As a real estate investor, you should have a set of investment goals that are yours alone. While there are many tried and true strategies to investing in real estate and making money from it, every investor is on their own path. That’s one of the things that makes our industry so interesting.
In Las Vegas, it’s especially important to be prepared. This is a competitive, fast-moving market that’s found in a thriving and diverse city with a strong local economy and a growing population. You’ll have to come to the Las Vegas real estate market knowing what success looks like for you.
For many years, flipping homes had a moment. Everyone was buying, renovating, selling, and repeating. This was the way of things. It was especially profitable in Las Vegas, where older properties and distressed homes could be bought for cheap. After a few key renovations and some cosmetic upgrades, that property was brand new. And worth a lot more.
Maybe you’ve been flipping homes for years. Maybe you’re new to real estate investing and wondering if this is a profitable way to enter the market.
We’re taking a look today at the data around flipping houses in Las Vegas and whether it’s the money-maker you think it is.
Deciding to Flip or Not to Flip
If you want to approach the possibility of flipping houses in Las Vegas, there are a few things you need to know about yourself:
- The capital you have available
- Your tolerance for risk
- Your general investment goals
- Your timeline
It’s especially important to understand the market as well as its current and future performance. That’s going to impact whether you make money, lose money, or break even.
Las Vegas has seen a significant increase in home prices over the past few years, making it an attractive option for real estate investors, whether you’re investing in flipping or you’re buying and holding. However, with this growth comes increased competition and potential risks.
As you’re thinking about whether you want to be the type of investor who buys a property, improves it, and then re-sells it, or if you want to be the type of investor who buys a property, rents it out, and continues improving it so that it increases in value over the long term, you need to answer some very important questions, such as how quickly do you want to make a profit? How much capital do you have to invest in both the purchase of a property and its renovations? Do you have a reliable set of vendors and contractors who can get high-quality work done in your intended timeline?
Most importantly, is the market on your side? Market factors are difficult to avoid anytime we’re talking about real estate. This will be one of the largest profit drivers. Or, one of your largest impediments to making the money you want to make. The market and its strength or weakness can help you or it can hurt you.
Data Around Flipping Homes in Las Vegas
Roll back to 2005 and 2006, and you may remember that everyone was flipping houses. Las Vegas was an especially ripe market for it. Flip rates were startlingly high in Las Vegas as well as markets throughout Florida and even in Phoenix. Flip rates in our market were close to 20 percent.
We all know what happened after that, and we all remember that the market was especially hit hard in Las Vegas, where home values plummeted, making it impossible for a lot of investors to even hold onto their properties. This created an opportunity for investors who wanted to flip. It was easy to pick up foreclosed homes at a steal, and then turn them into profit once resold when the market improved.
The trend picked up again between 2020 and 2022, where the flipping rate hovered between 8 percent and 12 percent. Lately, though, there has been a decrease in flipping, and that’s mostly due to the rising costs associated with buying a home. Maintenance and renovation costs are much higher than they were, too, shaving off a lot of that profitability that made flipping so attractive.
High interest rates over the last year or two have also kept a lot of buyers out of the market. You could produce an attractive flip, but if there aren’t enough buyers in the market, you’re not going to sell that investment.
That doesn’t mean it’s impossible. Plenty of investors are making it work, especially investors who come from more expensive markets, such as San Francisco, Los Angeles, Seattle, and New York. They have more capital available, and those resources make house flipping a lot easier to accomplish.
Here are some statistics that will give you something to think about. These are taken from the United States Census Bureau, data-gathering sites like ATTOM, and real estate sites like Redfin and Zillow. All of these numbers are current as of August, 2024.
- Median Home Sale Price: $451,400 (+8.7% Year-Over-Year)
- Number Of Homes Sold: 3,944 (+14.8% Year-Over-Year)
- Median Days On Market: 39 (-14 Year-Over-Year)
- Number Of Homes For Sale: 13,223 (+0.5% Year-Over-Year)
- Number Of Newly Listed Homes: 4,721 (+19.2% Year-Over-Year)
- Months Of Supply: 2 (0 Year-Over-Year)
- Homes Sold Above List Price: 24.4% (+2.1 Points Year-Over-Year)
- Homes With Price Drops: 26.5% (+5.0 Points Year-Over-Year)
- Foreclosure Rate: 0.104% (1 Out Of 961)
As an investor, these numbers might look just right to you. Or, you might take a step back and wait for a more lucrative time to begin flipping properties in Las Vegas.
It Can Be Profitable: Arguments For and Against Flipping Houses in Las Vegas
Here’s how to decide whether or not it’s for you.
- Pros of Flipping Houses in Las Vegas
- Attractive Market Conditions
The Las Vegas real estate market is characterized by high demand and limited supply, creating favorable conditions for house flippers. Mortgage rates are coming down. You may have a larger flow of buyers looking for upgraded properties, investors can capitalize on this demand to sell renovated homes at a profit.
- Diverse Neighborhoods
Las Vegas offers a variety of neighborhoods, each with its own ability to attract or dissuade flippers. Whether you’re targeting luxury properties or more affordable homes, there’s a neighborhood to fit every investor’s strategy. Identifying the right area to invest in can significantly impact your success.
- Potential for High ROI
Flipping houses in Las Vegas can yield a high return on investment (ROI), especially if you acquire properties below market value and execute cost-effective renovations. By adding modern amenities and appealing designs, flippers can enhance property value and attract potential buyers.
- Cons of Flipping Houses in Las Vegas
- Market Volatility
While the Las Vegas real estate market has shown resilience, it’s not immune to fluctuations. Economic downturns or changes in interest rates can impact buyer demand and property values, posing risks for investors who don’t anticipate these shifts.
- Home Values and Prices are High
It’s not as easy to find a fixer upper that comes with a dramatically low price tag. They’re out there, but they’re harder to find. Your profit margin may be sinking.
- Work and Expertise
Navigating the market alone can be a challenge if you don’t have the right network working with you. To effectively and profitably flip a home, you’ll need good relationships.
Key Considerations for Flipping Houses in Las Vegas
Let’s say you decide to do it.
Here’s what you need to know before you get started.
- Conduct Thorough Market Research
Understanding the dynamics of the Las Vegas market is essential. Analyze recent sales data, study neighborhood trends, and assess the demand for specific property types to make informed investment decisions.
- Assess Property Potential
Evaluate potential properties based on factors such as location, condition, and renovation costs. A thorough inspection and cost analysis will help you determine the viability of a flip and identify properties with the greatest potential for profit.
- Build a Reliable Network
Success in house flipping often hinges on having a strong network of contractors, real estate agents, and industry professionals. Building relationships with reputable partners can streamline the renovation process and ensure quality work.
- Prepare for Unforeseen Costs
Budgeting accurately and setting aside funds for unexpected expenses is crucial. From hidden structural issues to delays in renovations, unforeseen costs can impact your bottom line if not accounted for in advance.
Flipping houses in Las Vegas can be a rewarding investment strategy for real estate investors willing to put in the time and effort to understand the market and manage risks effectively. By leveraging the city’s thriving real estate market and implementing strategic investment practices, you can position yourself for success in this competitive environment.
So to answer the question at the title of our blog, yes, flipping houses can be profitable in Las Vegas, as long as you’re doing it right. Start by connecting with local experts and conducting thorough research to make confident, informed decisions.
We can help. Please don’t hesitate to contact us at New West Property Management. Our team expertly manages residential rental homes in Las Vegas and throughout Clark County, including Henderson and North Las Vegas.
