Why Invest in Las Vegas?

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The most important decision you will make as an investor is the location. As long as you buy in a good location, all but the worst mistakes will be corrected over time through rent increases and appreciation. However, if you don't invest in a good location, you can do little to turn things around other than selling the property, no matter the loss.

Below are some of the reasons why Las Vegas is an excellent investment location. When you are considering an investment location, compare it to what Las Vegas has to offer.

• Pro-business government
• Low property taxes - The average property tax rate is 0.55%. According to MortgageCalculator.org, Nevada has the 9th lowest property tax rate in the nation.
• Low cost landlord insurance - The cost of property insurance is a good indicator of the risk of a major natural disaster. Nevada has the 10th lowest average insurance cost in the nation.
• Dependable passive income properties are affordable - The current sweet spot for single-family investment properties is between $350,000 and $475,000.
• Low maintenance cost - Las Vegas properties have low maintenance costs due to the construction materials required by the Mojave Desert climate.
• Growing - Currently, there is over $24B under construction and more announced, which will create thousands of new well-paying jobs. All these new jobs will bring thousands to Las Vegas and continue to drive up prices and rents.
• Low commercial energy cost - California: $0.237/KwH, Nevada: $0.102/KwH. Also, Las Vegas is one of the few cities in the US with dual sources of electric power, critical for servers and electricity-dependent industries like data centers and Internet switching.
• Internet backbone - The fiber optic bundle connecting Southern California to the East Coast runs under Las Vegas Boulevard. This is part of the reason Google is building a $1.2B data center here. Also, Google just announced that they will launch a “first-of-its-kind, next-generation” geothermal project in Las Vegas.
• Population growth - The population continues to grow at a very sustainable rate of about 2.5% to 3%.
• High demand for rental properties - The average time to rent for properties that conform to our property profile is less than 2 weeks.
• Landlord friendly - Time and cost to evict a nonperforming tenant: less than 30 days and $500. Also, the laws allow lease agreements to place much of the cost for damages on the tenant. Plus, the ability to deduct any damage beyond reasonable wear and tear from the tenant's security deposit. The lease agreement terms are the major reason why our target properties' average tenant turn cost is under $500.
• Proximity to California - California seems to be doing all it can to drive people and companies out of the state. The proximity to California, especially LA, ensures that Las Vegas will continue to gain population and businesses.
• Land shortage - Las Vegas is an island surrounded by federal land. At the end of 2019, the amount of vacant buildable land in the Las Vegas Valley was less than 28,000 acres, of which 5,000 to 7,000 acres is not viable for residential development. (87.5% of Clark County is federally owned. 85% of the entire state is federally owned.) Consumption rate is about 5,000 acres/year. See the animated GIF below. The areas in brown are federal land. The time-lapse only goes through 2018 and there was a large amount of development in 2019 and 2020. The shortage of land combined with the increasing population almost guarantees property prices and rent will continue to increase.

• No urban sprawl - In locations like Phoenix and most other cities, property prices and rents increase slowly in established areas because there is no limitation to growth. So, instead of buying an older property and renovating it, people choose to drive 10 minutes more and buy a new home. The lack of land for expansion in Las Vegas and the increasing population ensures that rents and prices will continue to rise.

Conclusion

Las Vegas has a unique set of characteristics that almost ensures it will be a great place to own investment real estate today and for the long term.