Norada Real Estate Investments

The Important Tax Benefits of Real Estate Investing

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If you are planning on increasing your wealth, the best investment to deal with is real estate. Investing in real estate has some incredible tax benefits. Other benefits are an increase in property value due to appreciation and good cash flow in the form of rental income. It is easy to find the lists of these tax benefits of real estate investing, like the ability to deduct nearly every expense associated with the real estate or how to qualify to exclude from your income all or part of any capital gain from the sale of your main home.

However, it is equally easy for someone to inflate or conflate various tax benefits given by the IRS. Investors dealing in real estate get the maximum tax benefits in the name of deductions, which we'll discuss in detail. Deductions that are accounted for can be depreciation, property tax, repairs, or any other form of expenses. These breaks in taxes are helpful to a lot of people dealing with real estate as their full-time business. Let’s look at the top tax benefits of investing in real estate using hard numbers. This is the basic introduction to how tax benefits in real estate work.

The average home in the United States costs around 220,000 dollars. Yet many people don’t need a three or four-bedroom single-family home. Nor should you pay that much for an investment property. A good rule of thumb for investors is to pay no more than 70 percent of the ARV or After Repair Value of the property.

We’re going to use a property purchased for 130,000 dollars. This may be a small starter home in an average neighborhood or a full-sized home in a working-class neighborhood. The house would then be worth around 185,000 fixed up if we were going to pay cash for the repairs. You don’t want to overpay for the property.

  • Determine how much the property would rent for it after repairs.
  • Divide that by the property value.
  • You want a 1 percent rate of return at a minimum.
  • This means that if you can rent the property for 1600 dollars a month and have 300 dollars a month in expenses, your net revenue is 1300 dollars a month.
  • On a 130,000 dollar starter home, this is a 1 percent ROI and makes it a good deal.
  • If the property costs 130,000 dollars now but requires 20,000 in repairs, it probably isn’t worth it unless you’re going to sell it soon to capture the increased equity.
  • Don’t forget to factor in expenses like property management fees, property taxes, and insurance if you’re going to hold onto the property in addition to expenses like the mortgage.

Tax Benefits of Real Estate Investing

Suppose you want to buy a 130,000 dollar house with 20 percent down. That means the down payment is 26,000 dollars. This results in a mortgage of 104,000 dollars. We used a mortgage calculator assuming a 104,000 dollar mortgage at 5 percent over 30. This results in a monthly payment of 558 dollars a month. As a real estate investor, your mortgage interest becomes tax-deductible, while payments toward the principle are not. This makes nearly all of the roughly six hundred dollar house payment a business expense you can write off.

Because you put 20 percent down on the property, there is no PMI or private mortgage insurance.

However, property insurance will be tax-deductible, too. Homeowner's insurance ranges from 1 to 2 percent a year. If we assume a 1 percent homeowner's insurance policy, the premiums are 1200 to 1300 dollars a year. Property management fees are tax-deductible business expenses. If the rent on our 130,000 investment property is 1300 dollars a month, you’ll pay roughly 130 dollars a month or 1560 dollars a year for someone else to collect the rent.

All the costs associated with property acquisition can be written off. This list includes title insurance, legal fees, real estate agent commissions, transfer taxes, back taxes, and closing costs. Don’t be afraid to hire a real estate attorney if it helps you avoid major mistakes. The cost of asking a professional about the tax benefits of investing in real estate is tax-deductible, too.

Property taxes vary wildly across the country. Some states lack a property tax, while the rate may be negligible on rural properties. The average property tax rate in the US is 1.2 percent. This translates to a $1,560 property tax bill for homeowners. Unfortunately, that’s factoring in the homestead exemption property tax investors don’t get.

Assume a $2,000 to $2,400 a year property tax bill. The property taxes you pay offset the potential income taxes you would owe if your real estate properties are held by an LLC. Or they’re treated as a business expense for you as a private investor, reducing the taxable income you’ll owe on the property. Note that you’ll still enjoy the same tax benefits of real estate investing if it is held in a private LLC as held in your name.

What Are Tax Benefits of Real Estate Investing?

Everyone pays property taxes, but how much tax you pay can be reduced by utilizing certain tax breaks available in real estate. Let's now discuss each of these tax benefits in detail and how to use them to maximize your savings.

Depreciation

What is Depreciation?

One of the greatest tax deductions real estate investors enjoy is depreciation. Like any other asset residential real estate is also an asset that breaks down over time. Depreciation is a deduction taken on materials that break down. The IRS uses depreciation to acknowledge that an asset wears down over time. It is like an allowance given for exhaustion or wears and tear of the property, including a reasonable benefit for obsolescence. Depreciation is charged in different years for residential and commercial property. For residential properties, it is calculated in 27.5 years, and for commercial, the same is 39 years.

It is an incredible benefit given by the IRS to real estate investors. Even though anything that breaks down on the property can be deducted, we all know that property values generally go up over time. Therefore, depreciation on real estate is often known as a “phantom deduction” because although we deduct the cost, the actual loss never really occurs.

How is Depreciation Calculated?

Depreciation is charged by the method named (MACRS) Modified Accelerated Cost Recovery Method. In MACRS the residential rental property and structural improvements are depreciated over 27.5 years, while appliances and other fixtures are depreciated over 15 years. Whatever is the cost of your residential property (excluding the cost of the land), it will be spread out over 27.5 years and deducted every year.

Note that you can only depreciate the building, not the land.

For simplicity’s sake, we’ll say the land is worth 30,000 dollars while the house is worth 100,000 dollars, which will be spread out over 27.5 years.

This means you would divide $100,000 by 27.5 = 3636.36.  Hence, you can deduct $3636.36 every single year for the next 27.5 years on your investment property.

And that much of the profits from the property are shielded from income taxes because it is offset by the presumed losses from depreciation. This is separate from the tax-deductibility of actual repairs like replacing the roof or dead air conditioner.

If you made major improvements to the property, such as the fixer-upper scenario, those improvements are included in the depreciation. If you bought the house for 130,000 dollars and made repairs and renovations that made it worth 180,000 dollars, you have an additional 50,000 dollars of cost basis to use for depreciation purposes.

Note that minor repairs like a new hot-water heater or patched roof don’t count in depreciation.

Important Tips About Using Depreciation as a Tax Benefit in Real Estate 

  • Depreciation will start the moment the property is officially available for occupancy.
  • This means depreciation doesn’t start the day you bought the property but the day you started trying to sell it or find a renter.
  • Conversely, it means you can claim depreciation even if the property is vacant for several months.
  • Depreciation ends if you sell it, exchange it or retire it from service as a rental property.
  • For example, you can’t claim depreciation if you move into it and make it a permanent residence.
  • The catch in depreciation as a tax benefit of real estate investment is that when you sell the property, that entire deducted amount may be taxed at a 25% rate, in addition to any other capital gains taxes.
  • However, if you didn’t make money on the sale, then IRS will not tax your old depreciation amount.

Lower Capital Gains Tax

Capital gains are the profits you make when you sell a property. One of the tax benefits of real estate investing is that there are lower taxation rates on your capital gains. The gains that investors get from selling their investment property for sale are termed capital gains which are of two types as mentioned below.

Low tax rates on capital gains are an advantage if you build your long-term investment strategy around strategically selling real estate for growth or living expenses. Generally, in all tax brackets, capital gains taxes are considered better than the equivalent income tax on your ordinary income.

  • Short-Term Gains: The gains that are received from investment properties that are held for less than one year are called short-term gains. Investors have to pay tax according to the bracket under which they fall. There is no special tax benefit in real estate for short-term capital gains.
  • Long-Term Gains: The gains that are received from investment properties that are held for more than one year are termed long-term capital gains. The tax rate is lower in the long-term capital gains because of which investors prefer the latter over the former. The long-term capital gains tax is either 0%, 15%, or 20%, depending on what income tax bracket you are in.

1031 Exchange

As a real estate investor, you can use this tax code called 1031 Exchange to sell a property and use the profit to buy a new one that is of equal or greater value. In this way, you can defer paying taxes until that next property is sold or you can opt for another 1031 Exchange. When you choose to sell your property, you are required to pay taxes for your capital gains.

With the help of section 1031 of the Internal Revenue Code, you are permitted to postpone paying taxes when you reinvest those gains in another property. IRS considers that you are exchanging your old property for another real estate property. This is one such type of swap in which there is no tax paid; it is deferred legally.

Here are some of the factors which the 1031 exchange must meet.

  • The property which has been replaced and the property or properties bought in its place must have the same or greater value.
  • The IRS requires that you identify the property you plan to buy within 45 days and you also must close on that property within 180 days.
  • The properties included in the transaction must be similar. A real estate property cannot be exchanged for some other type of asset, such as a real estate investment trust (REIT).
  • The exchanged properties should be used for any productive purpose in business such as for investment.
  • Any cash or property received through the transaction that is not considered like-kind property is considered boot and is subject to taxation. Therefore, you can touch the cash. You must use an intermediary who will hold onto the cash while you wait to close on the new deal. If you do want to take out some of the profit, that amount will be taxed.

No FICA Tax

The Federal Insurance Contributions Act helps in the splitting of tax between the employee and the employer, and the rate of tax is 15.3%. If you are self-employed and have no employer, you are responsible for the full 15.3%, which is known as Self-Employment Tax. Now you might be thinking what is the tax benefit here for real estate investors?

The US Government does not currently look at rental real estate as a job or self-employed business. Therefore, a rental property income is not generally taxed as “earned income” and does come under FICA. Remember, it depends on how you earn from real estate. If you own a holding company and draw a salary, you would come under FICA.

Tax Benefits From Refinancing Your Mortgage

Refinancing is also considered one of the tax benefits of real estate investment. Exchanging your old mortgage with a new one at a new interest rate is known as Refinancing your Mortgage. Refinancing provides the borrower with fresh money at lower interest rates due to which the homeowner can lower his/her monthly payment amount.

As he/she obtains the loan at a lower rate of interest and consolidates all the debts, he/she now has to pay only one loan amount, which is obtained at a lower rate of interest and is left with some cash in hand. You don’t need to pay taxes on this. You’ll need to pay taxes when you sell the property, but you can use that money right now with no tax at all. The cash in hand after refinancing is non-taxable.

How Do You Take Advantage of These Tax Breaks?

The simplest approach is to document all of your expenses from property repairs to ongoing maintenance to insurance to taxes. Track one-time expenses like the cost of listing it for rent or sale. Your accountant will total up these expenses to determine your total business expense write-off. More importantly, what you pay your attorney or accountant to manage your business is also a tax-deductible business expense. The costs of acquiring and fixing up a property occur on a case-by-case basis.

Let’s jump to the tax calculations for the second year of ownership. We’ll use conservative estimates, though you might keep costs down.

Property taxes – $2000 a year

Depreciation – $4000 a year

Mortgage interest – $6000 a year

Property management – $1560 a year

Repairs – $2000 a year

Insurance – $1300 a year

Legal and tax preparer fees – $500 a year

That totals up to $16,860 a year in expenses. We already estimated an income of $1,300 a month every month or $15,600 a year. In this case, you’d owe no income tax on the property. If you were charging $1,500 a month in rent, you’d pay a little more in property management fees but only have to pay income taxes on $2,000 a year. In reality, you’re clearing closer to $6,000 a year, because you aren’t paying for the property’s depreciation. Know that these are rough, back-of-the-envelope calculations regarding the tax benefits of real estate investing. The costs and benefits of owning a particular property should be done on a case-by-case basis.

How Can You Lower Your Tax Bill as a Real Estate Investor?

Hold the property for more than a year to reduce capital gains taxes on the property’s appreciation. This makes a fix and rents a better strategy than flipping houses. You could even buy run-down properties, fix them up, manage them for 13 months, and then sell them to another investor. Just don’t get yourself classified as a dealer instead of an investor, because the self-employment category will double your FICA taxes.

Another option is owning the property as a legal liability corporation. You can receive the profits from the LLC, but you are personally shielded from lawsuits. You have some control over when you sell the property or pay the property taxes. Run the numbers. You might want to delay paying the property tax bill until January next year to offset the profits if you had a major repair bill this year.

If you sell the property, you’ll owe capital gains taxes. A like-kind exchange under Section 1031 of the tax code allows you to defer paying these taxes. Always work with a good real estate tax advisor to handle such a rollover. Another option is selling the property to the tenant or another investor under an installment deal. It lets you write off the value of the property with each installment, though you run the risk of only owning half a house if they default.

In theory, you can reduce your tax bill by borrowing against properties you own to buy new properties rather than selling them, too. On the other hand, you don’t want to pay more for repairs, services, or financing to get a tax write-off. For example, you’re not saving money if you pay the bank an extra 1000 dollars to get a 250 dollar tax write-off.

Set up a dedicated home office that you only use for work. Then you can deduct part of your mortgage and utilities as a business expense. Get organized. For example, you should keep track of mileage and travel costs, so you can include them as business expenses on your taxes. Document what you pay to attend real estate investing seminars or software you buy to run your business.

For simplicity’s sake, set up a bank account that is only used for managing rental properties. Rent is deposited into the account, and you only pay expenses for the rental properties out of that account. Then you don’t accidentally try to write off personal home repairs. However, this approach does make it difficult to write off a home office.

Concluding Thoughts on Tax Benefits of Real Estate Investment

Real estate investing enjoys many tax benefits. It is one of the most tax-advantaged investments compared to other investments. It depends on the investors and how they utilize these investments to the best of their advantage. It requires careful planning and effort to maximize your tax deductions while remaining in compliance with the complex regulations involved.  One can attain financial freedom by learning the right way to invest in the real estate industry. It is wise to hire a good CPA or tax expert who will save you more money than they cost. They will help you in plotting your tax strategy because the US tax code is quite complex and it is difficult to understand all the rules and regulations.

Tax Benefits of Real Estate: Places Where You Can Reap Maximum Benefits

Here are some of the best states in the U.S. for owning a property. This list takes into account median home values as well as state and local tax rates, including income tax rates, and property taxes as a percentage of market value or assessed tax value (whichever is applicable). If you buy a property or live there, it’s an excellent investment. We have listed each state's effective property tax rate, median home value, and calculated annual taxes on median home values —for an easier understanding of these tax rates.

The tax rates have been taken from Smartasset.com and median values have been taken from Zillow.com.

1. Alabama

Alabama has both a low tax rate and home prices that are well below the median home value in the U.S. For residential property, the assessed value is 10% of the appraised (or market) value. So, for example, a home with an appraised value of $100,000 would have an assessed value of $10,000. We have taken the median home value as an assessed value without any exemptions.

Median Home Value: $143,072
State Income Tax Rate: 2% – 5%
Avg. Effective property tax rate: 0.42%
Annual Property Taxes: $600

2. Nevada

Nevada's average effective property tax rate is just 0.69%, which is well below the national average of 1.08%. There are numerous tax districts within every Nevada county. County Assessors are required to reappraise all property at least once every five years. The assessed value is equal to 35% of that taxable value. Thus, if your County Assessor determines your home’s taxable value is $100,000, your assessed value will be $35,000. Tax rates apply to that amount. We have taken the median home value as a taxable value without any exemptions.

Median Home Value: $309,730 (Zillow)
State Income Tax Rate: 0%
Avg. Effective Property Tax Rate: 0.69%
Annual Property Taxes: $2,137

3. Florida

The state of Florida's average effective property tax rate is 0.98%, which is slightly lower than the U.S. average of 1.08%. Property tax rates are applied to the assessed value, not the appraised value. The most widely claimed exemption is the homestead exemption. Let’s say you have a home with an assessed value of $100,000. The first $25,000 would be exempted from all property taxes.

The next $25,000 (the assessed value between $25,000 and $50,000) is subject to taxes. Then, the next $25,000 (the assessed value between $50,000 and $75,000) is exempt from all taxes except school district taxes. Finally, the remaining $25,000 is also taxable. We have taken the median home value as an assessed value without any exemptions.

Median Home Value:  $252,309
State Income Tax Rate: 0%
Avg. Effective Property Tax Rate: 0.98%
Annual Property Taxes: $2,472

4. Louisiana

Louisiana has the third-lowest effective property tax rate of any U.S. state. Only Alabama and Hawaii residents pay less on average than residents of Louisiana. For residential property in Louisiana, the assessed value is equal to 10% of the market value. So if your home has a market value of $100,000, your assessed value would be $10,000. It offers a homestead exemption on the first $7,500 of the value of a person’s primary residence (does not apply to city taxes). We have taken the median home value as an assessed value without any exceptions.

Median Home Value: $170,388 (Assessed Value)
State Income Tax Rate: 2% – 6%
Avg. Effective property tax rate: 0.52%
Annual Property Taxes: $886

5. Texas

The average effective property tax rate in Texas is 1.83%, well above the national average of 1.08%. A property appraisal is done annually by county appraisal districts. Tax payments are based on the current market value of a property. However, some exemptions help lower property taxes in Texas. Most popular are homestead exemptions which reduce property taxes for all homeowners by removing part of their home's value from taxation. Only a homeowner's principal residence qualifies for it. It exempts at least $25,000 (for school districts) of a property’s value from taxation. We have taken the median home value as the current market value with Homestead Exemptions of $25,000.

Median Home Value: $211,199
State Income Tax Rate: 0%
Avg. Effective Property Tax Rate: 1.83%
Homestead Exemptions: $25,000
Annual Property Taxes: $3,407

You can also click on this link to read our blog on how to be a successful real estate investor. This blog will teach you how to succeed in your first real estate investment, going with a moderate pace, learning much, and being ready to leave any enticing opportunity that comes your way. 

REFERENCES

Median home values
https://www.zillow.com

Effective tax rates
https://smartasset.com

Tax advantages
https://www.investopedia.com/articles/investing/060815/how-rental-property-depreciation-works.asp
https://www.fool.com/millionacres/taxes/real-estate-tax-deductions/top-5-tax-advantages-real-estate-investing
https://www.usatoday.com/story/money/personalfinance/2017/04/16/comparing-average-property-taxes-all-50-states-and-dc/100314754

How to take advantage or maximize tax benefits
https://www.moneycrashers.com/lower-taxes-real-estate-investor
https://www.homeunion.com/how-to-claim-real-estate-taxes-and-deductions
https://smallbusiness.chron.com/calculate-value-investment-property-4122.html
https://finance.zacks.com/much-spend-investment-property-vs-potential-rental-income-10487.html

What is Digital Real Estate and How to Invest in it?

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The internet has changed the way we live, work, and invest. One of the most significant shifts is the rise of digital real estate, which offers investors new opportunities and challenges. Digital real estate refers to the ownership or investment in online properties, such as websites, social media pages, domain names, and virtual real estate. In this blog, we'll explore what digital real estate is, how it works, and the opportunities and challenges it presents to investors.

How Does Digital Real Estate Work?

Digital real estate works similarly to traditional real estate investing. It involves buying, selling, and leasing virtual properties, such as websites, domain names, social media pages, and virtual real estate. Virtual real estate includes digital assets in online games and platforms such as Second Life, Decentraland, and The Sandbox.

Investors can generate income from digital real estate in several ways, such as advertising, affiliate marketing, and selling products, and services. The value of digital properties depends on various factors, such as website traffic, domain authority, social media followers, and virtual land demand.

Is Digital Real Estate Legit and a Good Investment?

Digital real estate is a legitimate investment, but it comes with risks and challenges. Just like traditional real estate, digital properties can increase in value over time, generating significant returns on investment. However, digital real estate investing requires knowledge and expertise in online marketing, website development, and social media management.

Navigating the digital real estate landscape can be challenging, especially for beginners. Some tips for buyers, sellers, and investors include conducting thorough research on the market and the property, seeking expert advice, and investing in valuable and relevant digital properties. Investors should also stay up to date with the latest trends and developments in the digital real estate industry.

There are several digital real estate investment opportunities available, such as investing in profitable websites, buying and selling domain names, investing in virtual land and properties, and investing in online businesses. Investors should choose opportunities that align with their interests, expertise, and financial goals.

How to Invest & Make Money From Digital Real Estate?

Digital real estate is a rapidly growing market that offers investors new opportunities to make money. With the rise of the internet and new technologies, people can now invest in a range of digital assets, from websites to virtual land. There are various ways to make money from digital real estate. One of the most popular methods is advertising revenue.

Website owners can generate income by placing ads on their sites using platforms such as Google AdSense, MediaVine, and AdThrive. They can also earn revenue through affiliate marketing, where they earn a commission for promoting products or services. Another way to make money from digital real estate is by selling products or services online. E-commerce websites, such as Amazon, Etsy, and Shopify, allow individuals to sell products to customers worldwide. Virtual real estate investors can also earn income by selling virtual land and properties in online games and platforms.

Building Websites and Blogs for Profit

Building a successful website or blog is one of the easiest ways to invest in digital real estate. By creating content that attracts a large audience, you can monetize your website through advertising, affiliate marketing, and sponsorships. You can also buy an established website or blog and grow it further to earn capital gains.

In fact, building websites and blogs for profit is one of the most popular ways to invest in digital real estate. This is because it is relatively easy to learn, and the potential return on investment can be high. Building a website or blog requires minimal investment upfront and can be done in your spare time. Once you have built a website or blog that attracts a significant audience, you can sell the website for more than you invested in it, earning a substantial capital gain.

Furthermore, websites and blogs can generate passive income through various means, including advertising, affiliate marketing, and sponsored content. By monetizing a blog or website, you can earn a steady stream of income without having to actively manage the site. This makes it an appealing investment option for those who are looking for a source of passive income.

Another advantage of building websites and blogs is the potential for long-term growth. Once a website or blog has gained a loyal following, the site's value can increase substantially. This can make it an attractive asset to potential buyers, who may be willing to pay a premium for a site with an established audience. In addition, building websites and blogs can be a fulfilling creative pursuit. It allows individuals to express their ideas and interests in a way that resonates with their audience. It can also provide opportunities for networking, collaboration, and personal growth.

Selling Digital Products

Selling digital products, such as eBooks, online courses, and software is another way to invest in digital real estate. By creating valuable and unique digital products, you can build a loyal following and generate revenue from your products. You can also sell your products on platforms like Amazon or Etsy to increase your reach and sales.

Renting Digital Real Estate

Just like you can rent out physical real estate, you can also rent out digital real estate. This includes renting out website space, selling digital ad space, or leasing virtual land in online worlds. By renting out your digital real estate, you can earn a regular cash flow while also benefiting from any capital appreciation.

Flipping Domain Names and NFTs

Flipping domain names and non-fungible tokens (NFTs) is another way to make money in digital real estate. By buying and selling domain names and NFTs at the right time, you can make a profit. However, this can be risky, and you need to know what you are doing to make a profit. NFTs, or non-fungible tokens, are another way to make money in the world of digital real estate.

Flipping domain names refer to buying a domain name at a lower price and then selling it later for a profit. This practice has become popular in recent years as more businesses look to establish a strong online presence. The key to successful domain flipping is to find domain names that are in high demand and can be easily branded by companies. Domain names that are short, memorable, and have a .com extension tend to be the most valuable.

NFTs are unique digital assets that are verified on a blockchain and cannot be duplicated, making them rare and valuable. They can be anything from digital artwork, music, videos, and even tweets. NFTs are becoming increasingly popular as more people and businesses embrace digital ownership. In March 2021, a digital artwork by Beeple sold for a whopping $69 million at a Christie's auction, making it the most expensive NFT ever sold.

Some investors are buying and holding NFTs for their potential appreciation in value, while others are using them as a way to monetize their own digital creations. For example, musicians can create NFTs of their music and sell them to fans as a way to monetize their work and reward their most dedicated followers.

Investing in NFTs can be risky, as the value of these assets can be volatile and unpredictable. However, for those who are interested in the potential rewards, NFTs can be an exciting and profitable way to invest in digital real estate.

Investing in Cryptocurrency

Investing in cryptocurrency is a popular way to invest in digital real estate. Cryptocurrencies, such as Bitcoin, Ethereum, and Litecoin, are decentralized digital currencies that operate independently of a central bank. Unlike traditional currencies, which are backed by government-issued guarantees, cryptocurrencies are based on complex algorithms and cryptography.

One of the reasons why investing in cryptocurrency is attractive to investors is that it can offer higher returns than traditional investments. For example, In 2021, Bitcoin's value grew from $29,374.15 on 1 January to $46,306.45 on 31 December, managing to surpass the $60,000 mark twice, most notably when it reached its all-time high of $68,789.63 on 10 November that year.

However, it is important to note that cryptocurrency can also be highly volatile, and its value can fluctuate significantly in a short period of time. As of 2 March 2023, Bitcoin (BTC) has witnessed a significant rise, settling above $20,000, and showing a gain of nearly 40% since the beginning of the year. This increase in value has occurred amidst the expected slowing down of interest rate hikes by the US Federal Reserve (Fed).

To invest in cryptocurrency, you need to open an account with a cryptocurrency exchange. These exchanges allow you to buy and sell cryptocurrencies using fiat currencies or other cryptocurrencies. Some popular cryptocurrency exchanges include Coinbase, Binance, and Kraken. Another way to invest in cryptocurrency is through a cryptocurrency mutual fund or ETF. These funds allow you to invest in a diversified portfolio of cryptocurrencies, reducing your risk exposure to a single cryptocurrency.

It is important to note that investing in cryptocurrency comes with risks, including the potential for fraud and hacking. You should only invest money that you can afford to lose and always do your research before investing in any cryptocurrency. It is also important to stay up-to-date on the latest cryptocurrency news and trends, as this can have a significant impact on the value of your investment.

Virtual Real Estate in the Metaverse

Virtual real estate in the metaverse is a concept that has gained significant attention and investment in recent years. The metaverse is a virtual space that allows users to interact with each other and their surroundings through virtual reality. In this digital world, users can own virtual properties, which can be used for various purposes such as gaming, socializing, or conducting business.

Decentraland is one of the most popular metaverse platforms for investing in virtual real estate. Users can buy and own virtual land called LAND, which they can then develop, build on, and monetize. Investors can make a profit by selling their LAND or by developing it into something valuable, such as a virtual store or amusement park, and earning revenue from it.

Another metaverse platform that has gained significant attention is Sandbox, where users can purchase virtual land and develop it into various forms of entertainment, such as games, museums, and concerts. The platform has attracted significant investment from venture capitalists and celebrities, with several high-profile partnerships announced.

Investing in virtual real estate in the metaverse can provide several advantages over physical real estate. The cost of entry is much lower than traditional real estate, and there is less regulatory red tape to navigate. Additionally, virtual properties can be developed and monetized much faster than physical properties, allowing for quicker returns on investment.

The value of the virtual real estate in the metaverse is determined by supply and demand, much like physical real estate. As more users join the metaverse and demand for virtual properties increases, the value of the virtual real estate is likely to increase as well. However, like any investment, there are risks involved, such as the possibility of the metaverse platform failing to gain traction or losing popularity.

Tokenized Real Estate

Tokenized real estate refers to the practice of creating digital tokens that represent ownership or investment in a physical property. These tokens are often built on a blockchain, which provides a transparent and secure way to track ownership and transfer the tokens.

Tokenizing real estate allows investors to buy and hold fractional ownership in a property, without the need to purchase the entire property or deal with the traditional complexities and costs of real estate ownership. This can make real estate investment more accessible to a wider range of investors, including those who may not have the capital to purchase a property outright.

Companies and platforms that are exploring the idea of tokenized real estate typically purchase properties, then divide ownership of the properties into digital tokens that can be purchased and held by investors. These tokens can be traded on digital marketplaces or platforms, allowing investors to buy and sell fractional ownership of the property.

One example of a platform that offers tokenized real estate investments is RealT. RealT allows investors to purchase digital tokens that represent ownership in physical properties located in the United States. The platform uses blockchain technology to ensure that ownership is transparent and secure, and investors can receive regular distributions based on the rental income generated by the property.

Benefits of Digital Real Estate: Efficiency, Cost Savings, and Convenience

Investing in digital real estate offers several benefits, including lower transaction costs, greater flexibility, and easier access to a global market. With digital real estate, you can invest from anywhere, at any time, and with any amount of capital. Investors can manage their properties from anywhere in the world, reducing overhead costs such as rent, utilities, and staff. They can also automate processes such as online payments, customer service, and inventory management, increasing efficiency and saving time.

Blockchain technology is revolutionizing the way we conduct real estate transactions. Blockchain is a decentralized, digital ledger that allows secure and transparent transactions without the need for intermediaries such as banks or lawyers. Blockchain technology offers several benefits, such as faster transaction times, lower fees, and increased security and transparency.

Challenges and Limitations of Digital Real Estate: Addressing Issues of Access, Equity, and Trust

While digital real estate offers many benefits, it also presents challenges and limitations that need to be addressed. One of the main challenges is ensuring equitable access to digital real estate opportunities. Not everyone has access to the technology or resources needed to invest in digital real estate, and this could lead to a digital divide in the real estate market.

Another challenge is building trust in digital real estate transactions. These include the potential for fraud, hacking, and cyber-attacks, as well as the lack of regulation and oversight. It's important to do your research and understand the risks involved before investing in digital real estate.

To overcome these challenges, policymakers and industry leaders must work together to ensure that digital real estate opportunities are accessible to all, regardless of their socioeconomic status. This could involve providing training and resources to help people learn about digital real estate and how to invest in it. It could also involve implementing regulations and standards to ensure the safety and security of digital real estate transactions.

In conclusion, the rise of digital real estate is transforming the real estate industry, creating new opportunities for investors, buyers, and sellers alike. From blockchain technology to virtual property tours, digital real estate offers many benefits, including efficiency, cost savings, and convenience. However, it also presents challenges that need to be addressed, such as access, equity, and trust. By working together, industry leaders and policymakers can ensure that digital real estate is a safe and accessible investment opportunity for all.

Houston Real Estate Market: Prices, Forecast, News 2023

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The Houston Housing Market is Cooling

We will discuss the latest Houston housing market trends & forecasts for 2023. The Houston housing market report for January 2023 revealed that home sales were slower than usual, which was anticipated given the holiday season. However, there were several positive indicators for potential homebuyers. One of the most notable was the more robust inventory, which gives buyers more options to choose from. Another encouraging sign was that prices were moderating, which means that the market is becoming more balanced and less competitive.

Houston Home Prices 

  • The single-family average price rose 1.5 percent to $381,983.
  • The single-family median price increased by 1.6 percent to $315,000.
  • Those are the lowest price increases since October 2019.
  • In March of last year, the average price of a single-family house in Houston surpassed $400,000 – a record high of $438,290.
  • Since May 2021, the median price has stayed above $300,000.
  • Townhome/condominium median price increased 7.7 percent to $191,000.
  • Townhome/condominium average price decreased 4.3 percent to $230,775.

According to the Houston Association of Realtors’ (HAR) January 2023 Market Update, single-family home sales fell 29.9 percent, with 4,549 units sold compared to 6,492 in January 2022. That marks the tenth consecutive monthly decline. However, when compared to the last January before the pandemic – January of 2020, with a sales volume of 4,772 units – sales were down just 4.6 percent.

In January, all housing sectors reported reductions. In contrast, the rental market for single-family homes posted another robust increase, indicating that prospective purchasers continue to favor the rental market until mortgage rates decline and inflationary concerns subside.

Houston Housing Market Trends 2023

The Houston Association of Realtors' January 2023 Market Update showed a 29.9% decrease in single-family home sales, marking the 10th consecutive monthly decline. All housing segments experienced declines, except for single-family home rentals which saw a solid gain. Despite the slowdown, experts believe this is more of a return to seasonal home sales trending rather than a market in distress.

Single-family home prices also rose at the slowest pace since before the pandemic. In the coming months, buyers and sellers can expect a more balanced market, with moderate prices, more inventory, and an upswing in sales later in the year if mortgage rates stabilize and homes continue hitting the market at more affordable price points.

Months of inventory continue to grow, reaching a 2.7-month supply in January. A 6.0-month supply is traditionally considered to represent a “balanced market,” in which neither the buyer nor the seller has an advantage.

On the other hand, townhouses and condominiums experienced their eighth consecutive monthly decline, dropping 37.1 percent year-over-year with 353 closed sales versus 561 a year earlier. The average price dropped 4.3 percent to $230,775 and the median price fell 7.7 percent to $191,000. Both figures are below the historic highs reached in April 2022. Inventory grew from a 1.5-month supply to 2.1 months.

The HAR's most recent report on the Greater Houston Area Housing Market is available below. It analyses important housing indicators across the Greater Houston region for January 2022.

  • Single-family home sales fell 29.9 percent year-over-year, as the market tries to recover from economic headwinds;
  • All housing segments experienced negative sales.
  • Days on Market (DOM) for single-family homes went from 39 to 59 days;
  • Total property sales fell 30.9 percent with 5,650 units sold;
  • Total dollar volume dropped 30.9 percent to $2.0 billion;
  • The single-family average price rose 1.5 percent to $381,983;
  • The single-family median price increased by 1.6 percent to $315,000;
  • Single-family home months of inventory registered a 2.7-months supply, up from 1.3 months a year earlier;
  • Townhome/condominium sales experienced their eighth straight monthly decline, falling 37.1 percent;
  • The average price is down 4.3 percent to $230,775 and the median price is up 7.7 percent to $191,000.
There are the housing sales broken out by different price segments:
  • $1 – $99,999: decreased 17.0 percent
  • $100,000 – $149,999: decreased 24.3 percent
  • $150,000 – $249,999: decreased 35.1 percent
  • $250,000 – $499,999: decreased 29.6 percent
  • $500,000 – $999,999: decreased 22.6 percent
  • $1M and above: decreased 25.7 percent
Houston Housing Market Trends
Source: Har.com

Houston Housing Market Forecast 2023

Looking at the current statistics, what are the Houston real estate market predictions? NeighborhoodScout.com's data also shows that Houston real estate appreciated by nearly 98.21% over the last ten years. Its annual appreciation rate has been averaging 7.08%. This figure puts it in the top 30% nationally for real estate appreciation. During the twelve-month period (2021 Q3 – 2022 Q3), the Houston appreciation rate was nearly 14.76%. In the quarter, from 2022 Q2 – 2022 Q3, the appreciation rate was 2.07%.

Let us examine the price trends recorded by Zillow over the past few years. Houston has a track record of being one of the best long-term real estate investments in the U.S. Since the last twelve months, the Greater Houston home values have appreciated by 8.7% — Zillow Home Value Index. 

ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in Greater Houston is currently $296,083. It indicates that 50 percent of all housing stock in the area is worth more than $296,083 and 50 percent is worth less (adjusting for seasonal fluctuations).

Here is Zillow's home price forecast for Houston, Harris County, and Houston – The Woodlands-Sugar Land. The Zillow Home Value Forecast (ZHVF) is the one-year forecast of the Zillow Home Values Index (ZHVI). ZHVF is created using all homes, mid-tier cut of ZHVI and is available both raw and smoothed and seasonally adjusted.

  • Houston-The Woodlands-Sugar Land Metro home values have gone up 8.7% over the past year.
  • 1-year Market Forecast Ending December 2023 is Negative.
  • Home prices are predicted to decline by 1.6% between December 2022 to December 2023.
  • 0.984 – Median sale-to-list ratio (December 31, 2022)
  • 18.1% – Percent of sales over list price
  • 62.6% – Percent of sales under list price
  • 33 – Median days to pending

The Houston housing market saw a decline in sales in January 2023, however, there are positive indicators for the upcoming year. Home prices rose at the slowest pace since before the pandemic, and the 1-year market forecast is negative, with a predicted decline of 1.6%. Despite this, the Houston-The Woodlands-Sugar Land Metro area has seen a steady rise in home values, increasing by 8.7% over the past year.

As of December 31, 2022, the median sale-to-list ratio was 0.984, and 18.1% of sales were over list price, while 62.6% were under list price. The median days to pending is 33. Buyers and sellers can expect a competitive market with a slight downturn in prices in the coming months.

Clearly, for the long-term investment, you cannot ignore Houston. Investing in a rental property for the long term would build your equity and also generate cash flow through rental income. If you want to increase your cash flow in 2023, you will find great deals in the Houston real estate market.

Houston Real Estate Market Forecast
Credits: Zillow

Houston has been one of the hottest real estate markets in the country for years. It is also one of the hottest real estate markets for investing in rental properties. The Houston metro area offers great opportunities for investors who are looking for a stable market that offers both cash flow and equity growth at a price that is STILL well below their replacement value. According to many experts, Houston has been in seller mode for several years now and there’s no reason to think that will change drastically in 2023. 

However, the pace of the market is going to be moderate with no rapid price appreciation as seen in the last two years. Although the desire to own a home remains strong, the combination of high home prices and mortgage rates will make it difficult for many first-time buyers to afford one. Houston and the entire metro area market lack sufficient housing supply, so it cannot shift to a complete buyer’s real estate market, for the long term.

In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Houston can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. Therefore, in the long term, the Houston real estate market remains skewed to sellers, due to a persistent imbalance in supply and demand.

Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment. While the rapid real estate appreciation Houston witnessed earlier in the decade has slowed, the combination of a strong economy, low unemployment, and a lack of inventory in many market segments continues to push home prices in Houston.

Houston Real Estate Market Statistics (Previous Year)

The Houston real estate market in 2022 saw record-high average and median prices, but also declining sales, particularly due to a lack of inventory and rising mortgage rates. June had the year’s strongest sales volume with 9,844 single-family units sold. Despite this, new listings gave a boost to inventory levels, which hit a high of 2.8 months in October and November.

In total, 95,113 single-family homes were sold in 2022, representing a 10.9% decrease from the previous year, while the average and median prices increased by 10% and 12.8%, respectively. According to HAR’s December/Full-Year 2022 Housing Market Update, single-family home sales fell 10.9 percent to 95,113.

Sales of all property types totaled 117,572, down 10.7 percent from 2021. Total dollar volume dropped just 2.0 percent to $45.6 billion versus $46.5 billion in 2021. The lease market remained strong as many prospective buyers opted to rent until they were ready to buy.

Houston Rental Market Trends

The Zumper Houston Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Texas one bedroom median rent was $1,160 last month. Houston was the most expensive cities with one bedroom priced at $1,310. Texas City was the most affordable city with rent at $990.

The Fastest Growing Cities For Rents in Houston Metro Area (Year-Over-Year)

  • Texas City had the fastest growing rent, up 13.8% since this time last year.
  • Spring saw rent climb 7.6%, making it second.
  • Houston & Galveston were tied for third with rents both increasing 7.4%.
Houston Rental Market Trends
Credits: Zumper

As of February 12, 2023, the average rent for a 1-bedroom apartment in Houston is currently $1,350. This is a 12% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Houston increased by 3% to $1,251. The average rent for a 1-bedroom apartment increased by 4% to $1,350, and the average rent for a 2-bedroom apartment increased by 1% to $1,655.

  • Two-bedroom apartment rents average $1,655 (a 13% increase from last year).
  • Three-bedroom apartment rents average $1,890 (a 0% increase from last year).
  • Four-bedroom apartment rents average $2,110 (a 4% decrease from last year).

Some of the most affordable neighborhoods where the asking prices are below the average Houston rent:

  • East Little York, where the average rent goes for $870/month.
  • Greater Eastwood, where renters pay $850/mo on average.
  • Gulfton, where the average rent goes for $1160/mo.

Houston Real Estate Investment Outlook

Investing in Houston real estate can be a worthy investment due to a steady rate of appreciation. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Should you consider Houston real estate investment?  Houston is a minimally walkable city in Harris County with a population of approximately 2,112,810 people. It is a diverse city with lots to offer that will cater to the tastes of a variety of potential buyers and tenants.

According to Neighborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached homes are the most common housing units in Houston. Other types of housing that are prevalent in Houston include large apartment complexes, duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 45% of Houston's housing units.

Nearly 79,000 single-family detached homes were sold in the first 11 months of 2019, with year-to-date sales running 4.1 percent ahead of last year’s record volume. The total number of homes sold in the entire twelve months of 2018 was 82,229. Residential units, hotels, office buildings, and restaurants; the city is seeing continuous development projects that promise to keep the real estate market strong. Many of Houston’s neighborhoods are some of the most attractive places to live in the whole of Texas, and it’s not hard to see why.

With a great balance of urban regions and open spaces in the suburbs, the potential for development is clear to see, and the natural features of the land are some of the most attractive features you could hope for in an investment district. The Texas real estate market has been pretty quiet for a little under a decade now, but the real estate market in Houston has managed to remain relatively consistent while its surrounding areas have dragged their feet.

Houston has always been a hotbed of buyer activity; just ask the multitude of overseas investors who choose Houston as the city of their choice to invest in real estate. There was a time when Houston seemed immune to the highs and lows of housing cycles, but it now seems to have joined the pace of the national average.

But its rate of appreciation continues to be slightly above the national rate. With an extremely diversified economy and a huge demand for housing, Houston remains one of the top markets in the nation for real estate investing. Houston is one of the country’s top job creators, the home of America’s booming energy industry, is more diverse than New York City, and lets you stretch a paycheck farther than anywhere else in the country. Houston is also one of the hottest real estate markets in the nation.

Top Reasons To Invest In The Houston Real Estate Market
  • Houston is the #1 Market in the US for Job Creation.
  • Housing real estate is affordable.
  • 4th largest city in the US.
  • Its unemployment rate is far below the national level.
  • A paycheck goes farther in Houston than any other major metropolitan area.
  • Houston didn’t experience a housing bubble the way the rest of the country did.
  • It’s home to more Fortune 500 headquarters than anywhere in America except for New York.
  • It’s one of the centers of America’s booming oil and gas industry.
  • Massive international trade gives another big job boost to the rapidly growing city.
  • Houston is called Space City for a reason; it’s home to the NASA Astronaut Corps.
  • The New York Times calls it ‘one of the country’s most exciting places to eat.’
  • A spectacular range of ethnic cuisines, fantastic seafood, and great barbecue.
  • Ignore the Astros. The Texans, Rockets, and Dynamo are all winners.
  • It hosts the world’s largest concentration of health care organizations, with scientists working hard to beat cancer.
  • The city is filled with world-class and unique museums and cultural landmarks, like the Rothko Chapel.
  • The combination of The University of Houston and Rice University means there are a bunch of smart people around.
  • Houston recently passed New York to become the most ethnically and racially diverse city in the US.
  • And finally, it’s a great place for Southern hip hop!
  • There are approximately 1,196 schools in Houston, TX.
  • There are around 490 elementary schools, 256 middle schools, 178 high schools, and 272 private & charter schools.
  • To know more about Houston, read his blog – 17 Facts That Make Houston the Best City in America.

Houston Real Estate Market After Hurricane Harvey

Hurricane Harvey had some fascinating and somewhat surprising effects on the Houston Real Estate Market. Harvey’s devastating economic impacts have a silver lining for homebuyers in Houston. Houston's real estate market forecasts look promising after the hit the city took from Hurricane Harvey in 2017.

Big weather events hit many areas of the USA hard last year, and the costs of repairing the damage have been astronomical. But Houston has shown its trademark resilience, and 2018 is predicted to see real estate growth of 2.8% in the city, meaning now would be a good time to invest.

Hurricane Harvey tremendously impacted the real estate market in Houston, Texas. Houston had some of the largest swings in real estate value. So what were the economic ramifications of Hurricane Harvey on this delicate market? First, people have renewed interest in houses that were located in areas that did not flood.

This isn’t a particularly surprising statistic. Buyers now have confirmation that these areas can survive a catastrophic event and that they won’t be in any danger of damage. A recent trend, though, has been that homes in areas that were damaged by Hurricane Harvey have started to see a pick-up in sales.

Many houses that were damaged are being quickly sold to real estate investors. They saw an opportunity after Hurricane Harvey to buy damaged homes on the cheap in the Houston Real Estate Market. This has, in turn, led to Houston becoming a valuable “hot spot” for the real estate market in the US.

In October alone, 6,381 homes were sold in the Houston Real Estate Market, an increase of 7.5% over the same period last year. Agents are not only selling houses at a faster rate, but they are also commanding a higher price for their sales. Realtors are selling houses in Houston, Texas for over $7,000 or more than in previous years.

Perhaps the largest increase, though, has been in rental marketing. People whose houses Hurricane Harvey damaged have been looking to rent since the hurricane struck in late October. The rental market in Houston is approaching an all-time high. Investors are also intrigued by this statistic as it allows them to make money off of houses they may not be residing in at a given time.

This has further contributed to an increase in the housing market in Houston, Texas. The rental statistics for single-family homes and townhomes/condominiums are staggering. Single-family homes saw an increase of 83.6 percent over 365 days while townhomes and condominiums saw an increase of a mind-boggling 92.2 percent.

It is not surprising, then, that investors have flocked to the area with the idea of making a quick buck. As many have learned, the profit that could be acquired in this area is immense. The housing market in Houston is in an exciting new territory.

Although Harvey’s effects were devastating, the hurricane also contributed to the Houston housing market’s new rise after Harvey. Houston's inspiring efforts to come together and recover show the resilience of the people there and the city’s strength. The government’s quick response to the tragedy and their overwhelming desire to help the people exhibits the city’s importance on a national, and continental, scale.

Houston housing market remained in recovery mode in 2018 following devastating floods from Hurricane Harvey. People living in more expensive cities such as New York, Los Angeles, and San Francisco flocked to cheaper living cities such as Houston, Texas.

Many workers were fed up with the costs in these regions and were having difficulty surviving in areas with labor shortages, rising mortgage rates, and higher lumber costs. All these factors contributed to a significant upward trend in the Houston housing market in 2018.

Good cash flow from Houston investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Houston real estate investment opportunity would be key to your success.

If you invest wisely in Houston real estate, you could secure your future. The best investment is now looking for a rental property that will generate good cash flow. Your best tenants would be the retirees who intend to relocate to Houston and want to purchase property to rent out.

The running costs for owning and managing a Houston rental property should not be high. While hiring a property management company you should expect to give up roughly ten percent of the rent for each property they manage. Remember to factor this loss into your calculations when budgeting for a new rental property.

The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Houston investment property and you should be able to get a good return on your investment over the long term.

The neighborhoods in Houston must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Houston might not be the best place to live in.

A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. Houston's real estate prices are well above average cost compared to national prices.

It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods. The inventory is low, but opportunities are there.

When looking for real estate investment opportunities in Houston or anywhere in the country, the generally accepted standard is to purchase a property that will give you a modest but minimum of 1% profit on your investment.

An example would be: at $120,000 mortgage or investment cost, $1200 per month rental. That would be the ideal equation for example. Even with rent increases, buying a $500,000 investment property in Houston is not going to get you $5000 per month on rent.

The asking price of single-family homes in Houston (on Realtor.com) can start from $29,000 and can go up to $29.5M for a luxury property located in the Westside neighborhood. You can find many new construction houses available for sale in Houston.

Neartown – Montrose has a median listing price of $639,000, making it the most expensive neighborhood in Houston. Alief is the most affordable neighborhood, with a median listing price of around $155,000.

Even as Houston's home prices have reached new heights, the market remains attractive to residential real estate investors. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain.

The homebuyers won’t be able to outbid real estate investors and would end up renting. As with any real estate purchase, act wisely. Evaluate the specifics of the Houston housing market at the time you intend to purchase.

Here are the top 10 Highest Appreciating Houston Neighborhoods Since 2000 (List by Neighborhoodscout.com)

  1. Lawndale Wayside South
  2. Brittmoore Rd / Shadow Wood Dr
  3. Gulfton South
  4. Woodland Heights
  5. Greater Heights Southeast
  6. Greater Heights East
  7. Downtown Southeast
  8. Near Northside
  9. Second Ward East
  10. Greenway Upper Kirby Area West

Other Texas Real Estate Investment Markets

Apart from Houston, you can also invest in the housing market of Dallas, TX. If you have decided to invest in Dallas, you can either buy a fixer-upper or you may want to buy a Dallas investment property. This market offers a wide range of turnkey investment properties; you just have to find your tenants to rent out the property.

The El Paso real estate market is another hot market to invest in. El Paso real estate market was ranked 4th in Trulia’s hottest real estate markets to watch in 2018. El Paso’s strong job growth, affordability, low vacancy rates, and high population of young households were pivotal in the ranking process. The cost of living in El Paso is lower than the national average, while the cost of housing is well below that of other major metropolitan areas, including Houston and Austin.

The Central, Cielo Vista, and Mesa Hills areas offer more affordable rental properties for sale, while neighborhoods in the northwestern and eastern parts of the metro area have some of the more expensive housing inventory. The amount residents spend on everyday expenses, such as food and transportation, is slightly less than what the average American pays.

The next one is the San Antonio real estate market. The median home value in San Antonio is $167,600. San Antonio home values have gone up 8.0% over the past year and Zillow predicts they will rise 2.5% within the next year. For those who want to invest in rental real estate, the San Antonio real estate market is an ideal location because of its outsized military presence.

Fort Sam Houston is located inside the city limits. Lackland Air Force Base, Randolph Air Force Base, Camp Bullis, and Camp Stanley are located in the immediate vicinity. This means that there is a large population that will almost always rent because they don’t know where they’ll be sent on their next assignment. San Antonio has a dearth of affordable housing because demand is so much greater than the supply.

This has created a large number of renters who need to pay quite a bit to rent apartments or single-family homes. We know there is a lack of housing relative to demand when a balanced market has a 6 month home inventory and San Antonio has only a two-month inventory.

The Austin housing market is one hot place to invest in Texas. It isn’t the largest in the state of Texas, but there are several reasons to consider buying real estate in this city. The Austin real estate market has gained a lot of steam, with home values almost doubling since 2010. The Austin real estate market isn’t as big as Dallas, San Antonio, or Houston.

One of the long-term strengths of Austin is its diverse economy. The Austin real estate market dipped after the layoffs of the Dot-Com boom. They decided to solve the problem by encouraging medical and biotech employers to relocate to the area, too. As of this writing, there are 85 biotech and pharmaceutical companies in Austin.Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Houston.

Consult with one of the investment counselors who can help build you a custom portfolio of Houston turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Houston.

Not just limited to Houston or Texas but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Houston turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Let us know which real estate markets you consider best for real estate investing! 

This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the material is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. This article educated investors on Houston real estate. Buying a rental property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.

REFERENCES:

Market Data, Trends, and Forecasts
https://www.har.com/content/mls
https://www.zillow.com/houston-tx/home-values
https://www.neighborhoodscout.com/tx/houston/real-estate
https://www.littlebighomes.com/real-estate-houston.html
https://www.realtor.com/realestateandhomes-search/Houston_TX/overview

Rental Statistics
https://www.rentcafe.com/average-rent-market-trends/us/tx/houston/
https://www.rentjungle.com/average-rent-in-houston-rent-trends/

Foreclosures
https://www.realtytrac.com/statsandtrends/foreclosuretrends/tx/harris-county/houston

Downtown Houston
https://www.downtownhouston.org/development

Houston After Hurricane Harvey
https://www.houstonproperties.com/hurricane-harvey-impact-houston-realestate
https://www.bizjournals.com/houston/news/2017/10/11/following-harvey-houston-sees-home-sales-rebound.html
http://www.chron.com/business/real-estate/article/Houston-real-estate-market-continues-post-Harvey-12341532.php
https://www.npr.org/2017/11/08/562903267/some-real-estate-investors-eager-to-buy-houston-homes-damaged-by-flooding

How to Find Investment Properties for Sale in 2023?

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Most newbie investors are perplexed by the question of how to find investment properties for sale. This page will focus on how to find a profitable real estate investment property. Finding the right investment property can be a daunting task, especially for beginners. With the market constantly evolving, it's important to stay up-to-date on the latest trends and techniques for finding profitable investment properties.

In 2023, investors need to keep an eye on the changing market conditions and identify the areas with high growth potential, higher rental yields, and low vacancy rates. This guide will provide practical tips and strategies for finding investment properties for sale, including distressed single-family homes, small apartment buildings, and fix-and-rent properties. Whether you're a seasoned investor or just getting started, this guide will help you navigate the real estate market and find the right investment property for your portfolio.

A good investment property often has very different characteristics than one’s dream home. For some, investment properties are those that are cheaper than average yet command average or above-average rents. This might be a “distressed single-family” home or a small apartment building. In other cases, the investment property is one in desperate need of repairs or renovations. You buy it for a low price, invest in repairs and strategic upgrades, and then sell the property.

Fix-and-rent is a hybrid of these two approaches, buying homes in need of repair, making the needed renovations and repairs, and then renting out your newly desirable rental property. You need to look for areas with high growth, higher rental yield, and low vacancy rates. You make the money when you rent it. The challenge for many is finding the right properties to buy.

Finding a good investment property can give you some great benefits such as:

  • Income – You earn rental income by converting your investment property into a rental.
  • Capital growth or Appreciation – As your property increases in value, you will benefit from a capital gain when you sell it.
  • Tax deductions – You can deduct certain expenses relating to an investment property such as a rental. These expenses can be property tax, mortgage interest, property repairs, property insurance, etc.
  • 1031 Exchange: You can take advantage of the 1031 tax-deferred exchange to acquire a more valuable investment property. You can find a “like-kind” but much more valuable investment property and exchange your old property to defer capital gains taxes on profits until that property is sold for cash.

Unlike some complex investments, you don't need any specialized knowledge to invest in real estate. You need to know where you are in the market cycle and find some good deals. Let’s learn about different options to find investment properties for sale in 2023.

how to find investment property for sale

How To Find Investment Properties For Sale By Searching Off-Market Deals

The best deals are those that haven’t hit the market yet. Once the property hits the MLS, you’re going to be in a bidding war with others considering buying the same property. In other cases, you’re trying to find homes before they go up for auction on the courthouse steps. The best way to find these properties is to network with realtors. Raise the cash to pay for these properties, because distressed sellers want to close on the deal as quickly as possible.

Then begin networking with realtors. Prove to them that you can afford to buy properties you want to buy because they don’t want to waste their time or that of their distressed sellers. Once they know you’re a serious buyer, discuss the types of properties you want to buy. You may begin to get leads on homes that are going to be sold to settle an estate or as part of an upcoming divorce.

You may learn about distressed sellers who will sell to you to avoid having a foreclosure on their credit reports. In summary, realtors are one of the best resources available to those seeking investment properties for sale. Cultivate relationships with several realtors so that you’ll have a steady stream of leads. Just make sure you give each of the businesses if you want them to continue working with you.

Find Investment Properties For Sale Through Multiple Listing Systems

Buying through the MLS is still the most common way people find real estate or investment property for sale. Short for “Multiple Listing Service,” the MLS is the collection of most of the properties that all real estate agents are currently trying to sell on the market. When you search a site like realtor.com, you’ll be searching the MLS. This information is widely distributed for most eyes to see.

The problem with the MLS is that every potential buyer is searching there. It’s the largest database of properties for sale, so trying to find a good deal can be a bit difficult as you have to compete with other buyers by entering into bidding wars. Every buyer is represented by a real estate agent or broker on MLS.

Being the first one to submit a “verbal offer” on a deal can often help you get it under contract before others get to see it. Have your financing option ready before you submit an offer as most sellers want to see a pre-approval letter before accepting an offer. This can help you avoid competition, and bidding wars. Hiring a competent broker can help to close a deal as well as avoid paying far more than you should for an investment property.

Find Investment Property By Working With Real Estate Wholesalers

Wholesalers find properties, often distressed, and buy them at a bargain price. They then shop for buyers. Wholesalers may advertise that they buy houses from divorcing couples, estates that need to be settled, rentals where tenants won’t pay the rent, homes in need of dire repairs, and sellers who need to close as soon as possible.

These sellers get 50 to 80 percent of what the house is worth, but they get the cash they need to settle their financial affairs or just move on in life. In other cases, the wholesaler buys the contract for the home and then shops for a buyer. Wholesalers then sell the house to someone else. This may be to the general public, but these properties are regularly sold to investors.

Buying investment properties from wholesalers has several advantages. You don’t have to shop around for deals. You’re still free to assess the condition of the property and its relative price. They may have several investment properties for sale that you can choose from. And you don’t have to pay for the double closing if you’re going to fix and then rent out the property.

Another solution in this category is buying investment properties for sale from property developers in private investment groups. These investment properties for sale may be fixed and flipped, fix and rent out, or massive redevelopments of multi-family housing. Buying “fix and rent out” properties has the added benefit of giving you a property that already comes with known cash flow. Ironically, you might find realtors who do this type of property development on the side.

Find Investment Properties By Reaching Out to Potential Sellers Yourself

This can take several forms. One is driving for dollars or driving around looking for neglected properties. Note the address, and then send a letter offering to buy it. Another approach is direct mail to everyone in a given area. Send postcards letting everyone in the neighborhood know you buy distressed properties.

A few may contact you, and your information may be forwarded to someone they know who needs to sell fast. Direct mail only requires looking up public information regarding owner names and addresses. You don’t have to try to collect email addresses. You’re not cold-calling people in the area, something that could get you labeled a spammer.

What can you do if you’re interested in multi-family residential properties? Check the “for rent” ads. Are there developments that constantly have to advertise for new tenants? They may be willing to sell. Just make sure you have the plan to rehab the building and change how things are done.

For example, an apartment building owner ready to sell may be dealing with slow-paying tenants, high crime, or challenging government regulations. You may have to update the lease terms, evict non-paying tenants, make massive repairs, get government inspections, upgrade security features, or take more drastic action.

And you may not want to own a property in a dangerous neighborhood regardless of the ROI. On the other hand, you might find a real bargain when the soon-to-be-former landlady sells you the entire triplex so they can retire in Florida.

How To Find Investment Property For Sale Using Real Estate Websites

If you’re looking for investment properties, single-family homes can be found through traditional means like an MLS search as well as networking and direct marketing. Real estate investors looking for multi-family properties are rarely going to find this in the newspaper or the digital equivalent. Sellers of 50-unit apartment buildings and shopping malls aren’t going to list them on the average real estate listing site, either.

This is why you need to find websites like LoopNet, Realtor.com, and Costar that offer only commercial and multi-family residential properties. Sites like Zillow and Trulia rarely have such properties on their site. In some cases, you can find multi-family investment properties for sale by searching the offerings of various real estate investment groups.

People who buy, upgrade, and eventually sell multi-family properties are one of the few that will sell turnkey apartment buildings to renters. If you’re willing to take a risk and have excellent self-control, you might consider sites like Auction.com. This site focuses on housing auctions. This includes everything from land to newly built homes in foreclosure to luxury real estate subdivisions where the builder went bankrupt.

You can search their inventory for deals. You can look for properties you’re interested in. The challenge many would-be investors face is not over-bidding on the property. It is easy to get carried away when you’re trying to outbid others, though this could wipe out your profit margin.

How To Find Investment Properties For Sale By Talking to Bankers

An often overlooked way to find investment properties for sale is to talk to bankers. Let banks and credit unions know that you’re interested in buying foreclosed investment properties. You might be able to pick up newly renovated homes that house flippers couldn’t sell in time to avoid losing their shirts.

On the other hand, you might pick up a property that needs renovations completed to sell it or rent it out. In this case, bankers will be happy to give you first dibs because they know it will be hard to sell on the open market. You could also get leads on multi-family properties that are at risk of going into foreclosure.

Talking to bankers may lead you to bank-owned properties that haven’t been listed yet or were taken down off the website because they hadn’t sold yet. Better yet, they’re the ones who can give you lists of homes available for short sale. They’ll offer a discount because they didn’t have to pay the legal fees associated with the foreclosure. And almost none of the situations we’ve outlined will result in a property hitting the MLS.

Find Investment Property For Sale By Reviewing Publicly Available Information

This requires detailed research, but you may find leads for real deals. For example, reading lists of eviction notices published in the newspaper could tell you which apartment buildings have trouble with non-paying tenants. If the same property sees a steady stream of evictions, the owner may be eager to sell the property.

The same may be true of rented-out single-family homes. If you can find notice of default listings for multi-family buildings, you could make an offer before it goes into foreclosure. Sites like RealtyTrac are tailored toward searching existing foreclosures.

Another approach involves for sale by owner or FSBO ads. Owners trying to sell their own homes may be trying to save money. The property may need major repairs they can’t afford, or they may have an unusual home that’s hard to sell otherwise. In this case, you aren’t interested in the fresh listings. Instead, you’re interested in the FSBO listings that have been up for months. You already know from this that they are a distressed seller.

We would not recommend searching general real estate websites like Zillow to find FSBO properties, because it is hard to get a hold of the real owner instead of an agent working through Zillow hoping to act as an intermediary between you and the seller. However, you can use direct mail to reach everyone who has or has recently had FSBO ads to try to drum up leads.

One side benefit of this approach is that you can get very creative in the financing terms. This may include taking over someone else’s mortgage or signing a note with them to buy the property. However, we’d recommend getting a conventional mortgage to pay off their loan unless you’re going to sell the property in short order.

Always have a real estate attorney involved in this process. And have a thorough title search done every time because these kinds of investment properties for sale are much more likely to have clouded titles and issues like past-due liens. We do not recommend using tax liens as a way to get investment properties for sale.

Find A Profitable Investment Property For Sale: Contact Norada Real Estate Investments

Investment Properties For Sale

There are many ways to find potential investment properties for sale, no matter what type of property you’d like to own. You can find a strategy that works for you, whether you have the time to do detailed research or want to be presented with several options to choose from.

Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in real estate and cash-flow investment properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property for sale.

Consult with one of the investment counselors who can help build you a custom portfolio of investment properties in some of the best real estate markets. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete real estate investments, we help you succeed by minimizing risk and maximizing profitability.

References

  • https://www.fool.com/millionacres/real-estate-investing/articles/how-find-investment-properties-outside-mls
  • https://www.mashvisor.com/blog/how-find-real-estate-agent-investment-properties
  • https://www.fortunebuilders.com/how-to-get-started-in-wholesaling                             
  • https://www.thanmerrill.com/how-to-find-investment-properties                       
  • https://www.biggerpockets.com/member-blogs/8266/64085-10-best-ways-to-find-great-multifamily-properties
  • https://www.biggerpockets.com/guides/ultimate-real-estate-investing-guide/how-to-find-investment-properties
  • https://www.thebalancesmb.com/websites-for-investment-property-for-sale-2124875
  • https://www.rocketmortgage.com/learn/buying-house-for-sale-by-owner                           
  • https://finance.zacks.com/risks-tax-lien-investing-avoid-7495.html                         
  • https://www.realestatewitch.com/fsbo-zillow/#The%20Problem%20with%20Zillow%E2%80%99s%20FSBO%20Business%20Model

Las Vegas Real Estate Market: Prices, Trends, Forecast 2023

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Las Vegas Housing Market Trends in 2023: Opportunities and Challenges

The Las Vegas housing market has been through ups and downs over the past few years, with the pandemic having a significant impact on the market. As of January 2023, the market is facing a mix of opportunities and challenges for both buyers and sellers. In this blog post, we'll discuss the housing market trends in Las Vegas based on the report released by Las Vegas Realtors.

The decline in Single-Family Home Sales

According to the report published by Summerlincommunities.com (Data by LVR) on Las Vegas Real Estate Market Update, single-family home sales in Las Vegas decreased by 13.6% from December 2022 and by 48.3% from January 2022. However, the median sales price of previously owned single-family homes remained flat at $425,000, the same as in December, but down 2.3% from January 2022. This could be an opportunity for buyers who have been waiting for a drop in prices, but sellers may face challenges in getting their homes sold quickly.

Increase in Median Sales Price of Condos and Townhomes

The report states that the median sales price of condos and townhomes increased to $255,000 in January, up 3.3% from December and 4.9% from the prior year. This increase may be due to a higher demand for more affordable housing. Buyers looking for more affordable options may find condos and townhomes to be a good choice, while sellers may have a better chance of selling their properties quickly.

Increase in New Listings

The report states that new listings in January increased to 2,477, up 47.7% from December 2022, but down 14.6% from the prior year. This could be an opportunity for buyers to have more options to choose from, but sellers may face challenges in getting their homes sold quickly.

Housing Supply Continues to Increase

The housing supply in Southern Nevada was 4.1 months of inventory in January, up 1.6% from December and up 478.5% from the prior year. This may indicate a shift towards a buyer's market, where buyers have more bargaining power. Sellers may need to be flexible and open to negotiation to get their homes sold.

New Builder Incentives

Several new builder incentives were offered in January 2023, providing opportunities for buyers to save money. Taylor Morrison provided limited-time finance savings on select homes, offering an interest rate of 2.49% for year 1, 3.49% for year 2, and 4.49% for year 3. Toll Brothers offered a National Sales Event with incentives on select quick move-in homes, while Pulte offered special financing on a 30-year fixed rate of 4.25% for quick move-in homes.

Richmond American Homes provided 30-year fixed-rate financing at 4.875% for FHA and VA loans and 5.5% for conventional loans. Finally, Tri Pointe Homes offered limited-time below-market conventional 30-year fixed 3-2-1 buy-down with a first-year interest rate of 2.99%.

Summary

The Las Vegas housing market in 2023 presents a mix of opportunities and challenges for both buyers and sellers.  Single-family homes are still in high demand, and despite the decline in sales, the median sales price has remained stable. However, the significant increase in housing supply may lead to a more balanced market, with buyers having more choices and negotiating power.

On the other hand, the condo and townhome market has seen a slight increase in median sales price, which may be due to a higher demand for more affordable housing. This trend is likely to continue as more millennials and first-time homebuyers enter the market. The luxury market has seen an increase in sales volume and median sales price, indicating that high-end buyers are still active in the market. This trend is expected to continue, as Las Vegas remains an attractive destination for those seeking luxury homes and a desirable lifestyle.

Overall, the Las Vegas housing market in 2023 presents a mix of opportunities and challenges for both buyers and sellers. Buyers can take advantage of the increasing housing supply and new builder incentives, while sellers may need to price their homes competitively to attract buyers in a more balanced market. It's important to work with an experienced real estate agent who can guide you through the market trends and help you make informed decisions.

On a monthly basis, here's how the Las Vegas housing market ended

Las Vegas Housing Market Trends
Source: Las Vegas REALTORS®

Las Vegas Real Estate Market Forecast 2023

What are the Las Vegas real estate market predictions for 2023? The Las Vegas-Henderson-Paradise Metro housing market has seen a positive trend, with the average home value reaching $396,342, which represents an increase of 4.5% over the past year. This is a good indicator of a strong real estate market, showing that demand for housing in Las Vegas is on the rise. The Zillow Home Value Index (ZHVI) is a key metric used to measure changes in property values, and it has been steadily increasing in Las Vegas over the past few years, as shown in the chart above.

According to Zillow's data, the median sale-to-list ratio was 0.984 as of December 31, 2022, indicating that homes were selling very close to their list price. Additionally, only 16.5% of sales were above the list price, which suggests that there is less competition among buyers in the market. On the other hand, 62.8% of sales were below the list price, indicating that buyers are in a good position to negotiate favorable terms.

The median days to pending is 53 days, which is a relatively short time frame, indicating that homes are selling quickly in Las Vegas. This is a good sign for sellers, as it suggests that there is high demand for housing in the area. Zillow's market forecast predicts a 3.7% decrease in home values over the next year. Higher interest rates may help curb soaring prices, but it also increases the cost of borrowing

Based on the data provided, the Las Vegas housing market in 2023 is likely to remain strong, with rising home values and high demand. The market is currently favorable for both buyers and sellers, as homes are selling quickly, but buyers still have some negotiating power. However, the Zillow market forecast predicting a 3.7% decrease in home values over the next year could be a concern for homeowners who are looking to sell their property.

This decrease in value may be due to higher interest rates, which could make it more difficult for buyers to secure financing and afford homes. Despite this potential decrease, the Las Vegas housing market is still expected to remain relatively stable and strong overall. The city's growing population, strong job market, and desirable lifestyle all contribute to the demand for housing in the area.

Therefore, both buyers and sellers should continue to monitor the market closely and make informed decisions based on the data available to them. It may be a good time for sellers to list their homes, while buyers may want to act quickly to take advantage of current market conditions before interest rates increase.

Las Vegas Real Estate Market Forecast
Courtesy of Zillow.com

Las Vegas Real Estate Market: Is It A Good Place For Investment?

Now that you know where Las Vegas is, you probably want to know why we're recommending it to real estate investors. Is Las Vegas a Good Place Real Estate Investment? Many real estate investors have asked themselves if buying rental property in Las Vegas is a good investment. You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Las Vegas housing market's historical and current trends for answers on why to put resources into this market.

Las Vegas is a minimally walkable city in Nevada. It is the 32nd most walkable large city in the US with 583,756 residents. Las Vegas has some public transportation and does not have many bike lanes. Downtown Las Vegas, home to the casinos and hotels, is the city's most accessible neighborhood, but housing is sparse there. In 2018, the Las Vegas housing market was so hot that it outperformed the best U.S. housing markets like Seattle. The Las Vegas real estate market is entirely brimming with new businesses.

It isn't just about casinos, medicine is a growing industry as well. The University of Las Vegas and Zappo's, the internet shoe store, is also based in Vegas. Its friendly business environment is propping up the economy and helping towards the positive Las Vegas real estate market trends. The new businesses are propping up at a much faster rate than the national average.

Las Vegas has a mixture of owner-occupied and renter-occupied housing units. It is a big rental property market. According to Neighborhoodscout.com, a real estate data provider, three and four-bedroom single-family detached homes are the most common housing units in Las Vegas.  Other types of housing that are prevalent in Las Vegas include large apartment complexes, duplexes, rowhouses, and homes converted to apartments.

Las Vegas is the destination point of millions of visitors, the town is famous for its vibrant nightlife, exciting gaming action, and the natural allure of the beautiful desert that surrounds the greater metropolitan area. Tourists pour billions of dollars in Southern Nevada through which thousands of tourism jobs are supported.

Let's learn more about Las Vegas and find out why one should invest in this sturdy real estate market. These things make the Las Vegas real estate market stand out when it comes to choosing a place to invest in 2020 and beyond. Keeping aside the short-term impact of the ongoing pandemic, let's take a look at the number of positive things going on in the Las Vegas real estate market which can help investors who are keen to buy an investment property in this city.

Why Is Las Vegas A Good Place For Real Estate Investment?

THE CITY & ITS DEMOGRAPHICS

  • Las Vegas is a beautiful city of million-lightbulb signs and fantastic architecture.
  • It is an internationally renowned major resort city.
  • It is known primarily for its gambling, shopping, fine dining, entertainment, and nightlife.
  • It is often known as “The Entertainment Capital of the World” – because of its “broad scope of entertainment options including nightlife, shows, exhibits, museums, theme parks, pool parties, and so on.
  • Las Vegas has 68 beautiful parks.
  • It is one of the country's leading vacation destinations, drawing far more tourists than the Grand Canyon or Yellowstone National Park.
  • More than 41 million people visit Las Vegas each year.
  • Over 22,000 conventions are held in Las Vegas every year.
  • It has been one of the fastest-growing major cities in the United States.
  • It is the most populated city in the state of Nevada and the 28th-most populated city in the United States.
  • The current metro area population of Las Vegas in 2020 is 2,699,000, a 2.98% increase from 2019 – Macrotrends.net.

THE HOUSING MARKET & PRICES

  • The most prevalent building type in Las Vegas is single-family detached homes.
  • The city has a mixture of owners and renters, with 51.07% owning and 48.93% renting – “Neighborhoodscout.”
  • Las Vegas is in the top 10% nationally for real estate appreciation.
  • Las Vegas real estate has appreciated by 244.86% over the last decade.
  • It amounts to an average annual home appreciation rate of 13.18%.
  • Home values have gone up 14.2% over the past year (ZHVI)
  • The median sold price of homes in Southern Nevada is $425,000.
  • 1-yr forecast: -3.7% (ZHVF) until January 2024.
  • Las Vegas rental real estate market remains healthy and affordable for most renters.
  • There's also no slowdown on the horizon for the number of people moving to Las Vegas.

THE ECONOMY

  • The Las Vegas Valley as a whole serves as the leading financial, commercial, and cultural center for Nevada.
  • Las Vegas is home to more than half of the 20 largest hotels in the world.
  • There are more than 150 casinos and roughly 150,000 hotel rooms in the Las Vegas valley area.
  • Las Vegas annually ranks as one of the world's most visited tourist destinations – famous for its mega casino hotels and associated activities.
  • A diversified economy is driven by health-related, high-tech, and other commercial interests.
  • The primary drivers of the Las Vegas economy are tourism, gaming, and conventions, which in turn feed the retail and restaurant industries.
  • Mining constitutes the mainstay of the region's industrial sector.
  • Most of the manufacturing plants are concentrated in the communities of Henderson and North Las Vegas.
  • No state tax for individuals or corporations, as well as a lack of other forms of business-related taxes, have aided economic growth.
  • Construction is also a significant component of the economy.
  • The government is the metropolitan area's single largest employer.

These are just some of the highlights that make Las Vegas a great place to live and invest in real estate. The list can go on and on. Before the coronavirus pandemic hit the state, the Las Vegas real estate market forecast was as hot as the desert heat in Nevada. Keeping aside this crisis for a moment, the housing market in this region provides an excellent opportunity for investors. They are expressing confidence in the stable housing prices and the number of available housing units on the market.

New businesses are being created at a much faster rate than the national average. Las Vegas is also a strong rental market. Nearly 40% of the population rents in Las Vegas. Rental properties near these new businesses will benefit greatly due to the increasing tenant pool and the general improvement in economic activity that they bring. The first half of the previous year saw a huge increase in the demand for housing in Las Vegas, Nevada.

The inventory of homes has further decreased from last year. The current local housing inventory in Las Vegas is just over a two-month supply of homes available for sale. The high demand is followed by an increase in population, as well as an overall improvement of the economy in the area. All these factors have had a huge impact on the Las Vegas housing market, which is considered one of the hottest markets in the nation. Las Vegas has experienced several booms in its history, and it saw an incredible real estate bust during the Great Recession.

Las Vegas' recovery hasn't made the same headlines as the 50% or greater declines in home values did a decade ago. Yet its recovery shouldn't keep investors away. For savvy investors, the Las Vegas real estate market is both stable and predictable. Let's find out the latest trends and forecasts.

Las Vegas Home Prices Are Low Relative to Recent Highs

There have been articles claiming that Las Vegas is ready for another bust. However, prices are declining somewhat as new housing stock comes onto the market. This explains why the inventory of unsold existing homes doubled at the end of 2018. Yet the demographic trends that keep the Las Vegas housing market so hot aren't stopping.

This means that the Las Vegas real estate market is seeing a lull with a guarantee that the price will start to rise. The Las Vegas housing market is a great place for real estate investment. It remains relatively affordable than the expensive seller markets in the US. When people lose their jobs in great numbers, home prices crash as they did in Las Vegas a decade or so ago.

Homes went from an average price of over $300,000 to less than $150,000. Home prices have recovered, though due to inflation, they remain well below historic peaks. Likewise, Las Vegas foreclosure rates have fallen but they remain high by national standards. Around one in a thousand homes are foreclosed on each month.

Las Vegas Housing Prices Are Rising Slowly but Surely

The wide-open deserts around Las Vegas constrain the Las Vegas real estate market. The federal government owns the vast majority of the state. The Clark County government asked the federal government to allow them to take over 38,000 acres of land and start building housing. Nevada Congressional delegation has to ask the Bureau of Land Management, and they may take years to give their permission if they ever do.

This means that Las Vegas is surrounded by a lot of open lands, but it cannot simply expand to meet demand. This will continue to drive up prices in the Las Vegas housing market. We don't think the Las Vegas housing market is set up for a bust because it isn't overheating. The home values have gone up 1.8% over the past year. That's a healthy growth rate, whereas double-digit price increases are unhealthy. This rate is skewed by the number of new luxury homes coming onto the market and the constant churn at the high end of the market.

Las Vegas Is Landlord Friendly

Unlike many other Western states, the Las Vegas real estate market is landlord-friendly. It isn't difficult to evict non-paying tenants from Las Vegas investment properties. In general, they have five days from the date rent is due to “cure” the problem or eviction can begin. The same time frame is used to correct issues like lease violations, after which the person can be evicted. After those five days, the case can go to court, and these are landlord-friendly. Rulings typically arrive the same day, after which point the tenant has one day to leave the premises.

Landlords don't have to pay interest on deposits. There are no limits on late fees, though the late fees due must be spelled out in the rental agreement. There is no payment grace period set by state law. All of this adds up to the Las Vegas real estate market being a paradise for landlords.

Update: On July 1st, 2019, a new tenant protection legislation named SB 151 officially went into effect. It provides tenants with more time to deal with the consequences of eviction after they have had an eviction notice posted on their homes. They will now have seven judicial days to pay their rent or quit. The previous time frame was five calendar days.

For landlords, this new housing legislation also enables them to utilize an attorney or agent to prosecute the eviction action on their behalf. They will now need to go find a permitted eviction process server to carry out these tasks. Those who oppose SB 151 claim that giving tenants more time to go through the eviction process, will make it more difficult for owners to get their properties back on the rental market.

Las Vegas Job Market Attracts People

The Las Vegas job rate has ranged from half a point to a full point above the national unemployment rate. However, that's better than the unemployment rate in Arizona, Salinas, or the San Fernando Valley. And it is places like that sending de facto refugees to Las Vegas. The diverse economy of Las Vegas includes low-skill but good-paying jobs in entertainment, hospitality, and services. It draws thousands of new residents each year. This growth, coupled with its unusual economic basis, has made Las Vegas one of the wealthiest cities in the country.

Since the 1990s, Las Vegas has had one of the fastest-growing employment bases in the country, benefiting from a large labor pool and a favorable business climate. These conditions enabled city promoters to entice businesses of all kinds to choose Las Vegas over California. Every job-killing regulation in California drives businesses to Oregon and Nevada, too, taking jobs with them. This explains why future job growth for the next ten years is expected to be nearly 40%, well over the 33% expected for the nation as a whole. A growing supply of jobs will propel the demand for the Las Vegas housing market.

Las Vegas Rent Prices Are On the Rise

During the Great Recession, Las Vegas went from a fifth of its residents renting to nearly two-fifths. As the job market and personal credit improved, the area is back to having around 19% of residents choosing to rent. However, rents are on the rise. While homes are being built, many people are unable to afford them. This is because the developers who survived the Great Recession are maximizing their profits by building luxury homes, not the affordable homes that many want.

Due to an improving local economy and ongoing population growth, the demand for apartments remains strong in Southern Nevada. For those who can afford Las Vegas investment properties, this guarantees a large rental population that isn't going to be able to afford the new upscale properties that are coming onto the market.

As of February 26, 2023, the average rent for a 1-bedroom apartment in Las Vegas, NV is currently $1,299. This is a 0% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Las Vegas increased by 3% to $1,125. The average rent for a 1-bedroom apartment remained flat, and the average rent for a 2-bedroom apartment increased by 1% to $1,545.

  • Two-bedroom apartment rents average $1,545 (a 3% decrease from last year).
  • Three-bedroom apartment rents average $1,950 (a 4% decrease from last year).
  • Four-bedroom apartment rents average $2,447 (a 5% increase from last year).

The Las Vegas real estate market is a great place to invest in real estate in 2022 based on these trends. There was a short-term decline in the rents but they are rising back. The unemployment rate is also decreasing so it is a great time to snatch up hot real estate deals by selecting the best neighborhoods.

Another report, issued by the Nevada State Apartment Association (NVSAA) shows that Southern Nevada’s apartment market is starting to stabilize, with rents projected to rise more slowly this year than previously projected. The report, produced by the NVSAA based on data provided by CoStar, predicts that apartment rents in Southern Nevada will increase by more than 20 percent from the end of the first quarter of 2022 to the end of the same quarter one year later. The average monthly rent in the first quarter was $1,451, up from $1,198 a year earlier.

Meanwhile, local apartment vacancy rates remain stable, with the average vacancy rate during the first quarter of 2022 at 5.4%. That’s up 0.3% from the same time in 2021. Local apartment construction is also on the rise, with the industry projected to catch up with demand by the end of 2022. The report showed more than 7,000 new local apartment units under construction through the first quarter, compared to about 3,800 units during the same time last year.

The average size for a Las Vegas apartment is 893 square feet with studio apartments being the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage. You can, of course, charge much more for a three or four bedrooms single-family home than an apartment.

The most affordable neighborhoods in Las Vegas are Beverly Green, where the average rent goes for $1,061/month, Crestwood, where renters pay $1,061/mo on average, and Francisco Park, where the average rent goes for $1,061/mo. Other good neighborhoods for affordable rentals include Hillside Heights ($1,061), Huntridge Park ($1,061), and John S. Park ($1,061), where the asking prices are below the average Las Vegas rent of $1,471/mo.

The most expensive neighborhoods by Average Rent are:

Las Vegas Neighborhood Average Rent
Mountain Trails $2,591
Sun City $2,591
The Hills $2,591
Red Rock $2,438
Amber Hills $2,335
The Canyons $2,125
The Crossing $2,125
Paradiso $2,036
Summerlin Village $2,036
The Paseos $2,036

California's Loss Is Nevada's Gain

A $475,000 median price may be steep if you're coming from the heartland where a mid-market home costs $150,000 to $200,000. However, tax refugees from California flooding into Nevada find that same house to be an outright bargain compared to the $781,050 price for a comparable property in Los Angeles.

Southern Nevada is one of the cheaper metropolitan areas in the United States, and it is a fraction of the cost of living in California on nearly every front. This explains why you see so many California license plates in Vegas and why it costs $120 to rent a moving truck to go from Vegas to San Francisco but $2000 to come to Las Vegas.

As per the data by Lasvegasrealestate.org, the luxury home market has expanded as 30% of buyers are moving from California to take advantage of Las Vegas' low cost of living. Even the most expensive custom homes from builders such as Blue Heron are found to be a bargain for out-of-state buyers and investors.

Possibly our second-largest market is retiree buyers in 55+ Communities who enjoy the weather, health care, and activities that only Las Vegas can combine in one city at a value not matched in any major city anywhere in the USA.

Nevada Is the Ultimate, Low Tax Locale

While those who own Las Vegas investment properties will need to pay their mortgage if they don't pay cash for the property and ongoing expenses like maintenance and insurance, Nevada offers very low taxes. There is no state income tax.

Nevada's property tax rates are among the lowest in the U.S. The state's average effective property tax rate is just 0.69%, which is well below the national average of 1.08%. Homeowners in Nevada are protected from steep increases in property tax bills by Nevada's property tax abatement law, which limits annual increases in property tax bills to a maximum of 3% for homeowners.

Thus, even if home values increase by 10%, property taxes will increase by no more than 3%. The taxable value of a property is calculated as the cash value of the land (the amount the land alone would sell for on the market), and the replacement cost of all buildings minus depreciation of 1.5% per year since construction.

The assessed value is equal to 35% of that taxable value. Thus, if your County Assessor determines your home's taxable value is $100,000, your assessed value will be $35,000. Tax rates apply to that amount.

There are numerous tax districts within every Nevada county. Hence, when comparing between counties, it is useful to look at average effective rates. Clark County contains almost 75% of the state's residents and includes Las Vegas. The average effective property tax in the county is 0.70%, slightly higher than the statewide average, but still significantly lower than the national average.

If you're planning to buy in Nevada, the most common type of home loan is a 30-year fixed-rate mortgage. This option gives you plenty of time to pay back the loan and your interest rate remains the same for the duration of the loan's life unless you refinance. You can also consider a 15-year fixed-rate mortgage.

It allows you to pay off your loan quicker and comes with a lower interest rate, but your monthly payments will be higher. As we write this, the average Nevada rate for a fixed 30-year mortgage is 3.46%, and for a fixed 15-year mortgage it is 2.83%.

Nevada Real Estate Investment Markets

Las Vegas is a shining beacon in the desert for those fleeing California or simply hoping to make it big. Many others simply come to earn a living serving the many tourists who visit here each year or work at the firms relocating to this tax haven. All of this gives the Las Vegas real estate market a bright future.

According to PwC's annual real estate report, the Las Vegas housing market will enjoy a population growth rate that is well above the national growth rate. This is a continuing trend as data from the US Census Bureau shows a net migration of 6.46% from 2012-2016.

This earned the Las Vegas real estate market a spot among the best places that people were moving to in 2018. The city will hold this title well into 2020 according to the forecast. Good cash flow from Las Vegas investment property means the investment is, needless to say, profitable.

A bad cash flow, on the other hand, means you won't have money on hand to repay your debt. Therefore, finding the best investment property in Las Vegas in a growing neighborhood would be key to your success. If you invest wisely in Las Vegas real estate, you could secure your future. The best investment is now looking for a rental property that will generate good cash flow.

Your best tenants would be retirees who intend to relocate to Las Vegas and want to purchase property to rent out. The running costs for owning and managing a Las Vegas rental property should not be high. A cheaper neighborhood in Las Vegas might not be the best place to live in.

A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods.

The inventory is low, but opportunities are there. There are 50 neighborhoods in Las Vegas. The Paseos has a median listing price of $666.9K, making it the most expensive neighborhood (Realtor.com). Sunrise is the most affordable neighborhood, with a median listing price of $152K.

Some of the most popular neighborhoods in Las Vegas are Paradise, Enterprise, and Spring Valley. Here you'll find the maximum no. of listings. In Spring Valley, Las Vegas, NV, the home prices range from $44.9K – $18.5M while rental properties are within a range of $795 – $11K.

Even as Las Vegas home prices have reached new heights, the market remains attractive to residential real estate investors. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain. Millennial homebuyers can't outbid real estate investors and hence end up renting.

As with any real estate purchase, act wisely. Evaluate the specifics of the Las Vegas housing market at the time you intend to purchase.

There are many other markets near Vegas, that you can choose for real estate investing. As a result of an influx of companies and jobs in Northern Nevada, strong housing demand continues to put pressure on the available supply. The Reno real estate market is ideal for investors for several reasons. Supply is limited, and demand is growing.

Rental rates are driven by several competing markets that aren't going to slow down any time soon. Forget owning a couple of condos in Las Vegas and invest in a more affordable, stable real estate market like Reno. Good cash flow from Reno investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won't have money on hand to repay your debt.

Nevada Out of State Investment Opportunities  

On the east of Nevada lies the state of Utah, where you can consider investing in Salt Lake City. The Salt Lake City real estate market was ranked one of Millennials' toughest real estate markets due to limited supply relative to demand. Salt Lake is a “slightly hot” real estate market at the moment.

The economy is strong and the city achieves the lowest unemployment rate at 2.1%. The median days on market is 30.5 days, with inventory moving 6 percent faster than last year and 30.5 days faster than the U.S. overall. Home prices in Salt Lake City are expected to rise by record levels in 2020. A strong job market and a robust economy have contributed to the rising housing costs over the past seven years.

Ogden is another good and affordable real estate market in the neighboring state of Utah. The Ogden housing market is appreciating because people move here for work as often as they do live. For example, there are many good-paying jobs in the IT, life sciences, aerospace, and outdoor products manufacturing industries. There are civil service jobs with the state tax office and the local hospital. And then there's the college. This is on top of Utah's employment growth rate of roughly 3 percent a year.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Las Vegas.

Not just limited to Las Vegas or Nevada but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We're standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Las Vegas turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Latest Market Data, Trends, and Statistics
https://www.lasvegasrealtor.com
http://myresearcher.com/glvar-section-new
https://www.zillow.com/las-vegas-nv/home-values
https://www.lasvegasrealestate.org
https://www.littlebighomes.com/real-estate-las-vegas.html
https://www.neighborhoodscout.com/nv/las-vegas/real-estate#description
https://www.realtor.com/realestateandhomes-search/Las-Vegas_NV/overview
https://summerlincommunities.com/las-vegas-real-estate-market-update-august-2020/

LAS VEGAS' ECONOMIC & JOB GROWTH INDICATORS
https://en.wikipedia.org/wiki/Las_Vegas
https://downtown.vegas/visitors-guide/fun-facts

Low taxes
https://smartasset.com/taxes/nevada-property-tax-calculator
Geographical constraints
https://www.reviewjournal.com/news/politics-and-government/clark-county/clark-county-unveils-land-proposal-draws-ire-from-groups

Price growth
https://www.mashvisor.com/blog/las-vegas-housing-market-2019
https://knpr.org/knpr/2018-09/las-vegas-housing-booming-does-mean-another-bust-horizon
https://thenevadaindependent.com/article/las-vegas-appears-to-be-entering-a-steady-housing-market
https://www.forbes.com/sites/forbesrealestatecouncil/2018/07/17/why-las-vegas-luxury-real-estate-is-the-next-big-market-boom/#7b20b1c41543

Landlord friendly
https://www.costellomgmt.com/landlord-tenant-laws-nevada
http://lasvegasgleaner.com/the-rent-is-too-damned-highhttps://www.avail.co/education/laws/nevada-landlord-tenant-law

Loss of California
https://www.ktnv.com/news/nevada-sees-population-boost-as-people-leave-california-in-droves

California refugees
https://finance.yahoo.com/news/hottest-housing-market-2018-163701109.html
https://www.ktnv.com/news/nevada-sees-population-boost-as-people-leave-california-in-droves

Job Market
https://patch.com/california/encino/map-unemployment-rate-drops-in-state-in-may
https://www.sacbee.com/latest-news/article213798654.html

Foreclosure rates
https://www.reviewjournal.com/business/housing/las-vegas-foreclosure-rate-dropping-still-among-highest
https://www.realtytrac.com/statsandtrends/foreclosuretrends/nv/clark-county/las-vegas

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Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

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