Will there be a correction?
The short answer is “Yes.” We just don’t know when. I made a video which explains why there will be correction. In summary, hundreds of thousands of folks in Las Vegas are unemployed.
Right now, Las Vegas housing prices are soaring. The median sales prices of existing single-family homes reached $330k with an annual increase of about 10%. However, house price trends do not match the current economic climate in Las Vegas, which continues to struggle, this price growth is not sustainable.
For the last 10 months, folks didn’t have to pay their mortgage. The government stepped on the brake to delay foreclosures. Supposedly, the government will take their boot off the break January 31st. This loosely translates to about 200,000 mortgage holders in Las Vegas going into default. The strip is devoid of pedestrians. No one is buying T-Shirts, souvenirs or nick nacks to take home. There are a lot of casino workers who are un employed. Keep in mind, casino workers support all the other folks who take care of ordinary services. Conventions and concerts have been cancelled. Shows are dark and there are tens of thousands of of people from other countries who can’t get a flight here.
In April of 2020, there were about a hundred thousand visitors compared to 3.5 Million the year before. April 2021 will be even worse…
Evictions have been suspended until March 31st. I’m betting a case of beer either Sisolak or Biden offers a free pass all the way through September. OMG is right. There are some limitations: If the tenant is naughty (breaking the lease or disturbing the peace) we can toss them. Recent judge rulings indicate they are finally on the landlord’s side of things. We have been using that stick to flush out a few more delinquents. Out of the 300 doors or so, we only have about 4 tenants with their heads in the sand. We are focused on making their lives miserable until they leave.
Our decades of screening experience has paid off. Our 1% delinquency rate rocks compared to many of our competitors are in the 10-15% delinquency realm. Sucks to be them. We also have very low overhead. We own our building and have no employees. We can ride this storm forever.
The new Biden administration is coming out with a plan to reduce the suffering of millions of owners who have delinquent tenants. This FORBES article is a very good read and explains how this flurry of printing money will trickle down to mom and pop owners. These little drops of water won’t come out of the tap for several months and it’s not likely to be enough to keep a lot of small independent property owners alive.
IF you are one of those owners who are barely hanging onto a rental, this is the time to unload it before the market tanks. Call us immediately if you are in this category.
North Las Vegas Now Allows Short Term Rentals
A few weeks ago, North Las Vegas City Council approved short term rental licensing. This is huge for our investors who want to leverage even more money out of their property. Here are the basic rules:
- Ownership must be over a year. This eliminates all newcomers.
- HOA rules have priority. If your property is an HOA, there is a 95% chance you have a 30 day restriction.
- There is a 660 ft distance rule AFTER the first 60 days. This means if you want licensed, you should get it now.
- The cost of the license is $1,000. If you want me to do this for you, it will cost another $300. It’s a pain in the neck.
- Noise monitoring equipment will be required. This is recommended anyway.
Generally, a short term rental nets about 25% more than a regular rental. Short term rentals gross about 3 times rent. However, utility expenses, management and miscellaneous repairs are higher than a normal rental. There is way more than meets the eye on managing these. We charge 12% and $1000 to start it up. If you want to learn more about short term rentals, please read this page first.
Interest rates are predicted to remain low. This article explains more…
1099s and Year End Statements
Stacy Edgington my new assistant will be sending out your P&Ls in the next week or so. If you want to check status, please email her directly at firstname.lastname@example.org.
Corrie, our bookkeeper will be issuing your 1099s and will be going out January 25th. Please contact her directly at email@example.com if you have not received yours by February 3rd.