Real estate is now ripe for investors.
Recent statistics show that property prices – for single-family homes – have risen by 8.5 percent in Las Vegas over the course of the last year. The degree of property price increase depends, of course, on the region of Las Vegas, but the trend generally holds.
The unemployment rate of the United States, as of May 2016, declined 0.3 percent to 4.7 percent in the April-May period (though this is far from the record low unemployment rate of 2.5 percent of May 1953).
There is an economic trend, then, toward greater prosperity – an environment that bodes well for investors. It’s for this reason, among others, that property investors are playing a greater role than ever in Las Vegas.
Flipping in Las Vegas
According to a new report, investors are flipping houses at a higher rate compared to most large US cities – though their profit margins are considerably lower.
RealtyTrec reports that just over 10 percent of home sales in Las Vegas in the first-quarter of this year were flips – well above the average of 6 percent across the United States. They report that this is the ninth highest among over 120 US metro areas.
When framed in terms of states, Nevada has the highest share of all at almost 10 percent. RealtyTrec define a trip as “selling a home twice in a one-year period”.
The average purchase price in Las Vegas – for flippers – came in at $145,000 with a median sales price of $185,000. This gives flippers a gross profit of almost $40,000 – a sizeable profit that’s likely to encourage further investment in this area.
Lower profit margins
Still, as we learned earlier, the profit margin for Las Vegas flippers is considerably less than other major metro areas. Though Las Vegas ranks ninth highest in terms of flips, their profit margin ranks 115th in the same report (28 percent profit margin).
The average profit across the major metro areas was $58,000 – a margin almost 20 percent higher than that of Las Vegas (metro areas included by RealtyTrec were those that accrued at least 50 flips in the relevant quarter).
House flipping isn’t a new phenomenon – it was rife during the property bubble of the decade preceding the last recession. It’s a tactic that was driven by easy profit margins and one that was financed by easy access to credit.
Experts consistently show Las Vegas to be a destination ideal for flipping – not least due to the local popularity of flipping-TV shows, a relatively transient population, and the established reputation of Las Vegas as a place where profits are made.