Js,

The rental market has been pretty stable for a while now. There has not been a dramatic increase or decrease in rents. Just like Damon mentioned, there are many people still moving into Las Vegas every month. Many of them will turn into renters. There are many people getting foreclosed on. They will turn into renters. So even thought there are many rental properties on the market, there are many renters out there looking for them too. They pretty much negate each other out.

I believe that putting a decent percentage of money down into a cheaper priced home can work in someone's benefit. Ultimately, you will have a cheaper payment due to the lesser price that you would pay by putting money down. You can also get into some better loans by having some cash down, which in return will give you better interest rates. It can also help you break even or even have a bit of a positive cash flow if you have a cheaper monthly payment due to you paying less of a loan amount because you put money down. I believe that there are also negatives to using up a large chunk of money instead of utilizing it in other ways. Each individual situation will have its pros and cons.

Sat May 17 2008, 01:31

Hi Js,

For Northwest and Southwest single family homes from 1/1/07-4/1/07 the median rental price per square foot was $0.75 and the median time on the market was 37 days. 1/1/08 - 4/1/08 median price was $0.76 with the average days on the market down to 30 days.
With 6000-7000 people moving to Las Vegas every month and 11,188 vacant homes on the market, I'm pretty bullish on the rental market. Keep in mind that many of the homes facing foreclosure are occupied by owners or tenants. The tenants will find other rentals, and the owners in that situation will often become tenants too.

First let me agree with the idea that 20% will just about break even. You can get a Summerlin home for about $225k that will rent out for about $1350. Payments at 6%, not including principal, will be around $1390 including tax, hoa, ins, garbage and sewer. Get the seller to contribute and buy down your interest rate another 1/2 point and you're close to even.

Similar scenario with a $175k home in 89118 which rents for about $1250. Buy that interest rate down and you might be able to squeeze out $50/month or so.

Anyway, there are a few reasons I would do this instead of putting that $20k investment into a mutual fund or something. One reason is the tax advantages and depreciation. Another is that I actually believe rents will continue to go up and my "break even" will soon become a "positive cash flow". (I realize we may have different opinions on this point.) And lastly, I guess you could put me in the category of one of the fools that buys real estate on the speculation that prices are going to go up. However, I don't bet my house on it doing so within certain time period. I believe it will go up eventually, and as long as I'm at a break even or positive cash flow...well I can wait as long as it takes.

Even if values increase at a modest 4% year (does anyone know the national average appreciation rate over the last 50 years?) after 5 years my $225k home will be worth $273,745, more than doubling my investment of $22,500. (Someone let me know if my math needs help.) Find me a mutual fund that earn 15% year after year and only gets better with time and I'll sign up for that too!

Thu May 15 2008, 18:57

Len ---- why would it definitely make sense to put down 20% to break even (maybe) for Las Vegas homes where it appears vacancy percentages are going up and lower rents will probably follow? (Increased supply.)

Are foreclosures slowing down yet? How many of all the sales being reported in the local newspaper are being purchased by investors that are going to be putting the homes up for rent? (Once again, increased rental supply.)

I'm not one of the fools that buys real estate on the speculation that prices are going to go up. I sold my last investment property (of several) in '06 to one of these types of "investors" and I don't think I have to explain what happened to values afterwards.

Prices are much better now, but I'm looking for more then the "It's a great time to buy" because interest rates are low and there is plenty of inventory. If I can get a guaranteed and higher return on putting my 20% in an alternative investment, why would I want to speculate on the future values of Las Vegas real estate?

I was buying properties as far back as '99 for $120,000 that would rent out for $1,100 and from what I'm seeing, the same types of properties in Summerlin and Green Valley are well above $200,000, yet only rent for around $1,200.

It does not seem to make financial sense to me but hopefully somebody can specifically answer the question about rental rates and the supply of rentals available.

I certainly hope I don't have to explain that when there is increased supply, prices (or rents in this case) go down.

Thu May 15 2008, 12:18

Js,

It definitely makes sense to put down 20% sometimes or breaking even on your investment in a market like this. Give it a few years and you will have a great return on your investment in equity.

I specialize in the Green Valley area. My office is here and I live in the area too. Please consider calling me so I can work with you in finding you some great rental properties to purchase. I can email you over some stuff and you can let me know what you think if you would like. Hope to hear from you.

Len McGuirk
Prudential Americana Group
(702) 203-6688

Wed May 14 2008, 23:45

I would be interested in Summerlin or Green Valley but I don't see how putting down 20% and the property still not cash flowing (or even breaking even) would be a good investment.

The numbers just don't seem to make sense. Higher asking prices but the rents are not high enough to justify the increase in cost.

Wed May 14 2008, 17:17

No, in fact they're up about 4% from last year. Average time on the market for a rental is less than 30 days with high demand areas closer to 15-20 days. However, your question makes a good point. My stats are based on privately owned homes and condos. Perhaps the apartment market is losing out to the single family home.

If you're thinking about buying investment property to rent out, drop me an email. I'll gladly send you the rental stats for the area you're considering. Click on my profile for my contact info.

Wed May 14 2008, 13:08

If you are looking for positvie cash flow as your investment criteria, I wouldn't necessarily recommend a SFR right now unless you bought it at a super low price and you intend on putting a lot of money in for the down payment. Otherwise they tend to not cash flow. Rents are a function of the property features (size, rooms, ammenities) and the location so it is hard to say. $1100-1300 is an average price range for a +/-1900 sf home in a semi-desirable neighborhood if you want a ballpark answer. If you want to talk about other investment strategies, let me know.

Wed May 14 2008, 11:02

I'm getting mixed messages. On one hand I'm being told that investors are buying up properties under $300,000 (which tells me that they are going to be putting them up for rent).

This report --> http://cber.unlv.edu/housing.html ------ and this statement "A large inventory of empty nonowner-occupied units has increased rental activity. These owners find it better to rent and make a contribution to their mortgage payments than leave units vacant. Some households have moved into single-family units and out of apartments. As a result, apartment vacancies rose in 2007, ending the year with 7.7 percent vacancy rate."

Tells me something different then what is trying to be sold in the lvbusinesspress report with quotes from people that benefit from buying and selling apartment units.

Anyways....How much can I rent a home out for that is the median price range in Las Vegas? (Let's say a $250,000 home since nobody seems to have a set answer on what the median price is anymore.)

Wed May 14 2008, 10:06

Js,

From what I have seen, the rental market has been pretty stable around Las Vegas. Even though many of the homes are vacant, there are many people that have gotten foreclosed on or short saled their home, they usually end up renting a home nearby. So basically there are still many people renting homes. Another problem is due to the lending industry tightening their restrictions and the such.

I would be more than happy to help you find some great investments. Now is definitely a great time to get some great deals on buying. Let me know. You can contact me on my cell below if you would like to work with me. We will find some great deals in areas with high rent. Hope to hear back from you.

Len McGuirk
Prudential Americana Group
(702) 203-6688
LenM@AmericanaGrp.com

Wed May 14 2008, 09:40

More info http://www.lvbusinesspress.com/articles/2008/01/07/news/iq_1…

Wed May 14 2008, 09:14

They have been fairly stable, actually. Why? Because many potential home-buyers have chosen to wait and rent for a while and also the mortgage market has tightened making it a bit harder for people to buy homes. So demand for rental housing is still strong. The vacant homes tend to be for sale or somewhere in the foreclosure process so they aren't a big part of the rental pool.

John A. Brassner, MBA, Realtor
Windermere Summerlin Real Estate Residential and Commercial
Cell Phone: 702-808-9816
Fax: 702-995-0488
Email: john@john4realty.com

Wed May 14 2008, 09:13

I own but I'm looking to buy properties for rentals. It seems that there are a lot of properties for rent so I'm wondering if anybody has current information on the Las Vegas rental market.

Has rental inventory been increasing and making it a competitive environment for landlords to have to lower the asking rents?

Wed May 14 2008, 07:30

That has not personally been my experience. Though housing prices have gone down, rent depending on the area has either stayed stable or increased. Are you looking to rent a specific property. I noticed that you live in the 89144 area which tends to be more expensive then some. Please contact me with any other questions you have and I'll be happy to help.

Wed May 14 2008, 07:14