What Renters in Las Vegas Should Know Before Their Next Lease Renewal

The renewal letter comes sixty days before the lease ends, and it has a number on it that is bigger than last year's number, and you have about a month to decide what to do about it.

Most people sign it, because the alternative feels like a project they do not have time for. Some of them are right to sign it. Some of them could have bought and did not know, because nobody ever did the comparison correctly for them.

Here is the comparison, done correctly, without the scare math.

The mistake everybody makes is comparing the renewal number to a mortgage payment they saw on a website. That comparison is wrong in both directions.

The payment on owning a house is the mortgage, plus property taxes, plus homeowner's insurance, plus association dues if the community has them, plus what a Las Vegas house costs to cool in July and August, plus the repairs a landlord used to handle. That is the number to compare against your rent, and it is bigger than the website says.

Rent, on the other side, is not just the number on the letter. It is the number on the letter this year, and next year's letter, and the one after that, and you do not control any of them.

So the real comparison is: the full monthly cost of owning a specific house, against a rent number that will keep moving. Sometimes owning wins clearly. Sometimes it does not. It depends on the house, the loan and your savings, which is why a website cannot answer it and a conversation can.

What you pay in rent, and what you could pay. Not the payment you want. The payment you could carry without stress, including the July power bill. If that number is close to your rent, buying is worth a real look. If it is far below your rent, it is worth a look anyway, because you may be renting more house than you would buy.

What you have saved, and what you do not need. The belief that stops more people than anything else is that you need 20 percent down. You usually do not. Conventional loans can start well below that, FHA loans lower still, and there are down payment assistance programs in this valley tied to what you do for a living: healthcare, teaching, public service and others. One of my buyers, a single mother of two, bought a condo she was certain she could not afford because of a program tied to her job. I will not promise the same for you. I will tell you what to ask about.

Your credit and your timeline. A lender looks at both in a conversation that takes an hour and costs nothing. If something on the report needs fixing, you want to know that now, not in the month the lease ends. I wrote a whole piece on how long buying actually takes, and the short version is that the lender conversation should start three or four months before the lease is up.

I hear that sentence a lot, and it is usually not true in the way the person means it.

It usually means: we can't afford the house we pictured, in the neighborhood we pictured, with the payment the website showed us and the 20 percent down we assumed we needed. Change any one of those four assumptions and the answer changes. A townhome instead of a house. North Las Vegas or the older parts of Henderson instead of Summerlin. A loan with a smaller down payment. A program you did not know existed.

Sometimes the sentence is true. Sometimes the real payment on anything you would actually want to live in is more than you can carry, and the right move is to renew, keep saving, and fix the credit. I will tell you that if it is the answer. What I will not do is let you sign another year because of a comparison that was wrong.

If your job may move in the next two years. If the down payment would leave you with nothing after closing. If the credit needs a year of work. If the only houses that fit the payment are ones you would resent living in. Renting is not failure. It is flexibility with a price on it, and sometimes the price is worth paying. Just know that you are choosing it, rather than defaulting to it.

Do not sign the renewal the day it arrives. Take two weeks. Have the lender conversation, which costs nothing and commits you to nothing. Find out what payment you could carry and what you would need to bring. Then compare that to the number on the letter, with the full cost of owning on one side and the moving rent on the other.

Then decide. Either way, you will have decided instead of drifted.

Call 702-881-6562 or email JArendt658@gmail.com. Tell me what you pay now, what the renewal says, what you do for a living, and roughly what you have saved. You will get a straight answer about whether buying is realistic for you this year, what it would take, and where in the valley your money would do the most. If the answer is to renew one more year, you will hear that too, and you will know why.

John Arendt, Realtor, has sold homes across the Las Vegas valley for 20 years, in Henderson, Summerlin, Southern Highlands, Anthem, Boulder City and North Las Vegas.

This article is general information, not lending advice. Loan programs and their requirements change. A licensed lender can tell you what you qualify for.