First time Las Vegas real estate investors often understand the rewards of buying rental property. There’s an opportunity for short-term rental income as well as long-term ROI. You’ll be able to access tax benefits and watch the value of your investment grow even while someone else is contributing to the mortgage pay-down and the other expenses associated with owning property.
What first time investors tend to miscalculate is the risk that comes with owning rental property. It’s easy to make a mistake and there are often surprises. Many times, they’re expensive.
We love working with new investors because it gives us the opportunity to share our expertise and our resources. As experienced Las Vegas property managers, we know what types of properties will rent for the most money and which properties will only be a financial drain.
Here are some of the most useful tips we have for new investors who are exploring their options with Las Vegas real estate.
Invest in Professional Las Vegas Property Management Early
Unless you have the time, knowledge, and experience to manage an income-producing property on your own, you’ll want to hire a professional Las Vegas property manager for your real estate investments.
This is an important part of becoming an investor. You’re not going to have the time or the experience to do everything yourself. Instead, you need someone who knows the local market and understands the property management industry. Find a company that can accurately price the home, market it, and screen for highly qualified tenants.
A lot of new investors will expect that they’ll hire a property manager after they’ve closed the deal and they’re ready to rent out the home. In fact, you will have a better experience if you partner with a management company before you buy. Consulting with a management company will give you a few important advantages:
- You’ll know what kind of rents you can expect to earn before you make an investment. Property managers have up-to-the-minute rental data.
- You’ll know what kind of money you’ll have to spend to get the home ready for the rental market. There’s a big difference between investing in cosmetic renovations and a major rehab project. Find out how long it will take and how much it will cost to make your investment rent-ready before you buy.
- You’ll get an idea of what to budget for vacancy, preventative maintenance, turnover, etc.
Smart investors partner with Las Vegas property managers before they buy.
Establish Your Las Vegas Real Estate Investment Goals
The next tip we have is about developing an investment strategy.
You need to know why you’re doing this and how much you can spend on a rental property before you buy it. We’re often surprised at how many new investors skip this step altogether and just going looking for available properties to buy.
Be more strategic than that.
Buy the property that fits your investment goals and if you aren’t sure what those goals are – that’s where you need your starting point to be.
Decide if you’re hoping to earn immediate cash flow or if you’re more interested in appreciation. Consider whether you’re buying a rental property you plan to live in yourself one day as a retirement home or if the investment will serve as strictly an income property that you or your family members will never occupy. Decide if you’re renting out to long term tenants or short term visitors.
These are some of the immediate questions you’ll have to ask before you invest. It will shape what you buy and in which Las Vegas neighborhoods you decide to look.
Think About Financing Your Investments
Financing is another thing you need to think about before you invest. Again, your investment goals can help you decide how you’ll pay for your investment. Some of the questions you should ask before acquiring a rental property or deciding how to pay for it are:
- How much do you have for a down payment?
- What will you do to finance the rest of the purchase?
- How much risk can you tolerate?
- Do you have the available cash to spend on things like repairs, vacancy, and marketing?
We don’t encounter a lot of first-time investors who pay in cash. You’ll need to be prepared to budget for the expenses that come with owning a rental property. Get to know the mortgage rates, understand the total cost of your investment, and partner with a skilled broker who can help you get the best mortgage or financing deal.
Get to Know the Las Vegas Rental Market
Whether you’re a local investor or someone out of state who recognizes the potential of investment properties in Las Vegas, you need to know the market. Research is important before investing.
This is a growing and competitive market. Knowing everything you can before you enter it is critical. Each neighborhood has its own benefits and challenges. You’ll have the option of buying single-family homes, new construction, and multi-family units. There are tenant demographics to explore and rental values to analyze.
You also need to be aware of the federal, state, and local rental laws that require compliance. It’s impossible for a new investor to know everything about the Las Vegas market and its rental laws, but at least understanding the rental values, maintenance expenses, and vacancy rates for an area will help with budgeting and forecasting.
When you know enough about the market you’re about to enter, you can ensure you’re establishing a competitive and profitable rental value. You can also employ better marketing strategies for more effective leasing. Understanding competing properties will also help you prepare your own rental for the pool of tenants who are looking for new homes.
Depending on the property and the location, typical tenants may be families looking for good schools, professionals who want an easy commute to work, or retirees who will want access to recreational and entertainment activities. Understanding these details will drive important investment decisions.
This is yet another reason that working with property managers before you buy is so important. You’ll have a local expert ready to show you what you need to know.
Las Vegas Investment Tip: Buy the Right Property
When you’re buying your first investment property in Las Vegas, you have to make sure you know what you’re looking for, and what’s going to earn you the best ROI. You also need to consider how the property will fit your investment goals. It has to make sense mathematically, not emotionally. Your rental property is going to be a business. Treat it that way. Look at the numbers. Don’t buy a house just because you like it. Consider your prospective tenants, who will be looking for a well-maintained home in a desirable neighborhood.
We have seen a lot of first-time investors make the mistake of buying a cheap property that needs a lot of work. This strategy may work for experienced investors who are focused on flipping houses, but it’s not a great way to start your real estate investing career. The rehab that’s needed means there will be a delay in getting that property listed on the market. You’re not going to make the money you expect when you’re starting at such a large deficit.
Buy the right rental by doing a lot of research before you close on the deal. Get to know the rental value, the likely tenant demographics, the local economy, and the location. These things will impact what you earn and what type of investment experience you have.
Pricing Your Las Vegas Rental Property for High Earnings
Once you’ve found the right rental home and you’ve closed on your investment, it’s time to rent it out.
New investors can easily become confused about how to price their rental property. You probably have an idea about what you’d like your property to earn every month, but the rental price is really market-driven. It doesn’t matter how much cash flow you’re after or what you’ll need to make your mortgage and tax payments.
Access to accurate rental data is important during this process. You’ll need to know what similar homes have recently rented for in that exact area. You can check sites like Zillow and HotPads, but you’ll have better results when you have accurate and recent information. This is another example of what a Las Vegas property manager can provide.
Evaluate the market thoroughly with your management company, and check the prices for competing properties that are similar to yours.
Budget for Las Vegas Rental Property Maintenance
Our final piece of advice in this blog is to make a good maintenance budget. In fact, we recommend you budget for more than you’ll need. Every rental property will need work, especially once you have tenants in place. Wear and tear is going to occur, and systems and appliances will need to be repaired and replaced.
Prepare for this financially, and make sure that routine and emergency maintenance issues are a priority for you and your tenants. Any deferred maintenance or maintenance that’s left unreported by your tenants will damage the home and drag down its value.
There’s a lot to consider when you’re investing for the first time, and sometimes it’s overwhelming. For help, please contact us at New West Property Management. We’re passionate about the services and value we provide to the owners and investors who trust us with their properties. Our team expertly manages residential rental homes in Las Vegas, including Henderson and North Las Vegas.