Real estate remains one of the most stable sectors of the economy. Investing in rental property can be very rewarding if done correctly. The annual revenue from rental apartments was an impressive $183 billion in 2019. As the urban populations continue to rise, the sector will remain stable amid the uncertainties.
Luxury Apartments in Las Vegas
When it comes to owning a rental property, the location is crucial. Las Vegas is one of the best cities to own property. Apart from the luxurious casinos and the busy nightlife, Sin City has some of the lowest property tax laws in America. These favorable laws have attracted investments like Henderson apartments for rent. Luxury apartments Las Vegas are an excellent place to start growing your real estate empire.
The following are some of the steps you must take to get there:
1. Know You can’t Do It Alone
The process of owning can be daunting, especially for first-time landlords. Although there are online tools for research, you should take on this burden alone. Just because you already own a home doesn’t make you an expert. You will need a contractor, property manager, insurance company, banks, and other landlords in your corner to complete the process. In addition to the financing and inspections, you will also need to comply with tenant laws in your area. As you see, this is a big machine with different moving parts. Assemble a good team, and you are a step closer to owning your first luxury apartment for rent.
2. Do your Homework
Luxury apartments for rent come with a substantial price tag. Given the enormous sums of money on the line, you must do thorough research from the onset. Like any other business venture, miscalculations can bury you financially. Here are important areas to look into when researching.
- The neighborhood: The location of a rental property determines the vacancy rates and the type of tenants you are likely to have. Make a point to visit each potential site for more accurate information physically. Take note of other factors such as crime, schools, and other social amenities in the area.
- Property Tax: This is a massive deal to the landlord. A very high property tax can reduce your income from the property. Every state has different laws on property tax. Factor this into your final decision. A high property tax is not automatic. Weight it against other factors such as occupancy levels and average rent before deciding.
- Average rents: Apartments for rent are a business; the payments of the lease are your only income. Look into the average amount of rents payable in the area. The amount of rent should be enough to pay your mortgages, taxes, and other expenses incurred.
- Natural disasters: Properties in places prone to natural disasters such as flooding, earthquakes, and tsunamis attract higher property insurance. Look into how this extra cost will affect your income.
- Labor Markets: Higher employment opportunities in an area attract more tenants. Keep an eye out for an announcement about a company planning to relocate to space.
- The number of listings: A very high number of listings in an area is a red flag. It could be that the neighborhood is in decline or polluted. Investing in such a place will mean you have to reduce the rent to attract tenants.
3. Visit the Bank
Naturally, the next step is financing the purchase of the property. Ideally, it would be best if you started looking into financing before deciding on a specific property. Unless you have millions lying around, you will have to approach your bank to help you finance it. It would help if you made some savings before contacting the bank. Most banks will require a down payment of between 20%-30%. You will also have to cater for the closing costs. The choice of financing has a direct effect on your expected cash flow. A higher mortgage means less cash flow in the future. Alternative financing options include Home Line of Credit and Homeopath investment property financing. Don’t sign anything without understanding the financial implications.
4. Do the Math
The first math you will have to figure is the capitalization rate. This is a measure of the rate of returns based on expected income from the rent. You will have known how much rent to expect from the average rent of the area. The expected annual rental income is divided by the purchase price to obtain the capitalization rate. An ideal situation is where the rent is enough to cover the mortgage, property taxes, insurance, and other maintenance costs. Follow up on tax benefits you might be entitled to; they can help increase your cash flow.
5. Choose a Legal Entity
When you finally close the deal, your apartments will need to exist as a business. It means you will have to process all the documentation required by the state. If you are starting, both sole proprietorship and limited liability companies (LLC) are great options. However, for group investments, explore other possibilities such as partnerships or corporations. Registering a business in Las Vegas is simple. Just log onto the Nevada state website and follow the instructions. Consult your lawyer and accountant before deciding on a business structure.
6. Get an Inspection
Make sure an independent party inspects the property before making an offer. The inspection can uncover hidden problems. Since you will become the new landlord, you will be responsible for the safety of your tenants. An inspection also helps you determine the real value of the property. You can use the information from the inspection to renegotiate the price of the property. It also puts you in a better position when the bank appraises the house during the financing.
7. Make an Offer
Buying the property is the final step. It begins by making an offer to the seller. This should only be done once you have considered all other factors. Let the hard facts guide your decision and not emotions. The return on investment should be your primary motivation. Your real estate agent will make a formal offer to the seller. Once the offer is accepted, you will have a limited window to close the deal. On completion, the titles and other documentation will be transferred to you. And just like that, you are a landlord.
Bottom Line
If you follow these steps, your journey to becoming a landlord will be smooth. However, buying the apartment is only the beginning. Almost all Las Vegas luxury apartments are managed by third such companies. Tenant screening, drafting lease agreements, and dealing with tenants can be overwhelming. Keep in mind that investing in apartments in Las Vegas is not the quickest way to accumulate wealth. The good news is that a suitable property will always continue to appreciate. Don’t be in a rush to sell.
Author Bio
Oliver is a professional real estate blogger and Investment professional with an experience of over 7+ years. He provides balanced information and tips to his readers through his articles. He generally writes about apartment search, real estate investment & luxury living.
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