condos have a lot of competition - In Las Vegas, condos compete with apartments for tenants, which keeps condo rents low. After all, would you rather rent a 20-year-old condo, or would you prefer a newly built apartment with multiple pools, a theater, a running track, an exercise room, free WiFi, etc?
• Financing limitations - While residential financing is available for most condos, I believe investment financing is only available if certain criteria are met (such as 51% or higher owner-occupants). Investors will most likely have to pay cash for most condos. Single-family homes and townhomes are easily financed.
• Condo cross-unit maintenance issues - Condos are in close proximity to other units. The result is unwanted interactions. For example, if the unit above has a leak, and your unit is downstairs, it damages your unit. You have almost no way to compel the upstairs owner to fix it, let alone pay for your damage. Sometimes it isn't easy to get hold of the owner. It could take days or weeks. Meanwhile, the problem in your unit gets worse. This is especially true if there is mold caused by a leak upstairs or a unit on the other side of the wall.
• The close proximity of neighbors - When neighbors cause problems, your tenants will complain about noise, cigarette smoke seeping through their unit, etc. There's nothing you can do about such neighbor issues. One problematic neighbor in a condo will have your tenants wanting to leave instead of renewing the lease.
• Maintenance costs - Condo associations typically maintain the exterior of the properties, but you still maintain everything else, including the HVAC. Due to the climate (Mojave Desert), the construction materials used in single-family properties make them very low maintenance. In our experience, the annual maintenance costs for condos and single-family properties are about the same. This would not be true in other climates.

I recommend single-family homes and townhouses that target a specific tenant pool segment. The ones we targeted performed well over the +15 years we've worked with investors.

Great insight as always Eric. I read as many of your posts as I can to learn about the Vegas market. I've seen this opinion on condos before and agree with several of them. My question though is what would you recommend for investors targeting condos right now specifically because of the price point. Typically you can get a 2-3 bedroom condo in a B or better neighborhood for well below what a 2-3 bedroom SFH would go for. To me at least this has been part of the attraction of condos in the city (though admittedly haven't closed a deal yet). The capital needed to start investing when that investment is a condo compared to a SFH is far less, when comparing similar areas.

Any recommendations for investors with limited capital to get started in investing in this great city?  

Thank you for your time. 

My family and I moved here a little under 2 years ago and are working to get into real estate investing.  Happy to talk as someone that moved here knowing very little about the area.

I agree with what many have said here.  Vegas is too big to just say OK, no more water, let's turn it all back to desert. 

The reason the water levels are going down are not because of Vegas, though that doesn't mean Vegas can't/won't be impacted.  There are ongoing changes and policies already happening to help curb the water levels going down.  There's also going to be a lot of investment into finding a solution as whoever figures it out is likely to make a lot of money in the process.  

And as others have mentioned here, it's not just Las Vegas that uses that water.  If the thought it this source will run out and it's the only possible source then most of the southwestern US will end up the same.  I'm always confused why people only say Las Vegas is the only place in trouble because of this.

@Michael Mackney, I'm in a similar situation.  Spent the last several years learning as much as I can and last year we decided to start looking.  

When I first started talking about it my wife had zero interest.  It's all numbers to her, numbers that don't make sense and she doesn't care to try and have them make sense.  I tried the read Rich Dad route, she finished it but I think the exact response was "meh". 

She fully trusts me with making decisions around this, even with no experience, but I wanted her to be more involved so it felt like an "us" decision instead of just me making it.  She has come to look at properties with me, given her input there and listened as I say what my research has found.  I think that's about as far as I will get with her, at least until maybe we are further along and have several doors, and I've accepted that.  

I can't make her passionate about something she isn't, and I wouldn't want her to be.  We trust each other and will be involved in some areas together, while I take the lead on others.  Hopefully it all works out in the end.  Good luck.

Sounds like a great success.  What part of town were each of the condos in?

I'm trying to start investing in Las Vegas, specifically in condos because that's what our savings allows for right now so always interested in talking to those that have done it.

Depends what you're looking for. I've read about people being successful with STR in both North Las Vegas and Henderson, where that's much harder to do (legally) in Las Vegas itself. Also, depends on if you're looking single family, multi, condo, and even going down to the individual areas of each. I've been in different parts of North Las Vegas that are very different than others.

Personally, I look all over town, I'm willing to look almost anywhere where I think the deal could be worth it.

My answer is putting down as little as possible to the point where you are comfortable with the numbers.  What's the amount you're willing to put into a property and what are you looking to get out of it?  I'm not putting $100K in where my analysis looks like $100 a month in cash flow.  So it's hard to say what's the right number or percentage.  It's about what you're comfortable with at the start and what your long term goals are with the purchase.