The Best Types of Properties to Buy in Las Vegas

So we are on the same page, I believe every investment property must meet three criteria:

  1. Sustained profitability - The property must generate a positive cash flow today and into the foreseeable future.
  2. Likely to appreciate over time - You would never buy a property just for appreciation but appreciation is very desirable. Especially when using a 1031 Exchange to reinvest equity or adapting to market changes.
  3. Located in an area where you can make money and risks are low. Key factors include state income tax, property tax, insurance cost and landlord favorable regulations. Regulations include property related laws like the time and cost of evictions, rent control, code compliance requirements, etc.

Achieving the three criteria requires a combination of the right property and the right location. In this article, I will only focus on the property aspects. Also, notice that the criteria does not specify a property type. What drives property selection is not the property type, it is the ability of a specific property to meet the sustained profitability requirement. Also, the property that will best meet the requirement today is not necessarily the same type that will best meet the sustained profitability requirement in the future.

In the remainder of this article, I will focus on the current Las Vegas market. Also, I will be using generalizations, which may or may not be true for individuals so use the following as guidelines, not immutable facts.

Condos

In general, condos in Las Vegas have the following characteristics:

The tenant pool for condos tends to be singles or couples with out children. This tenant pool tends to move more frequently making tenant turns more frequent than desirable.

Multi family

This includes duplex, triplex and fourplex. Buildings with more than 4 units require commercial financing and are outside the scope of this article.

Single family

Town homes

I get frequent questions on the difference between condos and town homes. With condos, you have exclusive use of the air gap within the walls of your unit and an undivided share of all buildings, grounds, etc. With town homes, you own the physical structure and the land upon which it sits. This id called fee-simple, just like a single family home. In other parts of the country where I've lived, Las Vegas town homes would be called patio homes or attached homes.

Summary

In Las Vegas, our experience is that single family homes and select town homes tend to be better investments than condos and multi-family properties. Note that this article only applies to Las Vegas and every location is likely to be unique.