Las Vegas and Henderson Home, Condo, and Townhouse Rental Tips

Las Vegas rents going up, up up!

The Las Vegas rental market has seen an upward trend the last few years

While the Las Vegas real estate market has been getting a lot of attention over the last few months, we thought it would be good to discuss the rental market, which also has experienced a similar situation. Yes, Las Vegas rents are going up, up and up!

This is music to every landlord’s ears, especially for those who saw little appreciation for for a considerable amount of time. Yet, the Vegas market has shifted. A shift started 3 years ago, when rents started to appreciate noticeably, especially with what most landlord’s were used to. Fast forward to today, the market is hot – and landlord’s are loving it.

In a similar twist of events, a shortage of rental properties is creating a competitive market, driving rental prices up. While many tenants used to find 2 bedroom condo’s for under $800 / month or single family homes for under $1300, that price has shifted – considerably. A 2 bedroom condo now averages close to $1000 or more per month. An average single family home is between $1500 – $2000. And that’s assuming you can find one! With such a shortage, prices have been going up – and there do not appear to be indicators to show anything changing, at least for the foreseeable future. As a matter of fact, as the Las Vegas economy rebounds, driving employment and reducing unemployment, we can expect more individuals to move here. How exactly that will play out is yet to be seen.

However, all indicators point to a strong and stable economy. If inventory remains low, we can also expect rent prices to appreciate, perhaps 6-8% per year.

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Is Real Estate A Good Investment?

A single family home illustrated

Is real estate a good investment? With many seasoned investors looking for a place to invest their money, real estate has always been at the top of the board. Or perhaps it’s a real estate enthusiast, first time potential investor looking at their options. The simple answer is: As with any investment, there are variables and there are risks. In this article, we’ll discuss residential rental investments.

Why do many investors decide on residential rentals?

For some, it’s where they will get the most return for their investment. If an investor has cash saved, they may realize that keeping it in a savings account or even higher yield CD (certificate of deposit) will only give them a limited return. However, investing that into a rental property may generate considerably more income and the investment has the potential for appreciation and profit. As a result, a rental property looks appealing.

What are the risks?

Of course, the risks have to be evaluated as well. Many rental owners put down minimal down payments and as a result, end up with a higher mortgage payment and PMI (private mortgage insurance). As a result, the rent they generate may not cover the monthly expenses, which would also include taxes, insurance and possibly HOA dues. As a result, they may be unprepared to cover the difference. A 20 or 25% down payment can eliminate PMI insurance and lower the monthly mortgage payment as well. Of course, in the end, it is best to confer with a property manager to see what rent potential a property has to be better prepared to absorb the costs.

Finding the right property

The type of property will also determine the profitability/cash flow of a property. For example, an older property may have a number of components nearing the end of their life expectancy. HVAC systems, hot water heaters, roofing and appliances can add a significant price tag to the operation of a rental property. Of course, once replaced, those items can last for many years. However, can an investor absorb those expenses since they will be real, cash expenses, even if the property is priced to reflect updates needed? On the other hand, a newer – or brand new – property may ask a higher purchase price. However, there may be limited maintenance expenses in the first few years of operation. These are things to consider when embarking on a purchase.

Be prepared for vacancies

Finally, as an investor of rental property, there will be times when a vacancy occurs and repairs have to be made. As a result, not only will there will be a lack of income but repairs that will cost money. Is this something that you will be able to absorb? Will you be able to save enough each month when generating income to cover those periods of time? Those are difficult but necessary questions to ask yourself. Additionally, market conditions fluctuate and real estate and rental values change. Some rental property owners have had to keep their rental properties for an extended period of time because of that, waiting for values to rebuild perhaps to sell their investment. Other long term investors, who had no plans of selling, had to be patient to see rental rates rise.

When planned correctly, a rental property can be a great investment – and has been for countless property owners. However, calculating the cost and type of investment is an integral part before embarking on being a rental property owner.

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Is Buying a Brand New Rental Property a Good Idea?

Modern street of typical middle class desert homes near Las Vegas Nevada.

With a shortage of inventory in the Las Vegas real estate market, more and more owners are turning to brand new properties to invest in. Of course, the difference is price. On average, brand new homes in Las Vegas have a median sales price of nearly $100K over existing inventory. So, is it worth the investment?

Here are the pros of brand new:

1. A brand new home means everything is brand new! Electrical, Plumbing, HVAC and Appliances should be in prime condition to last a number of years. Maintenance costs are reduced typically the first few years of ownership.

2. Rents for brand new properties tend to average higher compared to an existing home with comparable size and amenities – on average by 5-10%.

The cons of brand new:

1. Initial investment is typically higher since brand new properties tend to cost more than a comparable resale property.

2. Construction in a neighborhood can be a negative aspect to a potential tenant.

However, many homeowners have been able to purchase a brand new home and generate handsome rent to cover their monthly expenses. Planning is needed to research brand new communities and calculate potential rental income. Another big factor is financing. If you plan on carrying a mortgage, how much will you put as a down payment? The less of a down payment, the higher the monthly payment. And a down payment of less than 20% means Private Mortgage Insurance, which adds to the total payment due each month. And don’t forget the vacancy factor. Periodically, a vacancy will occur with no rent generated. Will you be able to satisfy the necessary mortgage payment.

Of course, if purchasing cash, monthly expenses will be limited to insurance, property taxes and HOA dues. While the return on investment calculation may be less than desired in certain cases, will owning a brand new property give you peace of mind, knowing that major maintenance should not be an issue for a while?

So, when all is said and done, a brand new property can mean less maintenance expenses and more peace of mind in that regard. However, it also means a higher investment. A resale property may be priced lower but also harder to come by. Repairs and other maintenance costs may need to be factored in as well.

So, the decision is ultimately yours. Take time to research and talk to the experts to help you make the best decision possible.

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The Best Window Coverings For A Rental!

There are a dime and a dozen window coverings available for your home. All you need to do is walk into your local home improvement store. From stock blinds to custom fitting shutters, the selection is endless. So, what should you choose for your rental home? A lot will depend on the type of rental home. A higher priced rental property may warrant more than basic mini blinds to complement any luxury features. But that is really up to you as a rental property owner!

MINI BLINDS
Mini blinds come in various styles and material choices. Some are plastic, vinyl or aluminum. Pricing is very reasonable, starting at just a few dollars. Its the most popular choice among homeowners as a result. However, keep the following in mind when choosing this option. Plastic and vinyl mini blinds, once damaged, typically have to be replaced all together. The gears inside are tedious to work on and hiring someone can be cost prohibitive. If a slat is cracked or broken, it will be nearly impossible to replace it. Aluminum blinds are higher priced and while slats tend not to crack or break, they can bend, which is a more common issue since they can have that tendency and is usually difficult to repair it properly. Installing mini blinds is most cost effective if you do it yourself. Once a blind company or handyman is hired, your cost goes up. At that point, you may want to consider upgrading. Mini blinds can last 2-5 years on average.

FAUX WOOD BLINDS
Faux wood blinds have gained popularity in recent years. Slats are typically 2″ in width and made to resemble wood blinds, with many being textured. They come with a decent sized rail at the top and can be operated using strings or a wand. They are fairly durable and the slats, though made of a PVC / vinyl material, are thicker and more resistant to breaking. They cost more as a result, averaging about 20-40% over mini blinds. However, they can last an average of 5-10 years.

SHUTTERS
Shutters are a beautiful addition to any home. Of course, they can be costly. Even entry level shutters can cost a pretty penny. However, shutters are durable, though they can have a flaw – the staples that hold the shutters together to the rod that allows you to open and close them can, in time, fall out. However, shutters can have many good years of use. Shutters are available in wood or PVC material and in a variety of colors.

DRAPES
Drapes are also an option that is affordable. Of course, drapes require the purchase of a rod that is hung over a window. Depending on the size and style, the rod can surpass the cost of the drapes themselves! However, many times an average rod is affordable and decent drapes can equal the cost of mini blinds. Drapes can be durable. However, they also get dusty and require cleaning, adding to the maintenance factor over blinds. Additionally, because many drapes have specific designs, it can create a theme that may or may not go well for all renters. The best theme is neutral for a rental property.

Yes, window coverings add privacy but also create style. Depending on your budget, there is a choice out there for you!

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Rental Tips! Do Upgrades Add Rent Value to your Home?

Shot of a Bright Cozy Modern Condo with new wood floors, fresh paint and furniture.

One of the most popular questions we get asked is if improvements made to a house increase its rental value? Perhaps the home you own was purchased many years ago and was recently remodeled – with new floors, counters, fixtures or cabinets. Or you purchased the home recently, maybe even brand new, and upgraded certain aspects of it to make it pop! How does this affect rental value?

Homes in Las Vegas are traditionally built in planned unit developments (aka PUD’s), or as we like to call them, tract homes (some call them cookie cutter homes). Homes are replicated by a builder with minor variations. As a result of this, when a rental analysis is performed on a home in one of these neighborhoods, other comparable, or identical model match homes that have leased are used to establish a value. For example, if your looking to lease a home that is a 3 bedroom, 2 bath, single family home with 1500 square feet, we would look to see if there is another model match in the neighborhood that has leased recently. In many neighborhoods, we can usually find a handful of model match homes. And due to this, because we are working with a similar size home, rental values will usually be within a specific range – not spread apart too far.

How, then, are upgraded features handled that may make your home stand out compared to others?

First, upgraded features definitely have advantages. They make your home stand out and make it desirable, allowing, in many cases, for it to rent quicker. How about rent value? Rent value can typically be increased, however, within reason. A home priced significantly above other comparable homes in the neighborhood may appear overpriced, even if it is highly upgraded. Consistent rental rates within a neighborhood play a significant role to tell a prospective tenant about what is competitive in a neighborhood. Of course, certain upgrades add solid value. For example, a pool can add rental value.

There are some additional factors to also consider. If you find yourself in a depreciating rental market, you may find that adding value is more challenging. An over supply of rental properties on the market can also affect this. The general economy plays a role as well – unemployment or decreasing wages for example.

So, whats the point of this article? Upgrades within a house make it more appealing to a prospective tenant to rent, even adding modest rent value. However, in many cases, upgrades do not add significant rent value above the rental range of a neighborhood or area. Depending on the economy along with supply and demand, this can also change. So, before you upgrade your home for the purpose of renting it, calculate to see if what you have in mind will be a good return on your investment.

Contributed by Nicklin Property Management. Opinion article reflects the views of Nicklin Property Management and is based on our years of experience.

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Homeowner Tips! COVID-19 Restrictions on Showing Tenant Occupied Homes – What To Do?

It’s no secret that Phase two restrictions due to COVID-19 have been extended – for an unknown period of time. Many Realtors who were planning on showing tenant occupied homes (which is restricted under Phase Two restrictions) that have been listed for sale were eager to start showing them on Saturday, August 1, 2020, when the Governor’s directive would of expired, only to find out that it was extended Friday evening. So, what can you do during this time?

If your property is leased and your tenant is paying rent, consider yourself fortunate! Perhaps keeping the home rented and waiting this time period out may be a possibility until restrictions are lifted.

If you absolutely need to sell a tenant occupied home, forging a good relationship with your tenant may be your best option. Current direction from the Nevada Realtors Association to Realtors states that due to restrictions to mitigate COVID-19, you can work with your tenant to obtain pictures or video of the home – tenant provided that is – so that you can have photos for your listing. You cannot force your tenant to do that, however, it is an option. Three dimensional property scans, virtual tours and virtual staging can also be used (Source: nevadarealtors.org).

If you can generate an offer and go under contract, most transactions can still take place while following directives and safety measures. COVID-19 disclaimers have been made available to Realtors in order to handle transactions during this unique period of time.

Of course, investors are scouring properties these days as well, looking for a rental property to invest in. So, there is still opportunity to sell the home. Granted, it may be more challenging. So, if your rental property is generating monthly income, perhaps consider waiting things out – if it meets your plans and goals. Otherwise, anticipate a sales transaction different than what you perhaps had in mind.

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What you need to know about owning a rental property during COVID-19

It’s no surprise that emergency measures have been implemented across many industries due to the COVID-19 pandemic, including real estate. As a rental property owner, what should you know so you can keep yourself compliant? Here are 3 top things!

1. Rent – Some tenants may not be able to make their rent payments due to the economic impacts of COVID-19. If so, under current emergency mandates, you cannot issue a non payment notice (7 day pay or quit) or file an eviction, with exception. The current state eviction moratorium (expiring March 31, 2021) prevents evictions if the tenant meets one of the following requirements:

  1. The tenant expects to earn no more than $99,000 in annual income during 2020
  2. The tenant was not required to report any income in 2019 to the IRS
  3. The tenant received an Economic Impact Payment

A tenant is required to file an affidavit with the landlord stating that they meet one of the above criteria. A landlord may challenge their eligibility, at which point, a tenant may attempt to establish it. Late fees and penalties per the lease can still be assessed. The goal is to prevent disruption in the rental market and have mounting evictions.

Landlords cannot and should not change the locks or put notices on their tenants’ doors or mailboxes to scare them into moving out.

What can you do? You have two options: Forgive some or all of the rent, depending on your tenant’s circumstances. Forgiveness is not obligatory. Or you can defer some or all of the rent, making it due later on. A payment plan can be initiated to collect the deferred rent.  The key is communication by both tenant and landlord.

2. Home maintenance – Even though rent may be suspended, the home must still be maintained properly. Homeowners are required to address habitability and other maintenance related issues.

3. Non compliance of lease by tenant – If a tenant poses a danger to other tenants or the public, is engaging in criminal activity or is damaging the property, eviction proceedings may move forward.

It is highly important to keep up to date on new directives issued by the State of Nevada Governor’s office or extensions to previously issued ones.

Together, we can make this situation easier by working together. Nicklin is doing its part to minimize the impact for both tenants and homeowners and we will continue to keep our clients well informed of any new changes.  Be sure to visit our up to date COVID-19 response for any changes or updates along with helpful resources for rent payment and mortgage assistance.

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