Long term renters are the most profitable because they reduce rehab and vacancy costs. And, I believe that in every market there is a maximum monthly rental rate for long term renters. These are the people who will likely never buy a home for any of various reasons. In Las Vegas I believe the current maximum is between $1,500 /mo and $1,800/mo. Are there units renting for more? Certainly. But it is my experience that people who can afford $2,000/mo or $3,000/mo are more likely to buy a home and move out leaving you with a vacant unit and rehab costs. People who are paying $1,200 or $1,500 are less likely to be able to accumulate the necessary down payment to buy a home and thus remain renters.
However, all renters in a given rental price range are not equal even if they pass the background and financial check. For example, a property manager I know passed on a couple of technically qualified tenants and ended signing a three year lease with an officer based at a nearby air force base. Thus, the investor will likely not have much in the way of rehab costs for the next three years. This is another example of the importance of the property manager.
Bottom line: In general, I recommend not buying outside the "long term renter" price range. The cost of rehab and vacancies can quickly consume any profits that the property produced.
Contact me if you are considering buying or selling Las Vegas real estate. You will be glad you did.
...Eric
Eric Fernwood
RE/MAX CENTRAL
8400 W. Sahara Ave
Las Vegas NV 89117
Email: EricFernwood@gmail.com
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