patrick.net

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.

I understand that, and I think places like Malibu, Newport, Manhattan, etc will fall further, they have to.

But I always hear the argument that rental parity and median income are important factors to consider. For the prime locations, I think there are other things to consider.

I bought in the last 18 month 15 houses in the phoenix area. They are all rented out, they get rented within 2 weeks. So the important thing is location and your rent price. Investing in rentals are a GOOD investment in this current market because at the end of the day you have something physical to invest into.Your invesment will not go to nothing like a stock can.
I always see negative comments about purchasing houses, and I am sure that these negative comments are from people who got forclosed on or cant qualify for a mortgage. I encourage investors that you have to do this for the long run, 7-10 years you will be very happy with your investment.

I am not a realtor, I am an investor, and I can tell you that my cash flow is excellent, may I ask "ContStink Degroots" why are you so bitter? I may can help you to get you some financial advise if you like, clearly we must be on different pages.

Marv says

I bought in the last 18 month 15 houses in the phoenix area. They are all rented out, they get rented within 2 weeks. So the important thing is location and your rent price. Investing in rentals are a GOOD investment in this current market because at the end of the day you have something physical to invest into.Your invesment will not go to nothing like a stock can.

I always see negative comments about purchasing houses, and I am sure that these negative comments are from people who got forclosed on or cant qualify for a mortgage. I encourage investors that you have to do this for the long run, 7-10 years you will be very happy with your investment.

I just bought a house in Scottsdale (not as an investment but as a home I will be in for the next 20-30 years).

Just keep in mind that this government program to dump the foreclosures to the rental market will eventually hurt the rental market here in the valley. Regardless -- Phoenix has a pretty solid growth rate right now in terms of jobs and population. But I don't think it's enough to curb the massive # of homes that will come onto the market.

LASVEGASWINNER says

My rental houses are now spinning off positive cash flow that gives me a nice, tax-free income.

Tax free? That's a neat trick, I have to pay taxes on the income from my rentals. Putting it into a numbered account overseas are we?

ContStinks DeGroot says

Marv says

Investing in rentals are a GOOD investment in this current market

Not at current inflated asking prices they're not. Nothing cashflows at current prices.

Why would you blatantly lie about something so clear?

This is your first and only post so it's self-evident you're a lying realtor.

You lying realtors are losing..... and losing big.

Living in the empty skulls of realtors. Rent-Free.

My properties cash flow at current prices. Where are you looking at?

bob2356 says

LASVEGASWINNER says

My rental houses are now spinning off positive cash flow that gives me a nice, tax-free income.

Tax free? That's a neat trick, I have to pay taxes on the income from my rentals. Putting it into a numbered account overseas are we?

Depreciation of the house plus accelerated depreciation of equipment does the trick, plus I am" forced" for a check up visit to my properties every couple of months, meaning airfare, hotel and meals are part of deductible business expense.

Obligatory Hitler video about Las Vegas:

http://www.youtube.com/embed/Sv92n4LSAn8&feature=player_embedded

LASVEGASWINNER says

bob2356 says

LASVEGASWINNER says

My rental houses are now spinning off positive cash flow that gives me a nice, tax-free income.

Tax free? That's a neat trick, I have to pay taxes on the income from my rentals. Putting it into a numbered account overseas are we?

Depreciation of the house plus accelerated depreciation of equipment does the trick, plus I am" forced" for a check up visit to my properties every couple of months, meaning airfare, hotel and meals are part of deductible business expense.

BUYERS AGENT LAS VEGAS BANK-OWNED HOMES

What equipment for a rental property? This isn't europe where you can depreciate the chattels on a separate schedule from the building. I don't come anywhere close to offsetting the rental income with depreciation. Sounds like some pretty creative accounting to me.

I don't consider taking thousands of dollars out of the rental income for trips to vegas then deducting 25 cents on the dollar tax free income unless you were going to vegas anyway and are looking to get 25% off.

.
Not every part of your rental property is real estate. You have a host of other pieces of property that aren’t real estate, and those can be depreciated over a much shorter period of time. Plus, there is one provision of the tax law that allows you to deduct a huge portion and possibly the entire cost of some property you would normally depreciate in one year.

Look at the depreciation schedule below taken from Internal Revenue Service instructions.

Refrigerators, ranges, dishwashers, carpeting, furniture – 5 years

Land improvements (sidewalks, fences, landscaping shrubbery, septic systems, water pipes) – 15 years

Computers and peripherals – 5 years

Typewriters, adding machines, copiers – 5 years

Automobiles and trucks under 13,000 lbs. – 5 years

Office furniture (desks, chairs, file cabinets, etc.) – 7 years

Residential rental property building – 27.5 years

Non-residential rental property – 39 years

You are allowed by law to separate all of these pieces of property from the value of the building and depreciate them individually on IRS Form 4562. As we will see later, that can make or save you thousands of dollars a year on your taxes

Johnsilence brought up a topic that no one wants to talk about. Yes, the rental markets are at their saturation point. When jobs decrease, the renter pool decrease because they cant afford to rent or do not have good credit to rent.

Here are some figures you may want to look at to give you a feel of what is going on.

Below is a website of an article from 1975. Its an interesting read because history repeats itself.
http://news.google.com/newspapers?nid=1755&dat=19750907&id=nv8jAAAAIBAJ&sjid=K2cEAAAAIBAJ&pg=7165,2787945

Here is some data on the new construction of single and multifamily units. Keep this in mind, if the rental market is so great, then there should be a jump in units built.

http://www.census.gov/briefrm/esbr/www/esbr020.html

Here is some data on the vacancy rates. Im basing this data on the timeframe that you stated your rental property was vacant. According to table 9, in 2rd quarter of 2011, 3 bedroom vacancies in the West made up 18.6% of the vacancies, and in the 3rd quarter 2011, they increased to 21.1% of the vacancies.

http://www.census.gov/hhes/www/housing/hvs/prevqtrs.html

To the crowd that is saying its Johnsilence fault, I have one thing to say: We can all say you should have, could have, would have. But in the end, no one can predict the future. The bible says that gold and silver cankers and money makes wings for itself. So if anyone of you think that your living lofty, your dead wrong. Any investment vehicle can fail. Any savings can dry up. Any crop can fail due to lack of rain. Judge not, lest you be judge.

When vacancy is high, tenants immediately takes advantage of situation by moving from one fresh clean apartment to another living left unit trashed and unpaid last rent.

“An Era of Abandonment: New York City in the 1970s
and the Use of City-Owned Properties for Affordable
Housing Development.
Although it is hard to believe during today’s thriving
real estate market, New York City faced a surge in
disinvestments and housing abandonment just over
thirty years ago. Significant housing abandonment
began around 1963, and peaked in the 1970s. Between
1970 and 1978, the city’s housing inventory fell by
nearly 320,000 units.3 During those years, dramatic
increases in heating oil prices pushed the overall
operating costs of apartment buildings beyond the
possible rent revenue in certain areas of the city.4 As a
result, many building owners deferred maintenance
and services, leading to physical and financial decline
and, in some cases, the inability to pay property taxes.” Manhattan Borough President
Scott M. Stringer

I am the original poster of this topic. The home is 3br 2ba with a pool, just under 1200 sq ft, near Anasazi & Summerlin Parkway in Summerlin. Last year in Feb of 2011 the home went on the rental market at $1450 and was leased quickly via a prop mgmt company. After being vacant since Jan. 1 of 2012, I've dropped the price to $1290 and still no takers as of this writing.

LasVegasWinner: I appreciate your insights from long term experience in LV. When you say "investors are coming from all over the world", I assume you are referring to the influx of those who are buying rental properties, correct? If so, as a result, aren't we now seeing a glut of such properties on the rental market, resulting in competition for renters and price wars to get them? I'm curious: Of all the properties you own in LV, how many are handled by property management companies? What has your track record been with regard to tenants, vacanicies, etc.? I've had my property less than a year, am going on my third tenant, and third month out of pocket. Thus far, not my idea of a good investment.