CONDOS: Recent lending rule changes are making this commodity popular again. If the condo does not meet the strict 50% owner occupancy ration as demanded by FHA loans, convention loans are still available to the average buyer. An owner occupied buyer may qualify for a condo loan with 10% down while an investor may qualify for 20% down.
TOWNHOMES: Townhomes are treated like homes by the FHA and most lenders. Townhomes may be a preferred choice to investors who need a loan because the prices are lower than homes and the HOA’s are very diligent in ensuring your property is cared for.
Association dues: Although the dues seem high, averaging $200, these dues may include necessary expenses such as garbage ($15/mo), sewer ($22/mo), homeowners insurance ($50/mo), external repairs, and in some cases, water and gas. A wise investor will inspect the common grounds for deferred repairs, as this may be a sign of a mis-managed HOA or a future increase in dues.
FOUR-PLEXES AND APARTMENT BUILDINGS: Las Vegas is not an apartment culture. Mass building of these units stopped in the 80′s, while many older apartment complexes were converted to condos in the late 90′s and early 00′s. Until recently, Las Vegas had a higher ratio of owners over renters, many Californians flocked to Las Vegas to finally live the American dream. Today, investors are outnumbering owner occupants. Nationally, there has been a sharp rise in building permits for multi-unit residential use buildings. Four-plexes and apartment buildings often enjoy the highest capitalization rates, 13% or higher. But they also have a large amount of deferred repair issues.
A four-plex can be purchased through an FHA loan as long as the buyer plans on living in one of the units. There are also special loan programs for apartment buildings.
HOUSES (Single Family Residential, or SFR): This is the standard purchase made by most investors and owner-occupants in Las Vegas. It’s often the least risky of investments, but also the most expensive. Newer homes have association dues, ranging from a few dollars a month to a few hundred. On average, a newer community with no tangible amenities may cost $30 per month. The association will take care of a few common areas and will notify tenants of violations such as weeds, oil stains in driveways, garbage can violations and many other issues. While these associations can be a bother to most, homes inside the association usually hold value better than non-association homes. For the investor, it is another set of eyes looking at the house, making sure the tenants are being respectful to the house and its neighbors.