Buying a vacation home in Nevada is a lot different compared to buying a vacation rental property in other states. The complicated relationship between Nevada and short-term rental properties makes navigating the Nevada housing market slightly more difficult.
If you’re a real estate investor and you’re looking at the Nevada real estate market for your next rental property investment, you need to read this first before you proceed.
Important Things Investors Should Know When Buying a Vacation Home in Nevada
Typically, when people talk about Nevada, the very first thing that comes to mind is obviously, Las Vegas. The Silver State is primarily associated with Sin City and all the other gambling spots nearby.
However, Nevada has a lot more to offer than its energy and flashiness. It is also home to a very vibrant and dynamic real estate market that investors find quite attractive. In fact, Las Vegas is one of the country’s top premier real estate locations mainly because of its tourism. In Clark County alone, real estate property prices are driven by Vegas’ leisurely lifestyle and tourism features.
But more than just tourism, one of the reasons why Nevada is a great state for investors to put money in its mining industry. NV is the world’s fourth-largest gold producer with more than 2,000 mining-related businesses that have made the state their base of operations. Because of the vast size of Nevada’s mining industry, job opportunities abound which has helped bring in people from outside the state who are looking for a good and stable job. The influx of people has created a constant need for housing which offers rental property investors lots of room to grow in.
The Clark County Complication
While tourism is one of Nevada’s strengths, one would assume that vacation rental properties such as those used for Airbnb and other short-term rental platforms would be widely accepted throughout the state.
Despite attracting millions of visitors and generating billions of dollars on tourism alone annually, Nevada has stricter regulations on short-term rental properties. Plenty of Nevadans, especially those who live in Vegas, believe that property values in the area have fallen significantly because of the different disruptions introduced by vacation homes.
Cases of disruptive behavior from parties, illegal drug use, and even prostitution have spiked since tourists started taking advantage of vacation homes for debauchery. Because of this, Nevada is one of the worst states in the US where the crime rate is involved. For instance, the state’s property crime rate is 8% higher than the national average. State and local law enforcement officials believe this is a result of the behavior of tourists in Las Vegas, Reno, and other gambling areas.
Consequently, the local government issued an ordinance that made Airbnb rentals illegal. Well, at least under certain conditions.
Essentially, the reason for the passing of the ordinance was mainly due to the county not being able to fully regulate and inspect these types of properties to ensure they are operating according to certain commercial operations standards. They are also concerned that the continuing operation of vacation properties in the county will inflate other real estate rental properties which will make renting out of reach for its residents.
At the time of this writing, Assembly Bill 363 has already been passed by the 2021 Nevada Legislature that will force Clark County to legalize and regulate vacation rentals starting July 1, 2022. And while vacation property owners may find hope in this bill, they should celebrate just yet. It has several proposed parameters to protect Nevada’s permanent residents.
Here are a few things that investors and property owners should know about the bill:
- It is not the first local bill to address short-term rental property issues;
- It is accompanied by a certain conceptual amendment including multi-family dwelling caps, restrictions on distance between properties, and other limits;
- It is designed to prevent excessive noise and ruckus behavior; and
- It could give the state and local governments certain tax benefits.
Why Should You Consider Buying a Vacation Home in Nevada?
Despite the different complications in the Clark County area, someone who is looking at buying a vacation home in Nevada will never regret making that decision. Other Nevadan counties offer investors promises of remarkable returns. It is still possible for a rental property owner to make a good Airbnb income.
Here are a few reasons why an investor can take a gamble with Nevada:
It welcomes millions of visitors annually.
Vegas isn’t the only attraction that Nevada has to offer. Sure, nearly 75% of people in Nevada live in the Vegas region because it is the state’s tourism capital but there are lots more that the Silver State has to offer. Tourism isn’t solely concentrated in The Strip. Its natural landscape has its fair share of fans which make up a fairly large chunk of its tourism pie.
Real estate is almost always a good alternative investment regardless of state.
Regardless of location, real estate is a great investment alternative for those who want to diversify their portfolio. This acts as a great hedge against inflation since it has a very low correlation to stocks and bonds. When things go sideways in the stock market, making money in real estate will be determined by the demand for property, especially in areas where the population growth rate is constantly rising.
It is one of the best states to own rental property.
Nevada, despite its stricter short-term rental regulations, is still one of the best states for landlords and property owners.
- It has a thriving economy to which tourism and mining are both large contributors. Both industries are constantly hiring which makes the state attractive to job seekers from out of state.
- It has a steady population growth rate due largely to the job opportunities in the state. As in-migration continues to rise in Nevada, the demand for quality housing also increases. Even if you’re not buying a vacation home in Nevada, turning a property into a long-term rental will still enable an investor to get a good Airbnb return on investment.
- Nevada is a strategic business location in the region that attracts all sorts of travelers. Rental properties may be illegal (for now) in Clark County but surrounding NV counties host countless thriving properties that generate decent Airbnb rental income for their owners.
- No corporate or personal income taxes. Need we say more?
- Despite the short-term rental industry status in The Strip, resident Vegas property owners can house hack their way into a thriving Airbnb business.
In spite of the restrictions, rental property owners can still make great money in Nevada. The key is knowing the local legislations on short-term rental properties before buying a vacation home in Nevada.
Once you know the corresponding laws in a county and city of your choosing, you can start searching for the right property that aligns with your investment goals. The great thing about this is platforms like Mashvisor can make property location a breeze for investors.
Its Property Finder tool allows users to find promising Airbnb properties to match their investing standards. This is especially great for out-of-state buyers. They no longer have to fly in and out several times to manually search for potential rental properties. All they need to do is log on to Mashvisor and let their fingers do the work for them.
Mashvisor also has a Real Estate Heatmap which shows users the condition of the different Nevada markets. It reflects how well or poorly a specific area is performing which gives investors a better idea of which areas to avoid and which ones to consider. Users can zero in on financially rewarding markets and access updated and accurate data like listing prices, rental incomes, occupancy rates, cash on cash returns, and other important details.
Buying a vacation home in Nevada requires investors to perform extensive due diligence, especially since the state has stricter short-term rental regulations.
What Are the Top Places to Buy Vacation Rental Properties in Nevada?
Given Nevada’s stricter short-term rental regulations, especially in Clark County, it is still a very promising place for vacation property owners. Buying a vacation home in Nevada is still a viable option for those who want to generate some additional positive cash flow. Investing in real estate properties and using a sound short-term rental strategy could still give an investor handsome returns in Nevada.
Having said that, here are eight of the best markets for rental property investors in the Silver State:
1. Carson City, Douglas
- Median Property Price: $733,160
- Average Price per Square Foot: $330.59
- Days on Market: 57 days
- Listings: 43
- Airbnb Occupancy Rate: 71.51%
- Airbnb Rental Income: $4,539.05
- Airbnb Daily Rate: $245
- Airbnb Cash-on-Cash Return: 5.04%
- Price-to-Rent Ratio: 13.46 (low)
- Walk Score: 79
2. Henderson, Clark
- Median Property Price: $735,435
- Average Price per Square Foot: $306.67
- Days on Market: 75 days
- Listings: 408
- Airbnb Occupancy Rate: 55.56%
- Airbnb Rental Income: $4,085.64
- Airbnb Daily Rate: $255
- Airbnb Cash-on-Cash Return: 4.11%
- Price-to-Rent Ratio: 15 (medium)
- Walk Score: 27.44
Despite belonging to Clark County, Henderson is one of the most promising Nevada cities on our radar where rental property investors can thrive. The city has imposed certain reasonable conditions on vacation home rentals which are generally easy for landlords and owners to comply with.
3. Incline Village, Washoe
- Median Property Price: $1,813,925
- Average Price per Square Foot: $823.6
- Days on Market: 92 days
- Listings: 322
- Airbnb Occupancy Rate: 53.93%
- Airbnb Rental Income: $4,094.28
- Airbnb Daily Rate: $289
- Airbnb Cash-on-Cash Return: 1.13%
- Price-to-Rent Ratio: 36.92 (high)
- Walk Score: 67
4. North Las Vegas, Clark
- Median Property Price: $424,965
- Average Price per Square Foot: $227.90
- Days on Market: 73 days
- Listings: 191
- Airbnb Occupancy Rate: 70.66%
- Airbnb Rental Income: $4,323.94
- Airbnb Daily Rate: $213
- Airbnb Cash-on-Cash Return: 6.78%
- Price-to-Rent Ratio: 8.19 (low)
- Walk Score: 62
The North Las Vegas City Council passed an ordinance that allows all forms of short-term rental businesses under specific conditions that owners should comply with. This is why knowing the local short-term rental property laws in an area is very important.
5. Pahrump, Nye
- Median Property Price: $432.861
- Average Price per Square Foot: $210.42
- Days on Market: 58 days
- Listings: 67
- Airbnb Occupancy Rate: 62.87%
- Airbnb Rental Income: $2,864.78
- Airbnb Daily Rate: $124
- Airbnb Cash-on-Cash Return: 4.03%
- Price-to-Rent Ratio: 12.59 (low)
- Walk Score: 51
6. Reno, Washoe
- Median Property Price: $626,861
- Average Price per Square Foot: $387.67
- Days on Market: 78 days
- Listings: 368
- Airbnb Occupancy Rate: 55.52%
- Airbnb Rental Income: $3,114.9
- Airbnb Daily Rate: $184
- Airbnb Cash-on-Cash Return: 2.94%
- Price-to-Rent Ratio: 16.77 (medium)
- Walk Score: 12.22
Reno is one of those cities that makes buying a vacation home in Nevada make sense to a lot of investors. Although it is greatly overshadowed by Vegas, the Biggest Little City has its own charm and personality that are attractive to tourists.
7. Sparks, Washoe
- Median Property Price: $547,135
- Average Price per Square Foot: $294.54
- Days on Market: 46
- Listings: 81
- Airbnb Occupancy Rate: 59.4%
- Airbnb Rental Income: $3,768.96
- Airbnb Daily Rate: $223
- Airbnb Cash-on-Cash Return: 4.53%
- Price-to-Rent Ratio: 12.1 (low)
- Walk Score: 82
8. Stateline, Douglas
- Median Property Price: $1,338,643
- Average Price per Square Foot: $652.5
- Days on Market: 99 days
- Listings: 209
- Airbnb Occupancy Rate: 61.15%
- Airbnb Rental Income: $5,399.1
- Airbnb Daily Rate: $295
- Airbnb Cash-on-Cash Return: 3.17%
- Price-to-Rent Ratio: 20.66 (high)
- Walk Score: 99
Despite certain short-term rental property regulations, investing in a Nevada property is still a profitable venture for any investor. Buying a vacation home in Nevada can generate a good passive income for rental property owners provided they exercise prudence (and perhaps, a little creativity).
And while the Silver State is a generally risk-free and safe investment option for real estate investors, being well-informed is the key to making rental property investment in the state a success. Know the different county laws surrounding Airbnb rentals and get the right housing market information from sites like Mashvisor.
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