Las Vegas continues to be one of the hottest real estate markets in the country (if not the world). As an investor, this is both good and bad news. With the right approach, you can generate substantial ROI figures. But the wrong moves could land you in a tough spot. In this article, we’ll discuss what this means and how investors, like yourself, can succeed in the midst of these rather unique market conditions.
4 Tips for Vegas Investors
Despite the coronavirus pandemic and tough economic conditions, the Las Vegas real estate market continues to boom. Sales are surging, prices continue to set record highs, and there’s no cooling in sight.
“The median sales price of previously owned single-family homes — the bulk of the market — was $330,000 in July, up 1.5 percent from the previous record high in June and 8.9 percent from a year earlier,” Eli Segall writes for Las Vegas Review-Journal. “Buyers picked up 3,325 houses last month, up 34.9 percent from June and 5.3 percent from July 2019. The market gained speed as availability shrank. A total of 4,806 single-family houses were listed without offers at the end of July, down 5.4 percent from June and 38.4 percent year over year.”
All of that technical language and data basically means this: The market is on fire.
For investors, a white hot market requires precise decision making and careful execution (or you could end up overpaying or getting sucked into trendy traps). Here are a few helpful tips for Vegas investors:
- Know Your ‘Hoods
Not all Las Vegas neighborhoods are created equal. There are five neighborhoods leading the way in this market and they all offer different options. They include:
- The Strip
- Meadows Village
- Downtown East
Depending on where you zero in, you’ll see huge differences in price per square foot, property type, and renters. The Strip, for example, is all about tourism – and that comes at a huge price. Downtown East, on the other hand, is much more affordable (but typically brings a lower cash on cash return). These are all things to keep in mind as you refine your investment strategy in 2020 and beyond.
- Account for Vacancies
If this coronavirus pandemic has taught us anything, it’s this: Rental income is never guaranteed. We’ve seen rent forbearance, relief, and eviction moratoriums. This has killed cash flow for rental property investors and serves as a serious reminder about the need to exhibit caution when managing properties.
Moving forward, you should only invest in properties if you can afford to keep an emergency fund on hand. Otherwise, you may find yourself in a hard spot when the next pandemic or crisis comes.
- Consider Looking Outside the City
In some cases, it simply might not make sense to invest in Las Vegas real estate. Many people feel like we’re entering into a pricing bubble. And with plenty of experts calling for a housing crash in 2021, overpaying at the peak could have drastic effects on your portfolio.
If you’re wary of investing in the heart of Vegas, consider looking outside of the city. This includes both the surrounding areas, as well as out-of-state investments. A market like Houston, Texas could give you better value (in terms of prices, taxes, and cap rate). Plus, with property management services, you can keep your investments running smoothly without needing to be local.
- Work With a Professional
Whether you choose to invest in Las Vegas, Houston, or some other city in between, you need to work with the right professionals. This means experienced local professionals who can guide your decision making and ensure you don’t end up on the wrong side of a bad deal.
Don’t hire a real estate agent simply because he’s your friend. Look for the most experienced person in the area – someone who has plenty of listings and who understands the market extremely well.
What’s Your Strategy?
One thing is clear: Now is the time to make some important decisions. Whether that means investing in Las Vegas real estate, putting your money to use in another market, or using some combination of the two, there’s money to be made in these unique market conditions. What will you do?