Las Vegas Updates

House Keychain hanging from hook

House Keys with Key Ring hanging on wooden Board

As Las Vegas home prices continue their slide, the rental market has seen an uptick in available rentals and as a result, more stagnation in the market. Nonetheless, properties are still leasing above average. When market conditions change, what should Landlord’s know and do to stay ahead of market changes and curves?

Don’t expect last month’s rent

If you are trying to lease out a property in a saturated or otherwise more competitive market, you will have to adjust to today’s market. That may require you to make a reduction in your asking price or offer an incentive to a prospective tenant. While other comparable properties from a few weeks ago may show strong numbers, the market can change, as it has, and require adjustment.
It is better to adjust sooner than later. Otherwise, trying to attain a rent that is now overpriced will lead to an extended vacancy and lost money. Additionally, every day that the house sits empty it is costing you utilities and opens your house to vandals and squatters.

Look at the big picture

A temporary reduction in rent is not a need for concern. Remember, both the real estate and rental market are cyclical, meaning, they go up and go down. Even if you find yourself leasing out a property during a downturn, eventually it will go up again, allowing you to raise the rent or re-lease the home for more. Nonetheless, rents today are higher than they’ve ever been before.

Focus on finding a great tenant

Whether the market goes up or down, in the end, a quality tenant will make or break your rental property. Thus, focus on a tenants qualifications. Find the best qualified tenant in today’s market. Even if someone is willing to pay over market rent but isn’t qualified or has poor credit or rental history, will the extra rent collected offset the potential risk?

Making sound decisions is key with your rental property. Far too many owners open themselves up to lost rent and tenancy issues because they approach things from a limited perspective. Look at the big picture and adjust as needed. Find the best quality tenant. In the long run, your rental property will succeed and you will avoid unnecessary issues.

Contributed by Nicklin Property Management. www.nicklinpm.com

Increasing house prices, houses on isometric piles of gold coins

Listing a rental property above going rental rates can lead to extended vacancy periods

The Las Vegas rental market continues to be in demand as rental prices remain strong and inventory slim. For landlords, the last few years have seen appreciation unheard of in years prior. As a result, some rental prices being asked are far above other comparable rental properties. If you’ve been tempted to list your home far above other rental rates, you might end up losing money in the process! How?

There is such a thing as overpricing your property, even in a red hot market. Remember, affordability comes into play for most individuals. Even though the market is appreciating, it doesn’t mean that income’s have compensated. While the market, being made up of tenants, can absorb increases, eventually, the market tops out. And even with limited inventory, tenants will shop around to find a property at fair market rent. As a result, many properties that are severely overpriced will end up staying on the rental market for an extended period of time.

In the end, this leads to lost rent. Every day that a property stays on the market is a day of lost rent. And even if a higher price is achieved after some time, will it actually offset the amount of time the property stayed vacant compared to less of a vacancy period at a lower rental rate.

Additionally, vacant properties may attract unwanted visitors. It becomes obvious after some time that no activity at a house may mean that a property is empty. And so, experience has shows us that this can lead to vandalism and theft.

Thus, even in a hot market, pricing a property competitively allows for showings quickly and finding that quality tenant. Don’t forget, you can always increase the rent after 12 months, or whatever lease term you enact.

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.