Las Vegas Updates

A for rent sign on display on the side of a down town apartment building.

A for rent sign on display on the side of a down town apartment building.

According to www.rentcafe.com (https://www.rentcafe.com/average-rent-market-trends/us/nv/las-vegas/), rents are continuing to rise in the Las Vegas valley. The average apartment is approaching $1500 / month, while many neighborhoods throughout Las Vegas are well over $2000 / month. As a result, many landlord’s are making sharp increases in rental rates when their properties come available or simply raise rents on existing tenants who’s leases are up or coming up.

Since Nevada has no limits, or a rental cap, Landlord’s are able to raise the rent with no restriction. Granted, some Landlord’s understand that a sharp increase may create a vacancy at their property and so, they approach a rent increase reasonably, only increasing to cover their higher ownership expenses and some. A vacancy results in lost revenue and vacancy expenses, such as utilities and necessary repairs. Thus, even if the property re-rents for a substantially higher rate, the cost of a vacancy can wipe out any profit.

Rental inventory continues to remain slim, thus, rents are continuing to rise as demand persists. Additionally, the higher cost of owning a property, such as insurance, taxes and repairs will result in higher rents as owners look to offset their expenses.

Homes that look like arrows to show real estate market appreciation

Real estate prices have grown exponentially

The Las Vegas real estate market continues to rise to unprecedented levels, setting a new record with a median price of $475,000 during the month of April 2022. Inventory continues to be limited, with many buyers ending up in a bidding war to see who ends up with an accepted offer. Of course, one of the biggest changes in the market over the last few months has been rising interest rates. Buyers who have been scouring the market trying to get their slice of Las Vegas real estate have noticed interest rates rise some two points, just since the end of 2021. At today’s price point, those two points are making a big impact on buyers, adding hundreds of dollars to monthly mortgage payments.

Additionally, as prices continue to rise so do down payments. Think about this, a 5% down payment that used to amount to a mere $10,000 just 4 years ago is now $23,750 on a median home. These additional costs have affected new and seasoned buyers considerably, forcing many to forgo their dream of home ownership or going in with other family members on a purchase, where they can combine incomes and down payments.

As interest continue to rise to reduce inflation, no doubt it will outprice many more buyers. While some may view this as a signal that prices will decline, the fact is, inventory continues to remain low and lending has remained restrictive, unlike the real estate crash over a decade ago. Even with interest rates rising over the last few months, the Las Vegas housing market has seen considerable increases in median sales prices. Will the market settle some? Yes, we can expect a leveling off as prices become unsustainable. However, many buyers are entering the market from other areas where real estate values are even higher, bringing cash to purchase a new property. This allows them to outbid other buyers and avoid appraisals.

What does all of this mean for Las Vegas? Even with rising home prices, as long as demand for properties exists and inventory remains limited, prices will remain strong, with some fluctuation.

Exterior view of multifamily residential building

Whether your watching home remodeling, home hunting or other home and garden shows, it’s inevitable that at some point, a rental investment is discussed. The story goes: A homeowner purchased a duplex and needs to remodel it in order to rent it and generate cash flow. That cash flow can go towards the existing mortgage or offer more financial freedom to the home owner. The idea sounds amazing! So, is it your turn to buy a rental property?

For many years, countless investors have purchased rental properties and generated steady financial income. Of course, real estate investors tend to vary on there parameters, investment budget and strategy. If you’ve been thinking of purchasing a rental property, your first step is to determine how much property you are able to buy, the same as when purchasing a home for yourself. Keep in mind that when purchasing a rental property, if you plan on assuming a loan, interest rates and down payment requirements are different than when buying a primary residence. So be sure to speak to a lender first.

Once your prequalified and establish a price point, the search for a prospective property can begin. What should you keep in mind as you embark on your search? Ensure you know how much your prospective property will rent for. Some investors entered the rental market with unrealistic rental expectations, thinking that they can rent the house they bought for much more than the market could substantiate. Keep in mind: Even in an appreciating, in demand rental market, you can over price your rental.  As a result, this led to disappointment right from the beginning. If possible, partner with a quality property manager who can provide you with realistic numbers prior to your purchase.

Second, don’t forget that the age and condition of the property you buy may require some initial investment to bring it up to rentable condition and in turn, generate competitive market rent. Having a reserve for these costs and other incidentals is key.

Purchasing a rental property can be overwhelming, there is no doubt about that. Choose professionals who can guide you and help you. Before you know it, exploring the rental market and even entering it as a landlord may not be so overwhelming.

Curious as to what property management is all about? Visit www.nicklinpm.com and explore what Nicklin Property Management does for its clients.

Aerial view of residential area and park of Las Vegas, Nevada with clear skies

The Las Vegas housing market continued a hot streak throughout August leading into September. The median sales price of a single family home was $405,000 (Las Vegas Realtors), matching the prior month. The median list price was $422,000 according to Realtor.com, a possible indicator of continued price appreciation. More and more buyers from out of state, such as California, have been relocating to Las Vegas, investors are purchasing properties and first time home buyers are trying to eek their way into home ownership. This heavy demand has caused a strain on an already reduced inventory. As a matter of fact, the available inventory of resale homes is down 34.6% from August 2020 according to Realtor.com.

As discussed in prior blog posts about the real estate market, a low interest rate combined with low available inventory has driven prices up as this has stretched many home buyers budget. As a result, home buyers are willing to pay more while saving on monthly interest charges. All the while, homeowners are putting more cash in their pockets when selling their properties.

The rental market has also seen it’s fair share of appreciation. Rental rates are skyrocketing within the Las Vegas valley, allowing many single family homes to rent between $1.25 – $1.50 / square foot or more. These are significant gains, especially when compared to just a few years ago when many properties were leasing far below that. Again, a limited inventory combined with increased demand is causing landlord’s to raise rents. For landlord’s, this is a prime time to capitalize on their investment properties and raise rents. For investors looking to enter the market, the increase in rental rates is good news. It allows for higher returns against higher resale values.

While it may be tempting to sell a property that has much appreciation, it is also good to consider what your property may rent for in today’s market. Some landlord’s have decided to sell because they weren’t aware of the rent potential of their properties. So, before selling, consider all of your options.

While it is difficult to predict how things will go long into the future, the Las Vegas real estate market has proved resilient and even surprising. It has caught many homeowners and landlord’s off guard – in a good way! As a result, investment properties today are doing what many have wanted for a long time – providing a solid return on their investment.

 

 

 

 

Aerial view of Las Vegas, Nevada, U.S.A.

The real estate market in Las Vegas continues to defy expectations. With inventory slim and buyers in full ready-to-buy mode, prices are rising. The median single family home sold for $405,000 in July 2021. Most properties are selling quickly too, especially when priced less than $400K. We are seeing about a 20% year over year appreciation in the valley, and there appears to be no stopping this train. While the pandemic continues to exact its toll on the economy to a certain extent, real estate seems almost immune.

Of course, affordability is the next point of discussion. Already, many are being forced into making compromises because of this spike in price. Some are choosing to look into smaller homes or consider condo’s or town homes due to their still relatively lower price point, though prices are rising steadily on those properties as well. Others are deciding to rent and wait it out, however, rent prices are sky rocketing as well. And thus this creates a dillema.
This significant increase in housing is causing some to move in with others, such as family. Others are simply packing up and moving to areas less expensive. The next couple of years will no doubt show a migration of individuals to more affordable housing spots, especially as more work is done remotely.

In the meantime, homeowners and Landlord’s are the ones benefitting from significant property and rental appreciation with no end in sight.

Eviction Notice Form

Well, here we go again. Another eviction moratorium. Many landlord’s we’re finally breathing a sigh of relief when it looked like things we’re going back to normal at the end of July. And for 2 days, things we’re technically back to normal. Until August 3. That’s when the CDC enacted a new eviction moratorium, that this time goes through October 3, 2021. For those rental property owners who have been relying on mortgage forbearance because they lost rent income – income they relied on – this was unexpected.

To clarify, we’re not here to discuss the reasons for the moratorium, the motivation or why it was passed. We’re here to explain how this latest moratorium works and what you can do if you own a rental property that has had its income, in essence, frozen. While what we say is not going to be a automatic fix, it can be financial damage control.

So, how does this latest moratorium work?

It applies to any county in the Unites States that doesn’t already have a moratorium in place that meets or exceeds the CDC one, like a state or county moratorium, and where the county has a substantial or high COVID transmission rate. Where does your county fall? Here’s the link from the CDC that shows transmission rates: https://covid.cdc.gov/covid-data-tracker/#county-view

If your in Clark County Nevada, Las Vegas, Henderson, North Las Vegas, Boulder City, which is where we’re at, well, your in a high transmission rate location and subject to the CDC moratorium.
A tenant, in order to be covered by the moratorium, has to meet some qualifications:

  • They have had to try and obtain rental assistance
  • They can’t make more than $99,000 in 2020 or if married and filing jointly, more than $198,000.
  • They cant make their rent payment due to loss of job, reduction in hours or have medical bills
  • They are trying to make partial rent payments to the best of their ability
  • They would become homeless if evicted

The moratorium covers a lot of situations.

Now of course, a tenant does have to complete a specific declaration via a CDC form to qualify. And the landlord can take steps to validate the truthfulness of it, to make sure their hardship is legitimate and meets the standard of the CDC moratorium. The moratorium does cover a broad spectrum.

So, say as a landlord, you get the declaration form from a tenant or maybe they already qualified previously under the moratorium we had between March 2020 until this past July and handed you the CDC declaration (which that is still in effect). What can you do?

Work on mitigating your losses. The eviction moratorium is in effect no matter how you look at things. Though tensions may run high, work hard to maintain a positive relationship with your tenant. This will help in preserving your property. A soured relationship, or one that turns into distrust, is never in the best interest of your property. It creates tension and hard feelings. Focus on the end result, one day getting your property back in hopefully, reasonably good condition. A positive relationship will go a long way in that.

And focus in on the options you have for mortgage assistance, beyond calling your bank for mortgage forbearance. Or simply throwing in the towel on your property. Now, this may take work and some research to find available resources in your state or county to help compensate you for lost rent. But it is possible and we’ve seen it first hand, owners getting checks for thousands of dollars for unpaid rent. Look up your states and counties housing department sites and see what available resources there are, what applications may need to be completed. Work to mitigate your losses as much as possible. In many cases, money has been set aside to offer help. It’s just a matter of finding it, applying for it and then collecting it.

So, while this is all far from the ideal and not what investors and rental property owners signed up for, it’s the new, temporary norm. And so, we’ve all had to change and adjust to the unexpected. If you approach it the right way, take the right steps, be proactive, get the help available, you might be surprised at how things work out for you.

Property Management in Las Vegas

LAS VEGAS, Nevada USA

Another month. Another record. That seems to be the trend for many months. The latest: June 2021 set another record for the median sales price in Las Vegas: $395,000; a nearly 22% year-over-year increase. It’s hard to believe that just 10 years ago, the median price of a home in the valley was just under $120,000. Much has certainly changed. So, what’s in store with these record prices? Are they sustainable?

While opinions vary as to sustainability, affordability is definitely the question on the minds of many. The current price point of many homes, even with low interest rates, is making the dream of owning a home impossible. As far as sustainability, we expect more homes to start coming onto the market as homeowner’s and investors decide to cash out with substantial equity.  However, many investors are also entering the market in Las Vegas, looking for properties to buy, as rents have also been increasing considerably.

As a result, while we may see some slow down with real estate prices over the coming months, there is still a shortage of inventory and plenty of buyers. Barring any significant economic changes, prices should continue to remain strong and modestly appreciate.