Multifamily

Investing in Multifamily Properties in Reno, Nevada

The Biggest Little City in the World is Getting Bigger

The Northern Nevada real estate market is experiencing a strong housing demand, which is squeezing the available housing supply while driving up home prices. Housing availability in Nevada is tight, and prices keep increasing.

Over the past decade, Reno is one of the cities whose housing market has experienced significant increases in home prices and demand. Reno is one of the most unaffordable small-to-mid-sized metros in the country with single-family home prices among the highest in the nation.

California Investors See Opportunity in Reno

While Reno plays second fiddle to Las Vegas, several positive things are happening in America’s Biggest Little City. The Reno, NV real estate market is growing largely in part because of a thriving tourist market, a large student population seeking rental properties, and an influx of investments from investors in California.

California buyers have played a massive role in the Reno, NV market, especially during the pandemic as many people moved out of the golden state, bought properties in Nevada and simply worked from home. San Francisco Bay Area tech workers, for example, were able to sell their $1.5 million homes and purchase a home in Reno for half the cost and twice as much living space.

Many of these California buyers, particularly from Northern California and locales closer to Reno, have been purchasing properties in Nevada with cash.

Across the state, an increasing number of cash buyers — including investors, investment pools, larger corporations and wealthy buyers from out of state — are driving up the pressure and squeezing out would-be purchasers reliant on loans and mortgages. Between Q1 2020 and Q1 2021, cash purchases in Washoe County, where Reno is located, increased 42%.

These cash purchases on investment properties are a significant factor in increasing home values. In January 2022, single-family homes in the Reno-Sparks area sold for an average of $580,468 – a 30% increase YOY. In the city of Reno, similar SFR properties sold for $625,000. If those numbers sound high to you then you’re not wrong: Reno’s single-family home prices are among the highest in the nation.

Inventory availability in Reno, Nevada has dropped 11% YOY in a market that already had considerable inventory decreases the year before.

Given these trends, it’s no surprise that Reno real estate investors are starting to shift their focus away from investing in SFR properties to investing in multifamily properties. With single-family homes becoming less affordable, multifamily construction rates have skyrocketed – increasing 44% YOY.

Northern Nevada continues to be a hot topic among multifamily real estate investors as more and more buyers are taking a hard look at investing here. While housing stats may seem bleak in Reno, plenty of opportunities for real estate investors interested in the city’s multifamily and new construction markets exist.

Multifamily Is King

Nevada has become a hotbed of multifamily investing activity, and Reno is a standout example. The city has been growing steadily over the past 10 years. The rapid growth has led to a sharp increase in multifamily demand.

Multifamily rental growth has increased 15% YOY, which is higher than the national average. Occupancy has increased from record highs of 96% in December 2020 to 97% in December 2021 and has stayed at this mark since.

Reno has become a hotbed for multifamily activity, but there aren’t a lot of deals being closed on existing properties. As a result, the few deals that take place have higher bids with multiple offers coming in over asking price. As a result, investors have adjusted their investment strategies to gain a foothold in the Reno-Sparks market.

Multifamily real estate is hard to acquire, so many investors have had to pivot from purchasing newer, larger stabilized properties. Instead, investors are looking to add to their real estate investment portfolios with value-add class B and C multifamily properties in the 50-to-100-unit range. Investing in these types of multifamily properties allow investors to create value through renovation, financing, and lease recapture.

What’s Next for Reno’s Real Estate Market?

Reno has become a city to watch in Nevada. The Biggest Little City is growing and is now home to 250,000 residents. The metropolitan area is even larger, encompassing 500,000 people including the suburbs. This results in ample real estate investment opportunities with real estate appreciation rates that are sky-high at an annual rate of 3.05%.

Experts believe these trends are going to grow over the coming years. Earlier this year, Business Insider ranked Reno in the list of the top 15 “hottest new places to live” and collected data from real estate agents across the U.S. who all placed Reno right near the top.

While inventory in Reno, Nevada might be harder to find, investors with strong real estate investment strategies can profit if they jump on the right opportunity.

If you want to move quickly, don’t work with just any private lender. You need the right lender capable of and experienced in financing Nevada investment property loans. Investors have several options when it comes to Nevada hard money lenders, but Lima One Capital has the best suite of multifamily loans for investors.

As experienced multifamily loan lenders, we’re able to move quickly when you find the right opportunity. Whether you’re interested in a value-add multifamily loans, a multifamily bridge loan, permanent multifamily financing, or other residential real estate investing, we’re here to help. Contact us today to discuss your next deal, or if you have a deal in hand, you can speed up the process by applying now.