A family that recently moved from Las Vegas to Henderson has been settling in. After living in their primary residence for about two years and having some extra cash, they expressed a desire to buy a second home to rent out. Their first concern was how much they needed to prepare for a down payment. They initially hoped for a low down payment program like they had for their primary residence, but soon realized that investment properties have different requirements and had to revise their plans.

Investment property loans typically require a down payment of 15 to 25 percent, which is significantly higher than for primary residences (fanniemae.com). A credit score of 620 is the minimum to qualify for a loan, but a score of 740 or higher is needed to secure a favorable interest rate. Interest rates are usually about 0.5 to 0.75 percentage points higher than those for primary residences. When assessing loan eligibility, only 75 percent of the expected rental income can be counted, and a rent schedule attached to the lease agreement or appraisal must be prepared (freddiemac.com).

The average rent in Henderson is projected to be between $1,697 and $1,826 per month as of 2026 (RentCafe, Zillow). A one-bedroom unit averages around $1,510, while a two-bedroom unit is about $1,753. Over the past year, rental prices have actually decreased slightly by 0.51 percent, indicating that the market is finding a more stable balance than before. This trend was a reassuring sign for the family, suggesting that the market was not one they needed to rush into.

The property tax rate in Clark County, where Henderson is located, is approximately 1.01 percent based on market value, with the city's own rate at $0.7708 per $100, and the combined tax rate across various districts ranging from $3.00 to $3.66 per $100. For a median home valued at $484,900, the annual property tax would be about $4,918 (Ownwell). Nevada caps the annual assessment increase for owner-occupied homes at 3 percent and 8 percent for other properties, so it's important to keep in mind that the assessed value may rise more quickly when converting to an investment property.

Nevada is a state without rent control, and state law prevents local governments from enacting rent control measures (doorloop.com). For month-to-month leases, landlords can raise rent to market levels with 60 days' notice, while for leases of a year or more, a 30-day notice is required. However, retaliatory or discriminatory increases are prohibited, and for fixed-term leases, the rent and terms must be maintained throughout the contract period.

If they choose to hire a property manager, they should expect to pay a fee of 8 to 12 percent of the monthly rent, and landlord insurance typically costs more than standard homeowners insurance due to broader coverage. A good rule of thumb is to set aside about 1 percent of the annual property value for maintenance costs. Applying the 1 percent rule to estimate the rent level compared to the purchase price can also help in making initial assessments.

Another property the family considered was located closer to downtown Las Vegas. Although the purchase price was lower than in Henderson, they felt that the management burden and vacancy concerns were greater after viewing both properties side by side. They concluded that it was essential to compare not just the purchase prices but also the total costs, including property tax structures, management fees, and insurance premiums. Making decisions based solely on purchase price or rental income without considering these total costs could lead to significant discrepancies in cash flow calculations later on.

Ultimately, the family decided to monitor the market for a few more months. They were also informed that if they later decided to sell this home and move elsewhere, they could defer capital gains tax through a 1031 exchange (irs.gov). Rather than jumping in based solely on the down payment, they were advised to consider the tax structure and management costs as well. This is not investment or legal advice, and consulting with a professional before making any contracts is recommended.