All Forum Posts by: Account Closed

@Phillip Dwyer I agree with you that hedge funds are not the sole reason of rents going up but they are a factor because they work off spreadsheets and are an unemotional investor. 

The local community is being squeezed financially with increased rent rates from increased demand/low supply (variety of factors from the pandemic and previous housing cycle). Many of my Owners are feeling the humanitarian need not to take a current tenants to the higher market rent rates. Real world examples from this week...

Current rent $1,410 and mom and pop owner taking rent to $1,575. Owner didn't want to gauge single mom. Progressive Residential is renting down the street for $2,000 (mom and pop aware of this significantly higher rent rate). 

Another example, local convention worker laid off and still paying rent. Rent significantly under market. Mom and pop aware...they are not raising rent due to emotional reasons knowing they tenant is a single mom w/ 2 kids. 

Mom and pops investors have a significantly different view on ROI. Institutional investors are coming into our market and are working off spreadsheets. I'm selling a house for an investor now that is rented for $1,495 and the institutional investor who is purchasing plans to list the house for $2,100/mo. This tenant, who has resided in the home since 2016, is being displaced as she can't afford the higher rent rate.

I feel for the local population.  As a local Vegas resident I'm sure you do to. Wall Street doesn't care.

@Jay Hinrichs I don't know as fact but I've heard apartments in Vegas are getting full and some have 30 day wait lists. 

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."

It's another version of Wall Street capitalizing on main street...institutional investors like Progress Residential are increasing rent rates on the working class and increasing the price of entry level housing across the markets they enter, Vegas included.

Pretium Partners, the parent company of Progress Residential, raised more than $1 billion in 2018 that was earmarked to expand the company’s single-family rental business. Here's a statement from the company: "the new fund’s strategy is to provide investors with access to a diverse pool of single-family homes across attractive major markets in the U.S. that are experiencing above-average employment and population growth. We are confident that our leading real estate platform, deep sector expertise, and operational advantage will enable Pretium to continue to acquire, renovate, and manage single-family rentals, while seeking to provide our investors with the risk-adjusted returns to which they are accustomed.” The fund attracted a “diverse” group of investors from around the world, including insurance companies, pension funds, and high-net worth individuals. 

Invesco Real Estate gave Mynd $5 billion to buy 20,000 homes in the United States in the next three years on behalf of pension funds. Institutional investors are crossing over from multifamily properties to single-family rentals. 

Fascinating to follow institutional investor's expansion but sad to see how wall street is treating main street tenants. I'm sure the local government will eventually get involved and Vegas will have rent control in the next year or two.

Progress Residential appears to be is a hedge fund buying SFR's in Vegas. We are seeing more and more rentals being listed by them. They apparently have 300 homes sitting vacant just waiting to be turned into rentals...they just can't turn them over fast enough as there aren't enough contractors/skilled trade. I mentioned this company in a post a few months back. Back in March Progress Residential purchased a few houses in North Las Vegas on a street I manage so I started following them. I was awe struck at the rent rates they were asking and getting...about $400-$500 over market.

I bring this up because any small investor might be competing with them during the offer phase. They typically offer cash and roughly 5% over list. I'm unsure if they play hard ball during due diligence but I would assume they do to lower their overall purchase price. If you check their facebook page renters aren't too thrilled with their services. I've heard stories of bait and switch where they list a home for rent w/ washer and dryer (and physically have both in the home during viewing) and then in the fine print of the lease they increase the monthly payment by $150.

It's like they are creating a private or public residential REIT using SFRs in Vegas. Is anyone seeing Progress Residential in other markets like Phoenix? I believe their involvement in our local real estate market is one factor rents have significantly increased the last few months.

Houses that were renting for $1,495 a year ago are now going for $1,895- $1,995 a month or more. Houses that were renting for $1,895/mo a year ago are renting for $2,500. It's simply bonkers.

It's a feeding frenzy for any detached SFR rental under $2k.

Good Morning Jason, I believe Casey Powers from Strawberry Property Management manages multi-family. She is very knowledgeable and has great reviews online. Double check with her though. Heidi

@Ginger Carr Good Question! I don't know

The first photo is Lake Mead in 1987. The 2nd photo is Lake Mead in 2021 and shows it only 35% full. 

Las Vegas has an amazing water reclamation district that tries to recapture as much water as possible, including sewer water. Here is a link: Article about how Vegas reclaims sewer water (pretty gross to actually think about). Roughly 90 million gallons of reclaimed water is released daily into the Las Vegas Wash, replenishing Lake Mead with billions of gallons every year. 

Part of your question comes down to water rights. Nevada's Colorado river allocation is 300,000 acre-feet per year. If Lake Mead drops to 1,045-1,090 feet, the state will be allocated 292,000 acre-feet. If the lake drops below 1,045 feet, the state will be allocated 290,000 acre-feet.

• Arizona's Colorado river allocation is 2.8 million acre-feet per year. If Lake Mead drops to 1,045-1,090 feet, the state will be allocated 2,608,000 acre-feet. If the lake drops below 1,045 feet, the state will be allocated 2,560,000 acre-feet. 

• California's Colorado river allocation is 4.4 million acre-feet per year. If Lake Mead drops to 1,040-1,045 feet, the state will be allocated 4,200,000 acre-feet. If the lake drops to 1,035-1,040, the state will be allocated 4,150,000 acre-feet. If the lake drops to 1,030-1,035, the state will be allocated 4,100,000 acre-feet. If the lake drops below 1,030, the state will be allocated 4,050,000 acre-feet.

Here is an interesting article on water rights an allocations between Nevada, Arizona, California and Mexico: water rights newspaper article

Some things are city is doing to combat water waste:

1) The Southern Nevada Water Authority will rebate $3 per square foot of grass removed and replaced with desert landscaping up to the first 10,000 square feet converted per property, per year. Ultimate goal is to conserve water.

2) The City of Henderson is actively fining for water waste and their fines range from $40 for a 1st offense up to $2,560.

 I do share your concern and believe you have a valid question but AZ is probably in a worse position than NV given the water rights. Vegas gets water credits for all our reclamation efforts. I'm unsure if AZ or CA have a similar program.

Active but with subpar applicants. 22 apps on my most recent rental which was listed for $1,795 in zip code 89183. I use a scoring card to approve and process applications. Most of the 22 apps didn't qualify to rent the property. The rental market is active but not with the highest caliber applicants.