Recently, many people still confuse gross yield and net yield as the same concept. Gross yield is a figure that does not deduct any costs, while net yield is the amount left after subtracting operating expenses such as property taxes, insurance, and management fees. Failing to distinguish between these two can lead to decisions based on inflated yield figures.

In Las Vegas, the average rent according to Zillow is $1,900, and the recent median sale price according to Redfin is around $450,000. Calculating the gross yield with these two figures gives a 5.1% yield, derived from an annual rental income of $22,800 divided by $450,000. This level of gross yield may seem attractive due to steady rental demand from tourism and population influx.

However, this figure does not represent net yield. The property tax for Clark County for the 2025 to 2026 fiscal year is known to be relatively low nationally, with an effective tax rate of about 0.55%. For a property priced at $450,000, the annual property tax would be around $2,500, which is much lighter compared to areas in New Jersey mentioned earlier. To calculate net operating income, one must also include operating costs such as insurance, maintenance, management fees, and vacancy losses. Applying the 50% rule, the net operating income would be around $11,400 annually, leading to a cap rate of about 2.5% when divided by the purchase price. The difference between the gross yield of 5.1% and the cap rate of 2.5% lies in whether costs have been deducted.

If financing is involved, the cash-on-cash return should also be considered. If purchased with a 20% down payment, the actual cash invested would be 20% of the purchase price plus closing costs, and dividing the pre-tax cash flow excluding mortgage principal and interest by this amount yields a different figure than the cap rate. During periods of high interest rates, it is common for cash-on-cash returns to be lower than cap rates.

Even within Las Vegas, rental demand and vacancy rates behave differently in areas adjacent to Summerlin or Henderson compared to downtown. To check school districts preferred by Korean families, refer to ratings from GreatSchools or Niche, but keep in mind that school district boundaries change frequently, so it's advisable to verify the assigned school for the specific address before purchasing.

While Nevada stands out for having no state income tax for those moving from other states, the structure of property taxes and insurance may differ from the previous state of residence, so it's wise to check separately.

According to the 1% rule, 1% of a purchase price of $450,000 is $4,500, but the actual rent is around $1,900, which does not meet this criterion. Recent market trends indicate that Las Vegas experienced periods where the rate of increase in sale prices outpaced that of rents, resulting in fewer properties meeting absolute criteria like the 1% rule.

Cap rates and cash-on-cash returns are indicators of cash flow at the time of purchase, but total returns must also include appreciation and principal repayment on loans to be complete. The steady demand from tourism and population influx can be referenced as a long-term demand base, but it cannot be assumed that prices will always rise, so risks must also be considered.

Recent market observations suggest that Las Vegas is consistently seeing new apartment supply, leading to a slower rate of rent increase than before. When reviewing properties, checking the rental trends and vacancy rates over the past year can help gauge actual yields.

Comparing the two areas, downtown shows higher gross yields but greater fluctuations in vacancy rates, while areas adjacent to Summerlin may have slightly lower gross yields but are easier for finding long-term tenants. Depending on the purpose of the purchase, it is necessary to evaluate which option is more suitable.

The figures discussed in this article are not investment or legal advice, and it is recommended to consult with an accountant or real estate professional before making any actual contracts.