[airics]

i believe that the prices on the lower end have stablized... (under 150k houses)... i also believe that the million dollars homes are going to fall a bit more before its done and over... as for the new foreclosures coming on board, i still think that there is time to buy, not only because of the quantity but also because it is harder to get the loan and keep the credit score up. With American Express, Citi, Discover, and Bank of America lowering the credit limits on their customers credit cards, it adds to the percentage of debt to available credit which lowers your score dramatically -- i know this because its happening to me

[gtbguy]

Originally Posted by jwt8070

I just came back from a field trip to Vegas to study the rental property market. Eventually I want to buy several SFRs in Vegas as rental property. The purpose of this trip was to scout the neighbourhoods. I spent five days in Vegas and visited Summerlin (89134, 89138, 89144), Henderson/Green Valley (89044, 89051, 89002) and Northwest (89131, 89143). I also had a meeting with a realtor whom I met on this board and another meeting with an ower of a property management company. I will report below what I saw and learned during this trip.

Summerlin: overall a very nice area. I stopped by an open house and chatted with the realtor there. She told me that one can buy a house in Summerlin at REO for $90-$120/sqft. This is consistent with what I learned from other sources.

Henderson/Green Valley: Seven Hills seems to be a nice place to live. Some neighbourhoods have nice views to the Strip/City due to its higher altitude. If I were buying a house for myself to live, I would serious consider this area - I like house with views. But I mostly saw expensive homes and age restricted neighbourhoods. Some neighbourhoods in 89002 are quite old and houses do not look very nice, but they still go for ~$100/sqft. I quickly gave up on Henderson/Green Valley.

Northwest: looks quiet and peaceful, but I saw more houses for sale here than in the other two areas. In some neighbourhoods, I saw as many as 3-5 houses for sale on one block. I also saw bank notices on some houses which apparantly had been abandoned by the owners so I suppose these houses will come to the market soon. I learned that here one can pick up a house for $70 or less per sqft.

My meeting with the owner of a property management company was interesting. I asked her to print out the rental rates for Summerlin and NW, and what I saw is that the rental rates in Summerlin are about 10-15% higher than similar houses in the NW. The owner of the property management company also told me the following:

* Summerlin is hot since everyone wants to live there, while NW is also a good rental market.
* Lower end market ($1100-$1300/month) is more active than higher end market.
* Avoid big houses (2000+ feet, 5 or more bedrooms) because it take longer to find tenants.
* If a house has a pool, it goes fast.
* Tenant turn over rate in Vegas is high.

Based on what I have learned, it seems that in the NW, investors will get a better return on investment if the property is occupied, but a house in Summerlin will rent faster thus have less vacancy period. Overall I think NW will still come out ahead if an investor selects his properties carefully to minimize the vacancy period. Note that I did not touch the subject of future appreciation because it is difficult for me to guess proeprty in which area (NW or Summerlin) will appreciate more once the housing market recovers.

I hope the above info will help other investors looking to buy a rental property in Vegas. Comments are welcome.

Great and informative post. I am also in the process in trying to buy a couple of properties in Vegas. I have to wonder though with so many properties that will be bought up by investors, just how many of those will get/stay rented? Lots of people are leaving Las Vegas at a faster rate than entering. Some investors could end up with properties vacant unless one lowers the rent enough to find/keep a renter.

RL

[airics]

Originally Posted by gtbguy

Great and informative post. I am also in the process in trying to buy a couple of properties in Vegas. I have to wonder though with so many properties that will be bought up by investors, just how many of those will get/stay rented? Lots of people are leaving Las Vegas at a faster rate than entering. Some investors could end up with properties vacant unless one lowers the rent enough to find/keep a renter.

RL

where is your source saying that they are leaving faster than coming in?

[jwt8070]

Originally Posted by gtbguy

Great and informative post. I am also in the process in trying to buy a couple of properties in Vegas. I have to wonder though with so many properties that will be bought up by investors, just how many of those will get/stay rented?
RL

Good question. The owner of the property management company I met also told me that the rent had been heading downward during the past year. An investor needs to build margins into his model because a property with positive cash flow today may produce negative cash flow tomorrow if rent continues to drop.

[airics]

so you are saying the possibility of rent falling below $800 for a house or condo which would cause negative cash flow?? never gonna happen...

[Fastrudy]

Airics:
Is $800 rent a magic number, or is it just your break-even point? Not trying to be rude, but it seems every different case will have their individual break-even point (where rent minus all expenses =$0) Please explain.

[airics]

what i am trying to get across, is that for $800, you can get a 100k home and include the taxes...This home should rent for $900-$1200... It is difficult to find an apartment in vegas for this money..so if you buy the $100k home, the odds of it NOT being able to be rented for $800 are very low in my opinion.
A few posters on these boards have bought condos for $35-$50k, a break even point would be close to $500.. shouldn't be hard to rent also... If you know where to buy, you will be fine.. If you buy in the east, you are on your own.

[gulfer]

If the article in the Las Vegas Sun this morning regarding thousands of more foreclosures coming onto the market is any indication, I would think that you'll see more renters. Now I do understand the media spin, but you can't argue that the help available to people that are underwater on their mortgage (cramdown, write downs, etc...) doesn't appear to be happening. Well I guess we could argue but would rather not. I do think that even families with damaged credit will be able to convince people that they will pay the rent (maybe a month or two in advance) so therefore be able to rent. Might even be able to charge a little more. People need to live somewhere.

[olecapt]

The GLVAR site indicates that leases are well up with stable pricing.

It could be a mix change thing but I doubt it. PMs have a tendency to always claims rents are down. Lowers the pressure to secure a top dollar lease. "Don't blame me...pricees are dropping"...

We did some hard dickers with some nice properties in Summerlin a couple of months ago and got no real slack. In fact one idiot turned down a singular good long term renter over a short sale...

[Fastrudy]

Thank you for the clarification. I agree with airic's analysis.