All Forum Posts by: Lana Sheta

Financed offers have been getting crushed in Reno these past few months. Here are a few things that I've noticed have helped buyers beat all cash buyers in this market. 

1. Large down payments paired and a waived financing contingency. If you can offer more than 20% and you're fairly confident your file will get through underwriting, waiving the financing contingency is a major signal to sellers that you'll be able to close the deal. 

2. Waiving the appraisal contingency. In this market, failure to appraise hasn’t been much of an issue so you might consider waiving the appraisal contingency or agreeing to come up by X,000 to make up for a low appraisal.

3. Modified inspection contingency: If you choose to keep an inspection contingency, include language that suggests that you won’t back out or ask for credits unless a major issue costing more than X,000 to repair arises.

Other than that, larger earnest money deposits, looking at cheaper, older listings, writing personal letters, and escalation clauses might help too.

Anything you can do to convince the seller that you can close the deal at a higher price than all cash buyer will help your offer win.

Good luck! It's brutal to be a buyer right now. 

@Susan Chan, yeah, all the properties are SFH rented by the room! I've looked at MFH several times and can't seem to make the numbers work given the current prices.

@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. 

@Jorge Chang Tightening regulations are certainly a concern, particularly on the California side of the lake. 

If you're not committed to California, Nevada is much less restrictive on permits. There are some properties on Kingsbury grade, ~10 minutes from Heavenly Village that fall within the Douglas County Tahoe Township. Getting permits is fairly straightforward, and there's no moratorium on applications. 

On the Nevada side, property prices are a bit higher, but taxes are much lower. I recently helped someone purchase a 2 bed/1bath turn-key furnished property for 315K, so strongly cash-flowing properties at decent prices are definitely out there. 

I imagine that once Measure T goes into full effect and the supply of STRs gets hugely constricted, nightly rental rates for Nevada properties are going to see serious increases.

The rental market in SLT is incredibly hot right now. As Dustin mentioned, new vacation rentals are banned in SLT, CA. Current owners of STRs are still able to run them until their permits expire next year. The Nevada side still allows them, which means that Nevada STR rental rates will likely climb dramatically in the coming year.

The mid to long term rental market (>1 month) is also very hot. I live in a house-hacked condo on the Nevada side. I posted a bedroom for rent last week and had ~10 requests within a couple hours. I ended up renting that single bedroom for $1k/month on a 6 month lease. Rooms are very easy to rent to mid to long term tenants. Demand greatly outpaces supply as many owners are using their properties as STRs. 

There aren't many multi-families for sale in the area, but I know of one off-market multifamily for sale on the Nevada side. 

Before moving to Tahoe, I had a house hack in Reno and I'm pretty knowledgeable about that market, as well. If you have any questions, feel free to message! 

Hey @Nick M.! Welcome to Reno! I've done one house-hack in Reno and my boyfriend has done 3! I'd love to grab (virtual) coffee with you at some point and discuss the market. 

1. You're definitely right about the midtown popularity growth, though some parts are cleaning up faster than others. I'd avoid going east of Wells or much further north than Ryland. The blocks surrounding Plumas down to Plumb and further south are popular. 

2. NW Reno (North of the 80, West of the 395) has quite a few multi-families, but they don't seem to come on the market often. There are definitely a lot of students splitting SFHs. My property and two of my boyfriend's are in this quadrant. I'd recommend looking in this area.

3. You have to get creative to find deals that meet the 1% rule, and they'll probably be SFH. My property is a 4bed/2 bath walking distance to the university and hit 1% (2875 gross rents, 260K purchase price, bought last Aug). My boyfriend's NW property is a 5 bed/3bath, 340K purchase price, 3400 gross rent (bought last Sept). It's possible, but you'll probably be looking for 5 bedroom houses that need a lot of work. Reno is appreciating fast, but there is a LOT of demand for room rentals.

Thanks @Alexander Yates! Congrats on your live-in flip. The UNR area rents so easily, it's awesome. I'd love to talk about our market soon. I'll send you a message! 

@Cody Nielsen

There are a couple reasons that I prefer the Nevada side for STR. The first being that it's much easier and there are many fewer regulations of STRs on the Nevada side.

On the California side, new STRs are banned in South Lake Tahoe if they're outside a narrow "tourist core" area. 

On the Nevada side, STRs are allowed in virtually all neighborhoods, and permits are relatively easy to obtain (can still obtain new permits during COVID). Property prices are a bit higher than California, but taxes are much lower. Here's the link to more info on STR permits on the Nevada side!

https://www.douglascountynv.gov/cms/One.aspx?portalId=12493103&pageId=16775156

If you're looking for neighborhoods on the Nevada side, I enjoy upper Kingsbury. It's right next to the lifts at Heavenly ski resort which makes it attractive during the winter. It's <10 minutes down the hill to the lake, too. There are some decently priced condos with low HOAs (e.x. in May, I bought a 2 bed/2bath condo for $320K, HOA is $91).

If you're interested in finding a property, I'll be getting my license shortly and would love to help you! I can also help connect you to some great property managers if you're interested.  

Thanks @Dustin Allen! The Stateline property was primarily a quality of life oriented decision. However, there's a huge basement that I'm converting to a studio apartment likely for STR and increased equity purposes.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $260,000
Cash invested: $10,000

I bought a 4 bed/2 bath SFR walking distance to the University of Nevada, Reno, for $260,000 in 2019. I used a 3% down loan (HomeReady) and seller paid closing costs + 75% of the cost of a new roof. Rents total $2875, for a positive monthly cashflow of $1,100 before reserves.

What made you interested in investing in this type of deal?

I had just graduated from the university next door and I knew the area well. I also knew how to market room rentals to students, since I had just been one. I was tired of renting and had heard about how house-hacking can totally change your financial status and enable financial freedom, so I set out to find a house-hack.

How did you find this deal and how did you negotiate it?

I found the house on the MLS. My real estate agent did a good job of finding comps, so we put in an offer for $5k below list price and seller paid closing costs. I offered a quick close, not contingent on selling any other property. During the inspections, it came back that the roof needed to be replaced. I shopped for ~5 quotes and gave the sellers the median quote (12K). They agreed to leave 6K in an escrow holdback account.

How did you finance this deal?

I financed this deal through a 3% down HomeReady conventional loan. I used CIT bank, an online bank with the lowest rates, to fund the loan. They were a nightmare to deal with and jeopardized the deal several times.

How did you add value to the deal?

I replaced the roof (8K total through Lowes, seller paid 6k, I used 0% interest financing to pay for the rest). I also added a door between the backyard and the common area (since the backyard door was in one of the bedrooms). Repainted most of the house from a dingy green, and replaced the floor in two rooms.

What was the outcome?

I'm still holding the property. I lived in it for a year and then bought a property on the Nevada side of South Lake Tahoe. It's rented out to students with long leases. So far, it's been one of the best financial decisions that I've made.