The Las Vegas housing market is as hot as the desert in which it lays, but prices have already begun to increase, and investors may eventually find themselves in a slowdown. Today, we’re talking about how to handle the ups and downs of any real estate market, particularly when you own or hope to acquire rental properties.
The Las Vegas Rental Market
It’s currently a great time to invest in Las Vegas. The real estate market has recovered nicely since being a victim of the downturn more than 10 years ago. If you’re an investor who would like to start over after that recovery, this is a great place to do it. Prices are still affordable, but values are rising. The population in and around the city is growing, providing landlords with a large and qualified tenant pool. New industries and companies are moving in, and professional sports have finally arrived. Now is the time to grab your first investment property in the Las Vegas area or another one for your portfolio.
There isn’t a huge inventory, which makes the sense of urgency even greater. While new homes and buildings are being developed, there’s a bit of a crunch in terms of what investors have access to right now. Look for the right opportunity and when you find it, don’t wait too long to acquire it.
Prepare for Slower Markets with BRRRR
Whether you’re a new investor or an experienced pro, don’t get left out in the cold investing in Las Vegas. This market is subject to what we call the BRRRR Effect. The acronym stands for Buy, Rehab, Rent, Refinance, Repeat. Investors can adopt this strategy when they buy a property with excellent potential for increased value. Buy with cash or finance a loan. Remember that the way you fund your purchase will have a direct impact on what you earn.
Once you Buy the property, it’s time to turn to the R’s. Rehab the property with its ultimate value in mind. You don’t want to spend more than you’ll earn back. So, focus on making it habitable and then invest in minor upgrades like granite counters, hard floors, and stainless steel appliances.
Next, Rent it out. You’ll find great tenants who provide a consist cash flow and help you pay down your mortgage, if you have one. Then, you want to Refinance with a bank or lending institution that will provide cash on the deal. Borrow on the appraised value instead of your equity. This will leave you more profitable.
The final step is to Repeat. When you can develop an investment strategy based on BRRRR, you’ll set yourself up for some great cash flow and impressive returns. It’s a great way to get through a market that may be slowing down.
We love working with investors and sharing everything we know about real estate and the Las Vegas rental market. Contact us at Tradewind Investments to access our portfolio of opportunities, and to talk about your next steps. We’d love to help you.