What Makes a Good Investment?
What Kind of Single-Family Unit is Best?
Las Vegas has seen an incredible amount of development in recent years, and that is showing no signs of slowing down. With new developments springing up around the city, it can be hard to identify what communities and properties are best for your clients. While it is hard to go wrong while investing in Las Vegas, the type of property chosen is important in achieving your investment goals in a timely fashion.
Cost Benefits
When faced with the option of single-family homes (SFH), townhomes, or condos, there are a couple factors to keep in mind that can help your clients make the right decisions. The first of these is cost. Typically, the purchase price of a SFHs will be more expensive than a townhome and a townhome will be more expensive than a condo. However, the purchase price is only part of the overall picture for an investment property. While townhomes and condos may be cheaper at the outset, they can come with hefty HOA fees that can eat up a large part of your clients' profit margin. Although HOAs are everywhere in Las Vegas, the cost of an HOA in a SFH community will likely be significantly lower than in a similar townhome or condo community. Continuing with the cost analysis of these types of properties, SFHs will likely incur higher maintenance costs than the other two types of properties. This is because outside of certain circumstances, HOAs cover many of the external and community repairs of condos and townhomes, whereas in SFH communities most, if not all, of the maintenance burden is placed on the homeowner.
Market Appeal
Another factor that should be considered when investing in rental properties is making sure your properties appeal to the widest market of possible renters. This will ensure the largest selection of potential tenants and increase your clients' odds of having the perfect tenant in their property.
On the average, condos will be the smallest type of property that can be offered. These relatively small units will appeal to tenants who do not need much space, or those without many pets. Additionally, to cover the increased cost of HOAs, these units will tend to have higher rent amounts. On the other hand, SFHs will offer the most space, with the potential for added benefits in the form of backyards, pools, and larger garages. However, this space will be at a premium and is best suited for tenants who could take advantage of the 3+ bedrooms.
This leaves townhomes as the sweet spot between the two extremes. Townhomes offer more space than condos, perfect for a couple, growing family, or a handful of roommates, while not being as large to only target large families or multiple occupants like an SFH. Townhomes will also come with lower HOA payments, as the community is no longer responsible for utilities. Not all townhomes are made the same, however. When evaluating townhomes, aim for only those that have two-car garage. Lacking that, look for single-car garages with driveway space. This is important because in many situations, when there is more than one tenant, they will have more than one vehicle. Whereas in most SFH communities, curb parking may be allowed, in many townhome and condo communities, this is not the case. This lack of parking space, and the complaints from the HOA it will cause, can be a make or break for an investment property.
If you want to make sure that you are orienting yourself towards the best possible investments to grow your real estate portfolio, feel free to contact us as your resident property manager to provide expert insights into what you can except from your potential rental property.
