How to maximize profit while investing in Las Vegas real estate, video

How to maximize profit for investors investing in Las Vegas real estate in 2020

The ultimate goal of investors is to maximize profit while investing in Las Vegas real estate or elsewhere. If there was such a thing as investor heaven, investors would be assured that they didn’t overpay and got a good estimate of the cash flow with every listing they got from their Realtor. Wouldn’t that make the investor’s life easier? That is exactly what we do, we find the best investment homes, condos and townhomes and email the listing with a very good estimate of cash flow to our investors.

In this video series, we discuss how to find the best Las Vegas investment properties with the highest net rental income (cash flow). This is done by

1: Finding the best-priced units in the investor’s price range through comparative shopping

2: Computing a rental rate for them

3: Deducting expenses from the monthly rent

4: Computing cash flow to find the listing with the highest cash flow

The key to finding units with the highest cash flow is minimizing the biggest cash flow killers like overpaying for the unit, minimizing repairs and especially vacancy.

In this video, we will go provide an overview of each step and discuss them in detail in calculating rental income for Las Vegas investment properties and escalating cash flow from Las Vegas investment real estate.

Lastly, we will show how much cash flow you can expect from investing in Las Vegas residential real estate as of March 2020.

Video:

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Video Transcript:

The title of this page is how to maximize profit while investing in Las Vegas real estate, but therein lies two problems.

1: Finding the best-priced units in a large area

2: Finding the units with the highest cash flow among the best-priced units

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One has to know how much cash flow a Las Vegas home, condo or townhome generates before finding the one with the highest net rental income. When is the last time that you were sent a residential listing with a good estimate of cash flow? In most cases, the answer is never.

We are one of the few Realtors in the United States who include a good estimate of the cash flow with the listings that we show our residential investors.

1: Finding the best-Priced homes, condos or Townhomes

1: Finding the best-Priced homes, condos or Townhomes

Finding the best-priced units is easy, but very time consuming and it is done through comparative shopping in a large area. We have done this for the past 10 years and have picked about 25% of the metro as the best investment area for homes and condos in the lower and mid-price ranges.

Apartment vacancy rate in Las Vegas zip codes for the Third Quarter 2019 map

Our desired area has some of the lowest vacancy rates in the metro with the highest ratio of price to rental income. Less than 10 out of 100 listings pass this stage.

2: Finding the units with the highest cash flow among the best-priced units

Cash flow and future appreciation vary greatly with the type, price range, and location of investment properties. Additionally, similar units in a small area that rent for the same amount have significantly different cash flows due to homeowner association fees, repairs, and vacancy.

Solving the second problem entails computing a good estimate of cash flow among the best-priced units.

We use the following formula to compute a good estimate of net rental income which equals cash flow for cash buyers but financing buyers have to deduct mortgage payments from rent as well.

Net rental income = (Monthly rent) – (HOA fee + property tax + Sid/Lids if applicable+ landlord insurance) – (vacancy + repairs + 8% property management fee)

Calculating the net rental income entails deducting two sets of numbers from the monthly rent. The first set can be found in any home or condo listings. They are the Home Owner Association fee or HOA fee, property tax, and SIDS and LIDS which are bonds that the builder issues to construct the infrastructure. SID/LIDS is passed to the buyers and is paid in installments. The landlord insurance rate can be figured by a quick online search. These expenses are mandatory for all investment properties.

The second set of numbers are property and owner specific which have a great effect on the cash flow and they are vacancy, repairs, and property management fees, if necessary.

In calculating rental income for Las Vegas investment properties video, we go over how to calculate the second set of numbers that are property specific.  So we can figure a very good approximation of the cash flow for a real-life example of a condo in the northern part of town that was bought and rented four days later in the fall of 2019. Please watch it.

Homes or condos that pass all filters are going to be some of the best-priced units that offer the highest cash flow, period. Less than 3 units out of 100 passes all filters and the listings are accompanied by the estimated cash flow.

What is the cash flow from investing in Las Vegas real estate in 2020?

As of March 2020, investors can get an estimated 3.5% to 5.5% cash flow from buying nicely upgraded homes, condos, and townhomes in good locations. Currently, condos and townhomes provide for a higher return than single-family homes. Higher rental rates result is a lower percentage of rent appreciations while vacancy goes up. But on the other side deep discounts can be found in higher price ranges for investors looking for future appreciation.

Higher cash flow is possible, however, there are not a lot of properties that offer them and one has to know where to look for them.

Rent appreciation for Las Vegas condos 2006 to 2019

Rent appreciation for Las Vegas condos 2006 to 2019

Professional investors calculate the cash flow every year based on the current price of the home or condo. But here we discuss increasing cash flow based on the initial cost of the unit.

The 3.5% to 5.5% cash flow is a snapshot in time. Rental rates have been increasing at a good clip for the past few years. In increasing cash flow from Las Vegas investment real estate video we show how escalating rental rates in the past few years have increased the cash flow yearly.

If the condo was purchased two years ago and had a 5% cash flow, a hundred dollar or 7.1% rent increase, would change the cash flow from 5% to 5.6% in a year. Another $100 rent escalation in the next year would change the cash flow to 6.1%.

Big mistake by some investors who invest in higher cash flow areas like the Midwest

Some investors avoid investing in Las Vegas real estate due to lower initial cash flow and elect to buy in the mid-west which offers higher rental incomes. However, prices and rental rates don’t go up much there, so these investors lose on future appreciation along with escalating cash flow due to increasing rents. Except for 2019, investment properties here have been returning near double-digit profits in terms of appreciation and cash flow for the past few years, which should go on for at least a couple more years as well.

If you are thinking about investing in Las Vegas real estate please call us at 702-478-7800 to start the process. We have been researching this subject for the past 10 years.

This is Karen Saberzadeh of Las Vegas homes, condos, and luxury high-rise condos wishing you a great day.

How to maximize profit while investing in Las Vegas real estate, video was last modified: March 22nd, 2020 by masouds