[gaash2]

Anyone have a sense what the cap rates are right now on single family homes in vegas. Newer construction (<10yrs old) but low priced (<150k). Are things still able to be rented quickly?

[Willy702]

Cap rates are down, but all over the place depending on location. They are very much correlated with ease of rental. In easier to rent areas like Summerlin (although may not be anything available for 150k) cap rates are low but the property rents quick. Cap rates in parts of NLV or far east LV near Boulder Hwy are much better but may take some time and price drops to get it rented.

[gaash2]

Originally Posted by Willy702

Cap rates are down, but all over the place depending on location. They are very much correlated with ease of rental. In easier to rent areas like Summerlin (although may not be anything available for 150k) cap rates are low but the property rents quick. Cap rates in parts of NLV or far east LV near Boulder Hwy are much better but may take some time and price drops to get it rented.

Thanks. By quite low, you mean like 3.5-4%?

[NoMoreRJ]

Originally Posted by gaash2

Thanks. By quite low, you mean like 3.5-4%?

depending on the hoa and price of the home, yes it's as low as 2% and thanks to financial firms buying up homes, the cap rates are getting worse each day.

[gaash2]

2% for a single family home?? Seems quite light; for a 150k home that is only $250/month net; which would mean these things are renting for at most $750 a month, being very conservative about expenses. Seems like that number is too low?

[WestieJeff]

The big investment groups are looking for cap rates of 6% factoring in property taxes, HOA, insurance, and a 10% prop mgmt fee, not including vacancies and repair costs.

The big investment groups will literally buy up anything that meets the 6% cap thus individual investors may have to accept less than 6% cap to actually buy anything.

Thus I see the cap rate being around 5% for an individual investor at the moment based on calculations above. Factor in vacancies and repair expenses, even less. Granted you could self manage and gain the 10% prop mgmt fee.

Overall, can't see how it's worth it.

[gaash2]

I will happily invest at a 5% cap right now if there are favorable population and demographic trends. With where rates are that is still quite attractive..

[WestieJeff]

Shouldn't be a problem. A friend of mine just sold a SFR right outside Summerlin for 160k that would easily get $1,100 rent. Minus expenses you could net $850/month, that's a 6%+ cap rate. You'll have to pay cash for the place though since it went over appraisal (not by too much though).

Originally Posted by gaash2

I will happily invest at a 5% cap right now if there are favorable population and demographic trends. With where rates are that is still quite attractive..

[lvoc]

I just did a run on Sun City. There I estimate a 162,000 home will rent for 1068. However I estimate a net of 366 per month and a cap of 2.66%

It is all in the assumptions.

[gaash2]

Originally Posted by lvoc

I just did a run on Sun City. There I estimate a 162,000 home will rent for 1068. However I estimate a net of 366 per month and a cap of 2.66%

It is all in the assumptions.

how do you get 700$/month of expenses?