The other day, I was visiting with the loan officer at a nearby bank branch. He had an interesting flier on his desk. “The joy of working for a Fortune 500 company is that they send all kinds of marketing materials, but this is all I need,” he told me. This flier had a little chart showing how over the course of years, your rent checks add up.  Even a modest sum like $600 per month adds up to $72,000 over only ten years, and $216,000 over thirty years! Boost that to $1000 per month, and you have paid $120,000 in ten years and $360,000 in thirty years.

Now make no mistake: renting is still the best option for a lot of people.  For example, if you only expect to be in an area for a year or two, renting is the way to go.  There are also people whose credit or money situation dictates that they must rent. I have nothing against renting, renters, or apartments.

However, we have a situation here in Vegas where renting is turning out to not be cost effective for many people.  Almost 2 weeks ago, I wrote about the 800 condos currently available for less than $100,000. Today, I ran the numbers on single family homes.

Despite the fact that Vegas home sales were up substantially in 2008 compared to 2007, we still have roughly 17,300 single family homes available today. Of those, 1,930 are priced at $100,000 or less. Only one was in an age restricted community. A total of 1869 are actually in the Las Vegas Valley;  the remainder are in outlying areas such as Pahrump, Mt. Charleston, or Boulder City. 

When I talked about condos, I eliminated the ones that were under $50,000 from consideration: they almost certainly need a lot of work to be habitable, and they almost universally won’t qualify for FHA financing. When we do that to our pool of single family houses here in the Valley, we find 1,664 homes priced between $50,000 and $100,000.

I wanted to know more specific information about these houses, so I narrowed the search to homes in the Northwest part of town for the sake of simplicity. There were almost 60 of them. It turns out that these houses ranged from roughly 900-1800 square feet, and sat on lots that measured roughly 1700-8000 square feet — a huge range. The vast majority were 2, 3, or 4 bedroom homes, but there was one 5 bedroom home. All had 2-3 bathrooms. Most had garages. There were even 2 that had swimming pools. Sure, it’s a safe bet that they need paint and carpet and maybe some repairs. 

Interest rates are still pretty close to what they were at the first of the year. We are still talking about being in an $80,000 mortgage for less than $500 per month, with perhaps less than $3000 in out-of-pocket closing costs — which can even be a gift from a family member — and a nice juicy tax credit for first time buyers. If we look at a $150,000 mortgage, the principal and interest is still roughly $850, well within the budget of someone currently spending $1000 per month in rent.

If you are planning on staying in the Valley a few years, and you are spending more than $600 per month on rent, you owe it to yourself to see if one of these homes might be right for you. If you are an investor, you have a great chance to either “fix and flip” or put together a portfolio of rental properties. 

That knocking sound you hear? It’s opportunity. 

To learn more about these homes, evaluate your housing needs, or discuss a purchase, please contact Bridget Magnus. Click the “Contact Me!” link or just call the number at the top of this page today.