Five Steps To Invest in Las Vegas Real Estate
In today's Wall Street Journal, Fed Chief Ben Bernanke is urging Congress to take additional steps to hel[p the housing market. I try to avoid getting political in my blog posts, and I do support Bernanke's view that the lending standards are choking our recovery. However, I disagree with the suggestion that our government get involved in the rental market. For most of the past year, at least half the homes purchased in Las Vegas have been cash purchases. Many of those purchases are investors who are snapping up foreclosures and short sales to turn them into rental properties. For the government to start competing with private investors who are risking their own money in converting these properties into rentals would be competing with the very investors who are helping our market turn around. Our investors are not just spending money on the homes they purchase. They're hiring a handy man to install ceiling fans. They're putting in new flooring. They're hiring painters. They're doing all of this in a cost efficient manner. Should the Government get involved in the rental market, look for taxpayers to start shelling out $200 to replace a light bulb that the private investor would buy in bulk and have the handyman throw in while they were putting in the ceiling fan they bought on sale.
For those who are considering Investing in Las Vegas Real Estate, we suggest you keep the following steps in mind:
1. Determine how much you can afford to invest. While we are confident that this is a great time for investing in Las Vegas Real Estate, this is not a liquid investment. Don't put money into a property that you might need for your living expenses within the next 2-3 years.
2. Once you've determined how much you can invest, narrow your focus down to how many properties. We have investors who like to purchase 1 large property while others prefer to hedge their bets and buy 10 smaller ones. With the large property, you may be in a guard gated, golf course community that has a good chance of long term appreciation. However, you will have one tenant who could leave the one property vacant, creating a negative cash flow for a month or so. With ten smaller properties, you are not likely to have all of them vacant at the same time.
3. Decide what type of property. We have investors who like to buy single family homes and condos that rent for a year at a time. Others like buying residential high rise properties that can be furnished and rented for as little as six months, leaving the owner the option of using the unit a few months of the year. And others like buying condotel units like Trump, MGM Signature, Platinum or Palms Place. Those have rental programs available so the owner can use the suites when in town and they're rented otherwise. Fees and the splits with the management will vary from one property to the next.
4. Be prepared for the occasional negative cash flow if the property is vacant for a brief period of time. You can buy a home warranty, or ask for one when making your offer to purchase the property so that repairs can generally be made with only a $60 deductible, however, it is wise to be prepared that emergencies do happen. Don't buy more properties than you can afford to maintain.
5. Finally, when you are ready to buy, find an experienced Realtor who knows how to write clean offers and give you sound advice as to how much the property is worth. In today's Las Vegas Real Estate market, homes that are priced under $200K are the highest in demand. If the home is in a good location and in good shape, you are likely to be competing with other bidders. An experienced agent will be able to give you the latest comps for how much similar homes have sold for and how much similar homes are currently renting for.
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