Builder: Las Vegas market ripe for rental house development
With his new rental house project in North Las Vegas, developer Randy Bury is betting on an industry that exploded in growth from the last recession and seems to be holding up during the current one.
Bury, founder of Moderne Communities, is building a tract of 185 single-story rental homes called Moderne at Centennial. He broke ground this past February, shortly before the coronavirus pandemic turned life upside down, and expects tenants to start occupying homes in February 2021, he told the Review-Journal.
The roughly $40 million development has duplexes and freestanding houses. None have attached garages, though all have backyards, he said.
Las Vegas’ rental house market grew rapidly after the real estate bubble burst more than a decade ago, as investors swooped into Southern Nevada, ground zero for America’s housing crash, and other regions to buy cheap homes in bulk to turn into rentals.
The apartment market also expanded after the Great Recession, as developers have been packing the valley with new complexes for years. A blend of the two ventures — newly built single-family-housing rental projects — appears rare in Southern Nevada, though it has been growing in popularity in the U.S.
‘Vegas is perfect for this’
Bury, a veteran homebuilder, lives in Arizona but plans to move to a home in his North Las Vegas project. He said other developers have been doing so-called build-to-rent projects in Phoenix and indicated the market was getting crowded.
He also noted Las Vegas has a transient population, with people moving here or away all the time, and said renters might want something other than a typical garden-style apartment complex.
“I think Vegas is perfect for this,” he said.
At least one other company is developing tracts of single-family rental homes in Las Vegas. American Homes 4 Rent, a dominant landlord in Southern Nevada and other markets, opened a 34-house rental project in the Spring Valley area in May, built one in the south valley with 35 houses, and has more in the pipeline.
Betting on rentals
Billionaire B. Wayne Hughes helped launch American Homes 4 Rent in 2011 after the U.S. housing bubble burst and while the economy was badly battered. It was a ripe time for rental investors.
Home prices were cheap, and widespread foreclosures, short sales and bankruptcies had made it all but impossible for many people to buy a place.
As of Sept. 30, American Homes owned more than 1,000 single-family houses in the Las Vegas area, a securities filing shows.
Invitation Homes, an even bigger landlord, was formed in 2012 by New York financial giant The Blackstone Group. As of Sept. 30, Invitation owned nearly 3,000 rental houses in the Las Vegas area, according to a securities filing.
The coronavirus outbreak has kept people home and away from crowds for fear of getting infected, devastating Las Vegas’ tourism-dependent economy and sparking huge job losses in the valley. Still, if Invitation’s local portfolio is any measure, Southern Nevada’s rental house market has not spiraled down with the economy.
In Las Vegas, Invitation’s average occupancy in the third quarter was 97.8 percent, and it fetched an average monthly rent of more than $1,700, the company reported.
Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.