Becoming a real estate investor is one of the best ways to make money nowadays. The real estate investing business is so diverse that it offers something for any investor – whether beginner or experienced. However, if you are just starting out in real estate investments, you might feel quite overwhelmed by the numerous options.
Here, we offer you an easy way to start out in real estate investing: buying a vacation home.
When you buy a vacation home, first of all, you provide yourself and your family with a free homey accommodation for your future vacations. Second, and more importantly, you get to own a rental property as you can easily rent out your vacation home as one of the booming short-term rentals (Airbnb rentals).
In this way, you will automatically become a real estate investor as you will start making rental income during the time of the year when you rent out your vacation home.
What Are the Advantages of Buying a Vacation Home as a Rental Property?
To convince you more that buying a vacation home might be the best way to become a real estate investor, here we list the most important advantages of buying a vacation home as a rental property:
- You secure yourself and your family with a free homey experience for your vacations in your favorite location.
- You become a real estate investor without having to pay two mortgages (one for a vacation home and one for a rental property).
- You get to make money from a real estate property in the form of rental income.
- You can enter the exciting world of short-term rentals, also known as Airbnb rentals. It is only logical that you will rent out your vacation home on short-term basis – such as through the Airbnb platform – because you will actually stay in your second home for at least a number of days each year.
- You can always turn to traditional rentals if you figure out that’s the more profitable rental strategy and/or if you don’t want to spend your vacations in your vacation home anymore.
- You run a very low real estate investment risk as you are using your vacation home as a second home anyway.
- You can take advantage of tax deductions related to vacation homes. However, you should take care to study the applicable laws in your specific location carefully because tax deductions on vacation homes vary depending on the use of your vacation home: as a vacation home – or a second home – only (no renting out), as a rental property, or mixed use (both a vacation home and a rental property). To make a long story short, in order to maximize your tax deductions, you should keep the personal use of your vacation home to fewer than 15 days per year, or up to 10% of the total number of rental days.
Related: The Future of Vacation Rental Investment Properties
How About the Best Location to Buy a Vacation Home?
Now that we know how profitable and beneficial it could be to buy a vacation home to also use for short-term rentals purposes, it’s time to talk about the best location to buy a vacation home.
Whether you are a beginner or experienced real estate investor, you must know that location is of key importance to the success of any real estate investment, whether a vacation home or an investment property, regardless of the rental strategy which you go for (short-term rentals – Airbnb rentals or long-term rentals – traditional rentals).
Naturally, the best location to buy a vacation home would be a top tourism destination as you want a place where you go for holidays, right?
According to data from Business Insider, the top 5 states for tourism in the US are: California, Florida, Texas, Nevada, and New York State. This makes a lot of sense taking into consideration that these states are home to place such as Los Angeles, San Francisco, San Diego, Sacramento, San Jose, Oakland, Beverly Hills, Miami, Orlando, Tampa, Miami Beach, Houston, Dallas, Austin, San Antonio, Fort Worth, Las Vegas, Reno, North Las Vegas, Sparks, New York City, Buffalo, Albany, and Ithaca, in addition to numerous smaller towns and even villages ideal for tourism purposes.
Since we have already talked about the best places to buy a vacation home in California, the best places to buy a vacation home in Florida, the best places to buy a vacation home in Texas, the best places to buy a vacation home in New York State, and even the best places to buy a vacation home in Michigan, today it’s time to talk about the best places to buy a vacation home in Nevada.
But before we look at the specific best places to buy a vacation home in Nevada, we have to know what we mean when we say “the best places to buy a vacation home in Nevada”. Are these the most popular tourism destinations in the State of Nevada? Or are these the places with the cheapest real estate properties? Or something else? Let’s figure out.
What Makes for the Best Places to Buy a Vacation Home in Nevada?
Let’s make it clear what the “best places to buy a vacation home in Nevada” means for us. For real estate investors the best place for any investment property, including a vacation home and a rental property, is the location which will yield the highest return on investment.
There are many ways to measure return on investment in real estate investing such as rental income, cash flow, cash on cash return, and cap rate, to name a few.
Most real estate experts agree that cash on cash return is the best metric to measure return on investment for a rental property (such as a vacation home used for short-term rentals), and that’s why we will use cash on cash return to rank the best places to buy a vacation home in Nevada.
To be precise, we will use Airbnb cash on cash return because the Airbnb rental strategy would allow real estate investors to rent out their vacation home for the time of the year when they don’t use it for their personal purposes.
Related: What is a Good Return on Real Estate Investment?
The data which we will use to determine the best places to buy a vacation home in Nevada has been generated by Mashvisor’s investment property calculator, which uses traditional and predictive real estate analytics to provide estimates of all major real estate metrics for both traditional rentals and Airbnb rentals including rental income, cash flow, cash on cash return, and cap rate.
Mashvisor’s investment property calculator eliminates the need to conduct real estate market analysis to get real estate comps as well as investment property analysis to choose the best short-term rentals.
Related: Mashvisor’s Investment Property Calculator: Real Estate Investing Made Easier
However, as a beginner or experienced real estate investor, you should note that Mashvisor’s investment property calculator yields the same number for Airbnb cash on cash return and Airbnb cap rate (as well as for traditional cash on cash return and traditional cap rate) because it assumes that all investment properties are paid for fully in cash.
Let’s continue our quest for the best places to buy a vacation home in Nevada.
Are Short-Term Rentals Legal in Nevada?
Since our focus here is on Nevada short-term rentals, or Nevada Airbnb rentals (as we are looking for the best places to buy a vacation home in Nevada), before we move any further, we should look at the regulations related to the Airbnb rental strategy in the State of Nevada.
As a beginner or experienced real estate investor, you will be intrigued to hear that Nevada’s rural Airbnb hosts received the 5th highest average Airbnb rental income for non-urban locations across the whole US in 2016. Moreover, more than 340,000 people stayed in Nevada Airbnb rentals in 2016.
However, unfortunately this does not mean that the local legislation is unproblematic with respect to short-term rentals. The recent growth of Airbnb rentals has forced the local authorities to enforce tighter restrictions on the short-term rentals real estate investing business.
Indeed, short-term rentals are simply illegal in certain areas, while there have been moves in other places to impose a hotel tax on places that are rented out for fewer than 30 days. In specific, Las Vegas has strict Airbnb legal codes, including the requirement to obtain a business license, obtain a letter from the homeowner association to have short-term rentals, and pay an annual fee of $500 for each rental unit for Airbnb rentals.
Most of these legal requirements are new, and the situation is likely to change even more in the coming months or years. Thus, if you are a beginner or experienced real estate investor interested in Nevada short-term rentals, make sure to keep an eye on new Airbnb laws in the State of Nevada, and especially in the best places to buy a vacation home in Nevada.
What Are the Best Places to Buy a Vacation Home in Nevada?
Now the time has come to look at the best of the best places to buy a vacation home in Nevada. Once again, these are the places which offer the highest Airbnb cash on cash return according to computations by Mashvisor’s investment property calculator, which also operates as a cash on cash return calculator.
So, if you are a beginner or experienced real estate investor, take a look at the best places to buy a vacation home in Nevada.
1. North Las Vegas
- Median Property Price: $235,000
- Airbnb Rental Income: $2,110
- Airbnb Cash on Cash Return: 7.8%
- Airbnb Cap Rate: 7.8%
- Traditional Rental Income: $1,020
- Traditional Cash on Cash Return: 2.3%
- Traditional Cap Rate: 2.3%
Any beginner or experienced real estate investor would love to know the #1 among the best places to buy a vacation home in Nevada: North Las Vegas. The City of North Las Vegas, with a population of over 225,000 inhabitants, has many attractions to offer, which makes it a great location for a vacation home as well as for short-term rentals real estate investment properties.
According to data from Mashvisor’s investment property calculator, the median property price here is quite affordable, especially compared to other top housing markets across the US. The Airbnb rental income is high enough to generate Airbnb cash on cash return and Airbnb cap rate (in case of all cash property purchases) of 7.8%.
Now, if you are a beginner or experienced real estate investor, chances are that you have read over and over again that you should always look for a rental property with cash on cash return of 8-12% or even higher. This is the traditional view, but we should be realistic here.
Nowadays, with the recent growth of the real estate investing business in the US, it is really hard to find investment properties with such cash on cash return. Thus, any rental property with cash on cash return (and cap rate) above 5-6% should be considered very profitable, regardless of whether for the traditional rental strategy or for the Airbnb rental strategy.
So, if you are looking for option to start a real estate investing business with relatively low initial capital, definitely give North Las Vegas a thought as the #1 among the best places to buy a vacation home in Nevada.
2. Las Vegas
- Median Property Price: $296,000
- Airbnb Rental Income: $2,290
- Airbnb Cash on Cash Return: 6.6%
- Airbnb Cap Rate: 6.6%
- Traditional Rental Income: $1,420
- Traditional Cash on Cash Return: 2.7%
- Traditional Cap Rate: 2.7%
Las Vegas – do we even need to explain why the City of Las Vegas takes a top position among the best places to buy a vacation home in Nevada? We don’t think so. Of course you would love to spend your annual vacations in Las Vegas for free, while enjoying a homey atmosphere. And of course other people would love to rent your short-term rentals there for the rest of the year, instead of paying for overpriced hotels.
Any beginner or experienced real estate investor would like to know that data from Mashvisor’s investment property calculator shows that the median property price in Las Vegas is relatively affordable. Meanwhile, the Airbnb rental income suffices to bring Airbnb cash on cash return and Airbnb cap rate of 6.6%. As we have previously said, anything about 5% is actually great as a real estate investment in our world.
So, if you are looking for the best places to buy a vacation home in Nevada to turn into a rental property with the Airbnb rental strategy, Las Vegas could be your location.
3. Sparks
- Median Property Price: $348,000
- Airbnb Rental Income: $2,580
- Airbnb Cash on Cash Return: 6.0%
- Airbnb Cap Rate: 6.0%
- Traditional Rental Income: $1,350
- Traditional Cash on Cash Return: 2.0%
- Traditional Cap Rate: 2.0%
Mashvisor’s investment property calculator ranks Sparks as #3 among the best places to buy a vacation home in Nevada. The median property price in Sparks is higher than in North Las Vegas and in Las Vegas, while the Airbnb rental income is lower.
However, the return on investment in terms of Airbnb cash on cash return and Airbnb cap rate is still very good at 6.0%. So, any beginner or experienced real estate investor should consider Sparks when thinking of where to buy a rental property.
Related: Understanding Real Estate Return on Investment
Starting a real estate investing business is not necessarily easy, but it offers amazing opportunities to make money as long as you get hold of investment properties with high return on investment. A not so complicated way to start out in real estate investments is buying a vacation home, which brings many advantages to any beginner or experienced real estate investor.
One of the top housing markets across the US to buy your vacation home in is Nevada, and the best places to buy a vacation home in Nevada to become a real estate investor are: North Las Vegas, Las Vegas, and Sparks.
When you know that you are ready to explore specific real estate investment opportunities in the best places to buy a vacation home in Nevada, make sure to use Mashvisor’s investment property calculator to choose the best real estate investment property among endless opportunities in the US. After all, Mashvisor’s investment property calculator is the best friend to any beginner or experienced real estate investor in the US.