January 2025 – Hang on to your money.
January 2025 Real Estate News In Las Vegas
It’s January 2025 and it is cold out there! A lot of investors have money to burn but there are three major reasons why I’m not recommending that you purchase investment properties in Las Vegas at the moment. We live, eat and breeze helping investors like you, make money. There are 3 reasons why you should save your pennies.
- Prices of real estate in Vegas are exceptionally high. Locals can’t afford the average home. Las Vegas real estate prices increase much faster than wages. Even though there are plenty of jobs in Las Vegas the problem is wages are not keeping up with the price of houses. This gets worse every month. The last time this happened we had a massive correction that contributed to the mortgage meltdown.
- Cash flow is terrible. I don’t know about you but I like making money. When I invest in something I expect a minimal return. Unfortunately when it comes to single-family homes, the return on your investment is terrible. If you’re lucky you’re gonna make about 4%. Most people aren’t that lucky. Condos and townhomes are worse.
- Rents are flat or potentially decreasing. With so much inventory coming online it is likely that rent in most areas will decline. Sometimes we have to lower standards to get a warm body. Concessions and lowering standards reduce the return for investors.
In summary, this is a bad time to invest in real estate. The only light at the end of the tunnel is a train. Save all your money stay tuned to my newsletter. I absolutely guarantee you will be the first we reach out to when it’s time to invest.
Rental Update by Bob Kinniburgh
Zillow has just released its Consumer Housing Trends Report describing the typical renter. Nationally, 35% of households live in rented homes. About a third of those rental households (33%) moved in the past year. In the Las Vegas metro area, about 40% rent. The median age of a renter is 42 and with only 25% of renters 60 years old or older, renters are below the age of the overall US population. Renters who tend to stay put have a median age of 44. Tenants likely to move have an average age of 31.
Nationally, about 56% of renters live in apartments, and 34% live in single-family homes (including townhomes). About 1% rent rooms in shared housing. Almost 60% of renters have a household income of less than $50,000. Rental properties with monthly rents around $1,500/mo. will most likely be in greater demand. The median household income in the Las Vegas metro area is $74k so properties in demand top out at around $2400. Properties advertised above $2400 are much harder to fill.
One particular item of note is Mr. Whiskers is becoming non-negotiable – with 58% of renters now owning at least one pet, “pet friendly” is becoming one of the biggest renter requirements. Accepting pets is a sure method for depleting a property. Flooring is the first to go and the chances of a security deposit covering flooring is low. In summary, allowing pets will get you a warm body but it costs you money in the long run.
Rent princes are expected to remain flat or decrease. We are encouraging our investors to get ahead of the herd and advertise prices below market to get better quality tenants with no pets.
Big Gambles On Luxury
Luxury Homes Las Vegas
According to the Las Vegas Business Press, luxury homes are expected to move quickly and command higher prices. If you have a tremendous amount of cash and you like to gamble, this would be where to put your money. Flipping a luxury home could make sense if you want to go big and are willing to pay large capital gains.
There is no question that wealthy Californian business owners are packing their bags to escape the fires, traffic, homeless and hostile economic environment. Luxury buyers are buoyed by the 20 percent-plus gain in the stock market for the year, gains in cryptocurrency and overall positive sentiment from the elections.
2024 was a record breaking year for luxury home sales and builders are struggling to keep up with the demand for buyers. November 2024 surpassed the 150 closings of $3 million and above recorded for 12 months of 2023. The 210 closings for 11 months in 2024 is likely to grow double digits once Realtors post their data in a few weeks. Luxury real estate agents expect the volume in the $5 million and above category increasing with entrepreneurs and CEOs relocating from California.
An all-time record was set in 2024 with a $35 million sale in The Summit Club, luxury agents predict other homes fetching $40 million. Homes in the Ascaya community are selling between $25 million to $30 million.
1099s Issued by 1/25/25
Corrie – Book Keeping Wizard
Corrie is busy working on everyone’ 1099s. Every year we get about 20 inquiries with this question:
“Why does my 1099 differ from the profit/loss statement.?”
The simple reason is 1099s reflect money actually collected while Appfolio reports categorize rent by month. If your tenant pays rent late December, that money is reported as earned income and will be in your 1099. Appfolio will show that money as money earned in January 2025. We recommend you use your 1099 as your income and the expense report generated by Appfolio for your expenses. If your tenant pays rent in January, your 1099 will match perfectly.
For owners who want to roll up your sleeves and go blind with detail, here are the IRS rules regarding prepaid rent. Please argue with the IRS if you don’t like the way your 1099 is calculated.