All Forum Posts by: John M.

 Yeah I forgot all of that too.  I was just telling someone else that Las Vegas is growing up as a city, I started going there in the early 90's and back then it really was just an isolated desert gambling town that was mostly just a weekend getaway for Southern Californians (which I was one of being born and raised in LA).  I remember when the Hacienda was in no mans land and Tropicana was all by itself on the south end of the Strip and between there and the Dunes to the north there was mostly nothing but small retail shops built in the 60's and vacant desert.  So I have watched it evolve first hand.  At the same time I also know first hand how LA has evolved from the early 80's and I am starting to see some of the same patterns of progress in Las Vegas I saw there, and how much money was made in LA if you got in the right place at the right time. Not saying Vegas will be another LA as far as prices, but there will be plenty of money to be made over time if you can get in front of the path of progress.  So that's why I am holding.   

So many people are waiting for a rinse/repeat scenario of the bubble/crash from 2009, but what if that was really just a brief period of volatility in the context of the longer term uptrend, never to be repeated again in our lifetimes?

Crash calling is fun and can make for some lively debates but it's sort of an exercise in futility because ultimately the market will do what it will do without regard for what any of us say or think.   That said, the market will always go through it's normal cycles of appreciation and corrections, but longer term the tend is up. 

@Aleejandro Dela Vega I understand what you are saying for price appreciation, I also think eventually that will flatten out so years from now there might be better appreciating markets.

Personally though I think Las Vegas will be a great rental market for the next 10 years and longer because I think the demand for rentals will be greater than the supply, especially in the B-/C+ markets.  Everyone seems to think there's all this vacant desert for Vegas to expand into (sort of like Phoenix to the west) but much of the land around Vegas is BLM owned or even conserved and cannot be developed so getting additional BLM land released for auction to develop is a slow process.  And the privately owned land within Vegas the prices are not cheap, like $100k to $200k per acre in sw which is where most of the remaining virgin undeveloped land is.  The closer to the Strip you get the higher the prices go, $1m+ an acre asking prices are not uncommon if it's a prime location. So, pretty much all new construction is either going to above market average rents or sales prices.  Which to me means there will be continued high rental demand in the middle market for a long time to come, especially for properties closer to where the jobs are, which all of the new construction is getting farther and farther away from.   That's my take anyway.

Whether there is or isn't a crash coming, I put down at least 40% on rentals so that I am well in the money on cash flow.  If there is a crash or rents fall worse case scenario I just cash flow less for awhile until the market recovers.  My properties are in locations with high rental demand so I know even in a bad market I can easily cover my debt service and other expenses. 

I think if you buy good assets in high demand locations and don't over leverage, you don't ever have to worry about crashes...

Hi @Aleejandro Dela Vega I like your original post and agree with many of the points you had made.  However you had made a comment that you don't think Las Vegas is a 10 year buy and hold?   Are you buying and holding only for a limited time period?  I personally think it's a great long term buy and hold but I guess that depends on your view of what you think the future holds for the city itself, as well as relative to other markets.

@Ian Tan Hi Ian, I love Las Vegas and own rentals there.  But prices have gone up quite a bit so I am sure you can find better returns in other markets at this time.   That said, I like the job and population growth outlook for Las Vegas for the next few years so I think both rent and price appreciation over the long term may beat other markets.  So I am a buy and hold Vegas investor and will continue to look for deals here.

@Alexander Coventry I live in California and only own rentals in Las Vegas and that's where I am continuing to invest.  I have had really good experiences from the deals, to my agent to quality tenants and a great PM.

One piece of advice I can give that I think was an advantage for me, is before I bought out of state one thing that was important for me was to know the market I was investing in.  Even though I did research in other markets, if I had never been there before or didn't know any history about the market myself,  I felt like that was a disadvantage and that was a risk. Since I already had a lot of first hand historical knowledge about Las Vegas going back to the 90's just from my personal experience there that was a huge plus.  But I also spent about 3 months researching to death the real estate market there before I was ready. 

I think personal historical knowledge of an area gives you a competitive advantage because you have a frame of reference to know where the market came from, and that can provide clues to where it's going in the future.  And that helped me greatly in finding opportunities in areas where nobody was really looking.

All in all I think investing out of state is a great way to find opportunities, if you do your homework.  And if you can invest where you have personal first hand knowledge about the market and it's history can only benefit you further!

Hey @Vincent M. just to clarify I think the Southeast is fine.  I just don't like the West Coast or East Coast because they are very expensive and seeming a little toppy in my opinion.  

I don't know too much about short term rentals other than based on the research I did I decided I prefer long term rentals.  But I do like other people doing short term rentals because it's less competition for both of us.   Be careful though because some cities and/or counties don't allow short term rentals or they might but you have to obtain a permit or business license (can be expensive) and people that are doing airbnb in those places and disregard the law or ordinances can be fined.

@Gareth Meaker That's great if you had thought about Vegas previously all the better since you have some familiarity with the market then.

You are correct the market has run up so it is harder finding deals.  However that is becoming a problem in many markets around the US not just Vegas.  I think the reality is that here in the US the easy money was already made by the people that were buying real estate at the bottom of the cycle in 2010 to 2012.   At this point in the cycle prices are high and the competition by investors is fierce for the few deals that are out there.

I don't know how Vegas compares to the other markets you are considering, but if all you want is cash flow for a buy and hold investment, anything can cash flow if you put enough down or pay all cash.  If it's the return you are more concerned with, you're probably looking at average 6 or 7 caps which may also be the case for many markets across the US, unless you want the higher risk that comes with 10+ caps like venturing into rough D class neighborhoods or go into markets that are much smaller, unknown, or worse  in population decline.  

Since I prefer A to B-/C+ class neighborhoods and properties, I am willing to accept a lower return up front if I think there's room for rent growth in the future.  Kind of like a stock many people overpay up front to buy for forward earnings not today's earnings.  That's why I don't spend too much time looking at cap rates, I prefer to look at future cash on cash return, which as rents rise over time, so will the return.  But that's where the homework comes in, doing enough research in a specific market to have enough confidence that the future will provide job and income growth, population growth, and resulting rent growth.  And also making sure that the market isn't currently so high priced that a lot of rent growth is already priced in which I think is the case with many Coastal markets.  For example in San Francisco where an average 2 bedroom apartment can rent for $5,000, can it expect to see the rent go to $7,000 or $10,000 for that same apartment?  Probably at some point in the future but you may be waiting a long time for incomes to catch up to support those prices. 

So I think this all depends on your goals, timeline, the type of market, etc.   Each of the cities you mentioned has it's own personality, demographics, etc so it might come down to personal preference.  I guess I ask the question would I personally live in that city?  If I wouldn't want to live there myself then I may not want to invest there either, and I can definitely say that about some of those cities in your list.  That's my philosophy anyways :)

Hey @Nick DePrizio I am from NorCal also, and eventually plan to move to Vegas in the next few years.... wish I could now but job prevents it.

I own two investment properties in LV, one in Henderson and one in LV just east of the strip.  The area east of the strip is interesting because many investors avoid it (it isn't necessarily the best area in Vegas), but I actually love it.  I started coming to Vegas in the 90's though before the transition from the old to the new (I remember when the Hacienda and Tropicana were in no mans land and there was nothing to see on the Strip south of the Dunes , lol) so I know a lot of history about that area plus I was born and raised in LA so I have a good feel for urban areas and what to look for and what to avoid.  It's all about the future and what I see, not necessarily how things look like right now.  But I can see where people would steer clear if urban areas aren't their thing.  

One of my best friends who works in finance in the banking industry just relocated to Vegas from the Bay Area and we're going to start looking at MFH deals in the future. 

Vegas is a great place though seems like people either really love it or they really hate it but I happen to be the former.