Is investing in a rental home a bad idea due to the poor occupancy rates in Las Vegas, or for other reasons possibly?

Well I wouldn't invest so far away from where you live. I would invest in my own area to keep it local. It is easier to control and manage so you won't have to add a property management company that will suck away any profits you have left over.

Occupancy rates is one factor but another is the RENT ROLL. Call a property management company down there that handles many rentals for the area you want to buy in. Ask for the type of property you want to buy say 3 bed 2 bath how long it takes on average to rent out and what range. Ask for lowest to highest amounts. Base numbers off the lowest amount to be conservative and factor in 1 to 2 vacant months out of a year for a buffer.

Now you want to run your numbers with a mortgage broker to see with property management that will screen tenants properly and collect rents what the break even point is after mortgage,management,taxes,hoa fees,landlord insurance,etc.,etc.


Then you have to decide are you buying for cashflow or are you buying for upside later on??

When the markets were hot people cared little if they cash flowed because they could refinance out cash with the rapid appreciation. Now that markets are very slow to recover it could take years to see a substantial uptick in prices. Knowing this you want to in my opinion break a decent profit every month and set a reserve fund for vacancy loss and damages,repairs from tenants.

Now if I had a lot of money I would invest in commercial real estate. You can buy a developed parcel from a distressed development that all that is needed is to build the structure. You can get killer returns when the markets come back in a few years and would only be paying taxes on the land. You could also buy a small strip center say with 8 storefronts. You can make much more cashflow and easier to manage under one roof.

Unlike multiple homes where you always have a repair needed at a different location.

Thanks for the reply.

I do have a rental here in WA, its worked out well. Ironically, I purchased it while living in Vegas and did use property management because of the distance. My parents live in Vegas and want to be partners on a rental home, with the idea that they ARE local and can adapt to problems quicker. If things go well, we may expand to two or three homes. Even with their close proximity, I am leaning toward the use of management for the first year.
The only reason I shy away from commercial real estate is the complete lack of experience and knowledge.
For us it is a long term investment, and not a monthly source of income. Rent can remain very low and competitive to keep the home occupied. I do worry about the surplus of vacant homes in the area.
On my last visit a couple weeks ago, I saw many strip malls vacant.

I believe you would have more upside with commercial. If you wanted to do business in GA I could help locate a prime property.

With residential you can pay down the mortgage and sell a house. With commercial you can have so many exit strategies to turn a nice profit.

The problem is when the economy is down new business starts are small to non-existent. Most developers when they built a small strip mall they were counting on boom rental rates per sq ft of 2007 and did not see the bottom fall out. Just like people overpaid for existing strip centers between 2004-2008. Now they are going into the red every month.

You have a unique opportunity to buy based on a low price where you can rent out for less.There are quality tenants out there they will just gravitate to the best deal.

If you are ever looking in GA let me know.

I specialize in residential and commercial foreclosures and distress sales.