Investing in a rental property in Las Vegas has the potential to be lucrative, especially with more and more people relocating to the city. Here are some tips to help you buy your own rental in Las Vegas.
- Study Las Vegas’ economic landscape.
Business is booming in Las Vegas and with that, the city is seeing the creation of more jobs, therefore attracting more professionals into the area.
What are the new workplaces popping up in the city, and what kind of jobs do these companies create? Will you be able to hone the rental property you’re interested to appeal to these professionals? How? As you scour the market for a residential rental property, consider these factors.
In the long run, being knowledgeable about this aspect of Las Vegas life will also allow you to make necessary adjustments to the rental property. You can add certain amenities or amend the lease agreement accordingly to accommodate potential tenants. You might also consider creating a co-living space and offer flexible living arrangements depending on your target market.
Once you find a rental property that suits your long-term goals, keep up to date with the market to stay on top of the game.
- Consider access to amenities and services.
To make the most out of your investment, find a rental property in a convenient location. This may be challenging, as more and more investors are moving in to buy properties in Las Vegas.
Instead of focusing on what’s already there, consider the potential of a place. Las Vegas’ economic boom is fueling further development. Locations previously deemed “unattractive” may be soon transformed into up-and-coming neighborhoods.
In general, your rental property should have sufficient access to services like public transportation and schools. But if you are geared towards a specific market, you should also be attuned to this market’s needs. For instance, if you want to cater to families, buying a rental property near good schools or within a top school district would be wise.
If you are targeting young professionals, find a rental property near Downtown Las Vegas or where the new companies are. It would also help to buy a rental property near commercial establishments like malls and restaurants, as well as nightlife.
- Include home-price appreciation in your calculations.
Gross income isn’t the only way to tell if a rental property can give you returns on your investment.
While looking for a rental property to buy, you’ll be doing your fair share of calculations to make sure the investment makes financial sense. Most people often look for the cap rate, which is the returns you would make given you purchase using cash. While calculating the ROI isn’t a bad move, don’t forget to take into consideration the home-price appreciation rate in Las Vegas.
Consult your real estate agent about the appreciation rate in the city and include this in your calculations. If it shows positive annual price gains, the better the outlook especially should you decide to sell the rental property in the future. Moreover, wouldn’t it be better to invest in a rental property that appreciates over time?
- Evaluate your financial capacity to maintain a rental property.
Just like managing your own household, you’ll be in charge of the overall maintenance and upkeep of the rental property. If you choose, you can hire a professional property manager to see to the daily needs of the tenants and the regular repairs, but ultimately, you will still be in charge as the landlord.
Maintenance and upkeep should be part of your considerations, especially if you are buying a rental property that needs fixing. Ideally, the property’s income should be enough to cover all of the rental’s expenses. There will be, however, days or periods when you will need to use some of your own money, especially in the event of a vacancy.
- Learn how to screen tenants.
Good tenants are instrumental in earning rental income, which would then cover the mortgage, payroll, and other big-ticket expenses. Whether or not you’ll be hiring a property manager, it helps to know how to weed out bad tenants from the pool of applicants.
Conducting background checks can be useful to verify information stated on the application. That said, it’s hardly possible to find a tenant with a perfect background. You will need to make special considerations depending on the situation. For instance, it might be better to consider a prospective tenant with some debt than an applicant with pending legal judgments.