patrick.net

http://www.youtube.com/embed/-xwquYkf43o

Las Vegas is great. Everyone should overbuild like they did, 2002-2008.

We'd drive rents to zero and could use the savings for more useful stuffs, and leechfuck landlords would be forced to find more productive uses of their capital.

Bellingham Bill says

We'd drive rents to zero and could use the savings for more useful stuffs, and leechfuck landlords would be forced to find more productive uses of their capital.

Would that be enough to get you out of living in your parents attic and actually into the real estate market that you are always so eager to advise other people on? Talk is cheap isn't it?

Sincerely,
Mr. Leachfuck.

Your first mistake is buying a rental can be a very shitty "investment". You'd have been much better off with Vanguard High Yield Corporate Bond fund and collected your 7%, which is electronically wired to your checking account if you choose each month.

Another reminder and reason why the rent to price ratio is overvalued. It gives off wrong signals. Combined that with the fact that average price for rent and average price for sales is not the same thing, the analysis is completely useless.

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Wasn't Vegas on Patrick's safe to buy list?

See this is the problem with looking purely at numbers.

I went to LV in November with a friend from Oakland to survey whether LV was a good place to buy. After looking around I said, "Vegas is not a good place to invest. But it could be a good place to buy and live, if you dont need a job and plan to stay for 15 years."

Also, if you are ginormously fat, living could be cheap too....

I guess you need to stick to BA. :)

So.
How much have you put in, include time, effort, commissions, travel etc. ?
How much do you get back ?
What is the risk ? Water ten years from now ?

Lotta people looking for negative cash flow or a right off. Don't be stingy .
Sell it !

My family member was looking for a place to rent - the requirement was all tile, allow 1 dog. There were very few places that fit the bill because she went thru property manager, who only referred to those places with comission high enough.

Meanwhile, I drive all over Vegas and see "for rent" signs. There aren't enough jobs to support the purchases, much less rentals, in Vegas.

To make the matters worse,isn't LV going to run of water soon?

The thought of $1500-$2000 rent or even more is one hell of a sexy idea for the stupid investors out there. But the Odds are enormously stacked against that ever being possible. Not with over 60% of the work force working minimum wage jobs, or pushing a name tag behind a Big box counter.

Rent goes over $800 a month, and a good 50% of the population will have to call Mom's couch home. Kids and all.

I just love watching the Fuck ups make an even bigger mess out of it. Yeah clear the inventory out for pennies on the dollar, we'll just end up with even cheaper rentals, and even cheaper home prices to buy. Stupid bastards, money is made by work and creativity, not following the latest scheme.

What would the demand for rental properties be if the utility bills for air conditioning became very expensive? Or if (subsidized) imported water was no longer available and instead the tenant had to pay market rates for electricity to pump water from a well?

LOL. I am a former realtor and have been trying to explain this to my friends that tell me home prices are too low and will have to increase based on rents. They have the belief (just like they had with home prices before) "rents will never go down, they only go up" rewind to 2005 "home prices never go down, they have always gone up". When Wall Street is taking all the money out of our financial system, people have less money and all prices will go down across the board.

Thanks for the comment. I write Minyanville.com's Housing Market Report and have been warning readers for 18 months that there is no housing bottom in sight. Patrick has been supportive and has linked to numerous article of mine.

This thread about Las Vegas is very interesting because it confirms my strong suspicions about the house rental market. Phoenix is probably even worse. There aren't enough renters to absorb all the house rentals offered by investors.

May I suggest checking out my article posted on Minyanville or reposted on BUSINESS INSIDER.

I've been a landlord in Austin for 8 years and own 4 duplexes. Rents here are rising. I manage my own properties and vacancies are seldom more than a couple of weeks, provided my outgoing tenant gives 30 day notice. Craigslist is my most effective advertising.

Stephen,

Thanks for the info. Austin is a different world from the major bubble metros. Try renting a home in Phoenix. The overbuilding in Phoenix, Las Vegas and much of s. Florida was mind-boggling. Mortgage fraud didn't help either. The number of houses for rent in these bubble metros is soaring.

One rental is not a trend. This thread is not scientific.

I don't think Phoenix or Vegas would be great areas to make money renting out properties. Too much inventory, and too much competition. Just because the numbers work out doesn't mean S/D doesn't apply anymore.

One to two months vacancy is absolutely normal for balanced market. For that reason you have vacancy reserve fund. I’ve seen houses sitting for more than 6 mo. waiting for a right tenant. That was a stretch.

Goran_K says

I don't think Phoenix or Vegas would be great areas to make money renting out properties

Relax it's coming your way too.

Eventually banks will be able to blitz out all of those houses that the banks have been refusing private offers on, or kept off the market for less than 1/3 of the average sales prices.

The Greedy Lemming herd will be sure to follow.

Everyone should do the math.
According to this posting, if you add up all the properites that were added, and all the properties that were rented, there were more rented than added.

Properties added: 6194
Properties rented: 7239
Difference = 1045 more properties rented than added.
The high number of 6614 is concerning, however, especially since only 414 rented. Most people rent in August before the beggining of the school year, hence the high numbers in September. At the current rate of 414/6194, it would take 14 months to clear out those properites.
Granted, most rental properties are not desirable for one reason or another: No pets, no 3 car garage, no yard, etc.
So half of those available will probably never rent. But adding 2800 in one month? The numbers are looking crazy.

The GOP says

Relax it's coming your way too.

Eventually banks will be able to blitz out all of those houses that the banks have been refusing private offers on, or kept off the market for less than 1/3 of the average sales prices.

The Greedy Lemming herd will be sure to follow.

Maybe but highly doubtful. Some areas are inherently more desirable than others. It's the reason why places like beach communities will never be at rental parity. The value isn't just in the housing but the location itself is a large part of the value. There are very few people who would choose living in the desert over living on the coast.

There's a reason why Vegas and Phoenix dropped so much faster than desirable parts of California.

Goran_K says

It's the reason why places like beach communities will never be at rental parity.

Yes it will, you'll just have bigger Fleas.

1: Lowend rents are way too high due to welfare
2: Midrange rents are way too high due to welfare/Section 8
3: Highend rentals are too high because normal working people have to pay to get away from those found in area 1 and 2, and SlimeBag LL's know it.

End Section 8, and rental prices get in line in a hurry. When the GOP wins in Nov, that means that by Feb HUD will be gone, along with the EPA. And when HUD goes away, Section 8 goes away. LL's better start lobbying for some other type of welfare housing, or get ready for a big taste of reality

Bap33 says

When the GOP wins in Nov, that means that by Feb HUD will be gone, along with the EPA. And when HUD goes away, Section 8 goes away. LL's better start lobbying for some other type of welfare housing, or get ready for a big taste of reality

Don't count it, don't you watch wrestling? You know they all eat dinner at the same steakhouse at the same table the night before? Sure they like to put on a show, that they are mortal enemies and if your wrestler can win, then... then.. then. What were we talking about?

Bap is dreaming.

Everyone better plan on democrats being in control of the WH for a long time. (obama relected 4sure!).

Thus we can count on S-8/Squatterville/Loan Mods 4 Liars being a major factor in housing market in the US 4eva.

http://www.youtube.com/embed/o3Q_GBog7-0

This is the reason why I wouldn't want to invest in rental properties. There are so many houses available and more and more will turn into rentals causing more competition. My best friend got started into rental properties in Houston last year. That's a sign for me that too many people are getting involved.

Keith Jurow says

This thread about Las Vegas is very interesting because it confirms my strong suspicions about the house rental market. Phoenix is probably even worse. There aren't enough renters to absorb all the house rentals offered by investors.

In good areas homes priced right and in a good location don't sit on the market long (rent wise). Vegas is far different than here.

Goran_K says

I don't think Phoenix or Vegas would be great areas to make money renting out properties. Too much inventory, and too much competition. Just because the numbers work out doesn't mean S/D doesn't apply anymore.

We will get hard probably once the government starts that program to sell off foreclosures as rentals. I don't personally rent out any homes here in the valley, but I know lots of people that do who have had zero issues renting them out. But once those flood of rentals come on the market... everyone renting is going to get bent over as most are used to them getting rented very quickly.

The GOP says

Yes it will, you'll just have bigger Fleas.

Okay whatever that is supposed to mean.

Tell me this, a place like Malibu, or Newport Beach, before this last bubble started, neither of them was at rental parity. Why?

My family owns six rental properties in Las Vegas, and we are in escrow on three more. I have also sold a number of properties to other cashflow investors. I have only had one that was difficult to rent. If a property is priced appropriately, it will rent.

I do like the negative sentiment though. My biggest worry is that too many others will embrace Las Vegas before I finish acquiring all the properties I want for my family. The more people talk down the Las Vegas market, the happier I am.

The sky is not falling, population projections from the 2000 census for Vegas 2010 was acurate, it actually exceeded the number. Population will likely continue to grow and thereby improve housing demand, just a matter of time. Why do people freak out?

KILLERJANE says

Why do people freak out?

Because they are people.

Well - this is pretty much what I have predicted.

1) Housing crash
2) Foreclosures
3) all the people who lost their houses to foreclosure go and rent houses, except for the millions who cant afford to do that any more and end up as roommates or living in someone's basement - it's called negative household formation
4) all the infestors jump in with both feet because they see an apparent 'shortage' of rentals as rental house prices rise as a result of #3
5) more people lose their jobs - last UE report indicated that the number of people actually employed is the same number of people as in the late '90s (see zerohedge) - even tho the population is more than 10 percent higher. To back this stat up, gasoline consumption just dropped to the same levels as 1996-97 - DO THE MATH

YOU ARE HERE

6) more negative household formation

OR HERE

7) now all the newbie landlords watch their dreams of eternal renters go up in smoke

OR HERE

8 euro collapses
9 banks panic and dump shadow inventory
10 interest rates rise
11 stock market goes to 666 again ... and then right thru it
12 lots more UE and lots more negative household formation - see Yahoo 'Slab City' article

13 houses prices drop another 50+ percent ... and then drop some more. And then some more, And then some more.

BTW - the negative household formation was predicted by the Fourth Turning book in 1997 - the most important and prescient book I have ever read regarding what is going on right now.

There are many, many subdivisions in vegas with crappy little houses crammed onto crappy little lots. People were happy to get anything during the boom, so they didn't care that they were buying near a pig farm (that's grandfathered in and going nowhere) or that the "bad" neighborhoods are now their neighborhood.

Sure, there are some nice places, but many of them wer thrown up so quickly that they're falling apart. With ten feet between the houses, there's not enough room. I don't care what anyone says, it's not a happy place right now.

I see patients in their homes and the mantra is always that they're either fighting foreclosure, in the process of foreclosure or a mod, and don't know where they're going. Jobs are scarce, tips are wayyyyyyyyyyyyyy down and the place is problematic. Perhaps golfplan18 has a different experience, but I see the people attempting to live off of next to nothing and it's heartbreaking.

JonSilence says

I've had to reduce my asking price by almost $200 with the hope of getting a tenant and am still waiting for one as I go out of pocket to cover my mortgage and other costs for the second month in a row.

How much is the asking price of the rent?

JonSilence says

Currently there are 6,614 properties on the market for rent.

Does that mean that's the number of unrented ones available to rent?

Bellingham Bill says

Las Vegas is great. Everyone should overbuild like they did, 2002-2008.

...and could use the savings for more useful stuffs, and leechfuck landlords would be forced to find more productive uses of their capital.

“Nessuna soluzione . . . nessun problema!„

Yeah, like buying rental properties in the Puget Sound area. Having one side of the world border water tends to limit building construction. Help Bellingham Bill's dream of creating a rental paradise near him, invest in WA.

Goran_K says

Tell me this, a place like Malibu, or Newport Beach, before this last bubble started, neither of them was at rental parity. Why?

the idea is to compare the price to rent for malibu from 10 years ago to today's price to rent and see if it's inflated or deflated.
in most bubble areas it's inflated.

if P/R is twice what it was ten years ago then you can assume prices are still bubbly.