After considerable research in late 2016, I was convinced moving to Vegas was worthy of taking big action on, so in early 2017 I moved my family out here. We closed on a house that my wife had not seen yet, and we had no jobs lined up. Some people probably thought I was silly, some thought risky, 18 months later I’m ready to recap on how things have turned out and what the future looks like from here out.
First, it’s important to know why we looked to move in the first place. We were in a small town in the southeast part of America, in North Carolina. Metro population of about 400,000, little to no growth and few opportunities. My wife and I had lived there a while, and it was a good place for us to meet, grow, and take some risks, but at this point, we wanted to spread our wings and capitalize on some massive new opportunity. So we wanted a growing city, somewhere warm, somewhere with low cost of living, and a place where we could start new careers easily. I had been coming to Las Vegas for years (to party!) so we had some small social connections to this town already and we had visited tons of times, just so happened that it was primed to be a fantastic economic location as well.
As a real estate investor, it was a bit tricky for me to navigate this move. I wanted to buy a primary house to live in (which normally I consider a lousy investment) but I was convinced the market out here would appreciate greatly, and I wanted to be a part of it. Since neither, I or Nikki had jobs lined up, and my passive income wouldn’t yet allow a bank to finance the amount of house we wanted to buy we put her mother on our loan to show income. I flew out alone one weekend to check on 3-4 houses, we made a good offer on one, we set to close a few weeks later so we packed out all our stuff and drove 3300 miles across the country.
We closed on a great little house for $223,000 in February of 2017. I came out of pocket ~$12,000 for closing costs and a 3.5% down payment. A few weeks later we both found great jobs and we were able to get paychecks before our first mortgage was due. SO EASY. In only 18 months the house value has increased dramatically to $270,000!! That’s a $47,000 increase in value just for being here! Also, on the $12,000 I invested that makes a return of 25%! This summer we will refinance our house to take the MIL off the loan and since the loan amount has increased to an 80% LTV I can drop the PMI off as well. The house looks to continue to increase in value over the foreseeable future and perhaps might be my most profitable property yet.
If you’re stuck in a town with no appreciation or opportunity, Las Vegas might be a good place to check out. Now, it’s become MUCH more competitive since we moved here, further solidifying my top-notch decision-making skills, but that doesn’t mean the all the opportunity has been extracted, actually I think Las Vegas has momentum that seems unlikely to slow for quite a while.
Let’s go through this list in a sort of “decreasing order of potential impact”:
Climate change was a big one I considered and still do. I didn’t list this just for laughs, and while some people may consider it controversial, it’s important to consider the facts.. As the climate changes threats on the coast will increase, especially the east coast and costs associated with increased weather events will have to be paid, both state costs and insurance costs will go up. We were caught pretty badly in 2016 with Hurricane Matthew, which did $25,000 of damage (to my $60,000 house!) and for me that was a tipping point, we moved shortly afterward. In 2017 the Hurricane season was much worse, I was glad not to be there. While this example by itself is absolutely anecdotal, it’s still part of a cogent long-term analysis. The coasts are going to more expensive, and higher risk to live on. Storms will get worse, water levels will rise, costs of repair will burden the states (and people) who are late to adapt. Over the next few decades as specific instances occur in larger frequency people will start to move inland and upwards. I chose Nevada, anywhere far from a coastline would have been acceptable.
Look at the financials and compare states who have implemented a lousy economic policy which has made them bankrupt (Kansas!) and compares them to states with progressive Marijuana legalization programs that are making money hand over fist! We closed in early February, and Marijuana went on sale in July, but the law had changed back in January so I KNEW it was coming, and I KNEW it would have a significant and sweeping impact on the state’s financials. Income from this new economic industry will allow the state to fund improvements in infrastructure, education, and more. Now eventually all states will legalize, but I want to make money right now, and this is easier in a state that can afford to reinvest. It’s important to consider the margin between states and their respective economies. Not all states grow at the same rate, just like your business responds to how you invest so do state governments. Get to state that encourages new industries and reinvests profits to benefit its citizens.
Population growth forecasts for Las Vegas are massive. Metro area population numbers in 2017 were around ~2 million and are projected to jump to ~3.2 million over the next 10 years. This is a lot of people! Where the people go, so does the opportunity. These people will all need jobs, things to spend money on, and places to live. This will further increase home appreciation but also job opportunities will get more competitive, this might be bad if you’re a talentless slacker, but if you like capitalism this will only serve to benefit.
For weeks before we closed on our house I was watching the news about the potential deal for the Raiders to move to Las Vegas. I don’t watch sports at all, nor do I think the stadium itself or the franchise coming here will have a much direct positive financial effect on the city. However I do think the cultural effect it will have on this city will be substantial, and I believe regardless of how things actually shake out, the perception alone will cause beneficial economics worth capitalizing on. I also knew that once the Raiders deal closed, the market wouldn’t go up overnight, it would take time. That said, the earlier you can get in, the better, so while we were bidding on houses I was also watching the news about this potential deal. Towards the end, I was VERY convinced this deal would move forward so I did as well. I ended up closing on my house about 3 weeks before the Raiders closed. For anyone who sees this as a benefit they can’t partake in, remember the stadium won’t be complete for another 2 years. That leaves a lot of time left to get in early!
I wanted to consider the low cost of living in Nevada (who wouldn’t?). One thing I will say about small towns, they are cheap to live in. Nikki and I had gotten spoiled living in a town where we can buy houses for $50K, property taxes and utilities are low, cost of living inflation is minimal to none. This isn’t without its negatives as well, in fact, this is a symptom of the negatives I spoke about earlier. A town with little opportunity, no growth, not much demand to go or live there certainly can’t be expensive as well, these things go hand in hand. So a concern of ours when moving was that our cost to live would increase as the opportunity did, this is correct thinking, but it’s not a direct correlation. Meaning, different markets have a different ratio of potential income to cost of living. California for example on average can produce far higher than average salaries, but the cost to live is exponentially higher than even that. We didn’t’ want this, we wanted to keep the margin between increased income and increased cost of living to be a minimum. Turns out that cost of living in Nevada is REALLY low! Nevada is one of only 5 states with absolutely NO state tax, Nevada utilities are cheaper than you would think, property taxes are really low as well, and There are 5 states without a state tax, Nevada is one of them. The cost of living change for us was mostly in housing and transportation. Houses here are just more expensive, and by a notable margin (Though they are much newer and nicer so we were happy to pay up!). We also found when we moved here that auto insurance rates are the highest in the country, so that cost went up slightly as well, neither have made us need to adapt or change our habits. The change in the cost of living was unremarkable if not altogether noticeable. At the same time, we get paid much more than back east, so in essence, we moved to a city with vastly more opportunity, and we get paid much more to have a better life than we did previously. Easy choice
Have you seen the data of movement out of California? California is a pain in the ass! This is no secret, and it will have a significant impact on the Las Vegas economic future. I’m certainly not saying that people are moving out of California in droves to move here, but rather the cost/benefit ratio of living in California is trending downwards, especially at the low end. It’s just more expensive to live there, and it’s only going up. As this happens people will move, and where will they want to go? How about a place that equivalent in weather, has a huge swing in the cost of living for similar lifestyle, has grown and is a well-established city? This is why Las Vegas, Phoenix, Miami, and others are topping lists for migration, now which one is closest?
Late last year the federal government significantly changed the tax law, and one aspect of this was eliminating the ability to write off property taxes for high dollar houses, it also eliminated the ability to write off state and local taxes. Now for most people they won’t notice really, the standard deduction was increased enough to offset this change for most people, but not everyone. People with high taxes (state, local, and property) are going to get pinched and it’s going to be expensive. Maybe they will stay and take it, maybe they won’t, certainly, some will do both. If only there was a place ~5 hours from LA that had similar big city amenities with low property taxes, low housing costs, and no state tax……….
I somehow missed this information in my analysis but shortly after moving here we found out about massive strip investments currently ongoing. One I did know about was the Raiders stadium, but a few new casinos in the works, the gorgeous T Mobile arena, Richard Branson just bought the Hard Rock Hotel and is converting it to a Virgin hotel, and more. Total investment will be about 10 Billion and the casinos should be complete in the next year or two. You don’t have to do a lot of market research in an area to see it’s future, instead look to the market research that was done by someone with more resources and experience. Simple explanation, I don’t have to speculate if Las Vegas is a good investment, smarter people than me just recently sunk 10 billion into it, so I’m going to assume they didn’t do it on a whim.
Las Vegas is very proactive about infrastructure. I’ve lived in a few cities in my days, and I’ve never been to one as universally afflicted with construction traffic like Las Vegas. Now, this isn’t to say traffic in Las Vegas is bad, the opposite actually there is hardly any traffic considering the size and population. So why is everything under construction when it doesn’t seem needed? The city is proactive about the incoming population, and they are not screwing around. We have great new, clean, wide roads that handle tons of traffic and will only improve thanks to the foresight and capital injection into infrastructure that is not reactive, but proactive.
Have you heard of the Golden Knights? I’m certainly not one to follow sports, I don’t think I’ve watched an entire sporting event in entirety in my whole adult life. I really could care less, but like the Raiders I absolutely care about the cultural and economic impact this has on my city. The Golden Knights are a hockey team that sprang out of nowhere with this being their first year playing, and they made it to the super bowl. To say that this was a local cultural phenomenon is an understatement, people are losing their minds. While I would never argue that this has direct economic benefit, it does change the cultural outlook of the city. Just like the Raiders coming, I think the impact will be indirect. People will look at this city differently, less as ‘sin city’ and more as a large metropolitan city with lots of opportunity, amenities, and it just so happens to be the entertainment capital of the United States. This bodes well for our future.
Feel like it’s too late to move to Las Vegas and you missed the rush? It’s certainly harder than it was 18 months ago. Houses are gone inside of 72 hours and going for well over asking price now, it’s a brutal fight to buy an average home right now. So where else is there to go?
Denver – Denver is a great choice! When I started my search it was my first choice, but it’s also on the upswing already so I couldn’t’ get in early. The second was that it was just too cold for me. If you’re looking for growth, Denver fits many of the benefits I listed and has a long road of prosperity ahead
Nashville – If I had to move again today, Nashville is where I would go. It’s in the south I know, which is horrible but Nashville is a large and respectable city so shouldn’t’ be too bad. It’s insulated from climate change fairly well, low cost of living, and poised for massive growth.
Phoenix – Similar to Vegas! It’s growing, it’s got a great long-term forecast and it’s well established. Phoenix, like Las Vegas, has a strict no-snow policy so you don’t need to worry about investing in heavy winter jackets!
Wherever Amazon HQ2 lands – What did we talk about in regards to letting other people do market research? Amazon is spending a lot of time and energy to find just the right place when they announce it, you might want to jump. People don’t all get up and move at once to capitalize on an opportunity, they filter in as it becomes more apparent. If you’re paying attention you can get in on the upswing of new developments without needing inside knowledge. Wherever Amazon chooses will likely be a good place to follow. There are exceptions however, Toronto is a current leader which I wouldn’t recommend and Washington DC as well. These places are overcrowded and overpriced, these are not underdog cities you can jump into and ride the wave. If Amazon goes to Raleigh though, I would jump on it quickly.
Deciding where to live is important. Most people die within 50 miles of where they were born, If you live where you were born then you didn’t choose it! It may be a good location or it may not, find out and then make a decision to live there or not, don’t stay out of comfort if it’s not lucrative. Live in a place that can maximize the strategy you build for yourself. If you live in New York City or Los Angeles and you’re struggling, LEAVE! Come back when you can more easily afford it. Paying the high cost of living for no reason other than complacency is a mistake and one that can be fixed. It’s important we all live in a city we have chosen and for valid reasons, winging it is relying on luck, and luck is fickle.