How is the Las Vegas real estate market effecting renters? We’ve all heard the sad stories of renters being evicted from their homes because the lender foreclosed on the house without the tenants’ knowledge. Some people found themselves being evicted despite the fact they’d been paying their rent. Security deposits were lost. Gradually, some safeguards were identified. In a previous post I’d provided information on how to find out if a house had entered the foreclosure process. Rereading this post also shows how much a market can change in a year. At that time, there was a shortage of rental properties as investors lost their properties to lenders. Now, those same properties have been bought again by investors, at great discounts, and put back into the rental market.
The sweet spot for lease rates appears to be anything up to $1200. So, for $1200, you can rent a house with three bedrooms, at least a one car garage and a place for a bbq. This means apartment house owners are feeling the competition. Apartment renters are abandoning their apartments for single family residence living. In 2006, the apartment vacancy rate was 4%. Now, it’s 11%.
An investor with cash or a 30% down payment, may purchase a property, rent it for around $950 if it’s a condo and $1200 for a 2 to 3 bedroom house and expect a positive cash flow. Of course, with so many rentals available, the pressure to be competitive is strong.
In an interesting twist, banks foreclosing on rental properties are beginning to allow tenants to stay in place as long as they continue to pay their rent. This allows the bank defer some of its expenses until it is ready to put the property market. Do you think a year from now we may find lenders in the landlord business?