Investor · San Francisco, CA · Member since 2023 · 12 posts · 11 votes
Hi folks! This is my first post on BP (yay!) I appreciate all the advice on this platform and love being a part of this community.
I just came back from Las Vegas where I was looking for my first investment property. I found a new build I like and joined the interest list (it's long) and was told I can expect to be able to purchase a house in 3 months, then take possession after it's built around November. The new build deals are pretty good right now and their prices are comparable to older resale homes. Plus, builders are offering incentives to cover closing costs & things come with warranties. It's a great deal and I 100% want to get in on this new build since it's within my budget. I was really excited to buy a home and kickstart my REI journey but I'm conflicted because it sounds like I'll have to wait 4-5 months to make my first purchase and do another hard inquiry on my credit.
I also found a great home that would need minimum rehab that I could use as my first BRRRR to learn from. It's open to offers now. However, I worry if I put an offer on this resale home, I won't qualify for the new build anymore. I really like this one and can see myself learning a lot from it. Should I even consider buying both?
Does anyone have advice for how to balance purchasing multiple homes? How are people qualifying for conventional loans? Or are most folks using creative financing & hard money? (In Vegas, it's rare to find anything that will cash flow in Y1)
My main goal is to do whatever I can to learn and get the ball rolling. I look forward to hearing any advice you have on starting out! Thank you!!
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
These “Old” properties are almost 25 years old and I’ve owned this one for 22. So there’s almost no depreciation. Vegas is a great place to own these older properties. In the last 20 years with a dozen properties I’ve spent $250 on roofing, zero on siding, and maybe $500 on exterior painting. But houses were built different back then. They’d try to jam 4-5 bedrooms in to a 2000sf house. 3-4 bedrooms in 2500sf homes just live bigger.
Speaking for the areas of Las Vegas I invest in. I’ve also noticed that neighbors seem to have a natural transition about 15-20 years in. The original buyers have raised their kids to college age and move on to smaller homes in nicer neighborhoods. They tend to be replaced by people are buying the best they can afford, maybe their first home. So they either have no money, no desire, or no knowledge of how to take care of a home. You get more and more oil stains, trash and/or grass in the landscape rock, more vehicles that never move, window heat shields made of newspaper or aluminum foil. That kind of thing.
I’ll definitely make less cashflow/profit with these new builds but…
I get the $60k discount for not paying taxes, I get about r0% more rent and double or triple the depreciation. Now imagine if a year from now it doesn’t work out as a rental and I move in there instead? A few years go by and I sell because I want to go live somewhere else. It’s almost like I got paid $60k to live in a new house for 4 years.
I’m really considering buy a dozen properties in the same neighborhood. But I’m 55 and I’m already concerned about the person/people who will inherit them. For the first time I signed a 30 year mortgage that I expect I wouldn’t live to pay off if I didn’t plan to pay it off in a couple years.
TLDR: yes, the older homes are cash cows, especially wi low maintenance, and what others would probably call c-c+ neighborhoods. But real estate investing is really boring, I might want to live in my first new home ever, and I’m not a huge fan of my current home. Certainly not a perfect financial decision but nobody who buys a new car should bring that up.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
If you and your credit can afford it, I’ve found buying 3 houses in 2 weeks to be a non-issue. But only you and your loan officer knows if you’ll still qualify.
I picked up a new build Saturday with a builder’s 30 year 6% interest rate (instead of 5,5% as owner occupant) and $5k in closing cost assistance. As you say, it was cheaper than existing properties. It was the back half of a 1031 I hope to repeat in November. But they’re averaging 2 homes a week in the community and with only 51 lots left they may all be gone by then.
Hi folks! This is my first post on BP (yay!) I appreciate all the advice on this platform and love being a part of this community.
I just came back from Las Vegas where I was looking for my first investment property. I found a new build I like and joined the interest list (it's long) and was told I can expect to be able to purchase a house in 3 months, then take possession after it's built around November. The new build deals are pretty good right now and their prices are comparable to older resale homes. Plus, builders are offering incentives to cover closing costs & things come with warranties. It's a great deal and I 100% want to get in on this new build since it's within my budget. I was really excited to buy a home and kickstart my REI journey but I'm conflicted because it sounds like I'll have to wait 4-5 months to make my first purchase and do another hard inquiry on my credit.
I also found a great home that would need minimum rehab that I could use as my first BRRRR to learn from. It's open to offers now. However, I worry if I put an offer on this resale home, I won't qualify for the new build anymore. I really like this one and can see myself learning a lot from it. Should I even consider buying both?
Does anyone have advice for how to balance purchasing multiple homes? How are people qualifying for conventional loans? Or are most folks using creative financing & hard money? (In Vegas, it's rare to find anything that will cash flow in Y1)
My main goal is to do whatever I can to learn and get the ball rolling. I look forward to hearing any advice you have on starting out! Thank you!!
Hey @Alex Yee, welcome to BP! It's awesome to have you here. I can see you're really excited about your new build and the endless possibilities it brings. By the way, I'm originally from SF too and piloted the tech exodus lol, making the move to Las Vegas back in 2018. It's been awesome exploring the possibilities out here!
Closing on a new construction project is such a cool experience. You get to enjoy upgraded designs and a sense of security. It's interesting that you've found prices comparable to resale properties and discovered some fantastic incentives from lenders and builders. Now, let's dive into the fun part and take a look at some calculations to showcase the potential benefits.
I've come across a few new builds that offer a 5.99% fixed 30-year rate if you use their preferred lenders and opt for quick move-ins. Let's say you're financing a property worth $300,000. With that interest rate, your monthly mortgage payment would be around $1,800. Just a heads up, these numbers are purely for demo purposes and may not accurately reflect current market conditions.
I do recommend shopping around with three different lenders. By requesting a soft inquiry instead of a hard inquiry, you managed to avoid any negative impacts on your credit score. Although the rates aren't locked yet, receiving pre-approval is a positive signal that you qualify for a mortgage. That's a great starting point!
Now, let's talk about your interest in rehabbing a property. It's always wise to exercise caution, especially considering the possibility of interest rates exceeding 10% in the near future. While the current rates hover around 7%, you're in a relatively 'okay' position. Have you considered an adjustable-rate mortgage (ARM) product? It might be worth exploring, along with factors such as the location of the property and whether it already has tenants. There's a lot to consider, and joining a Facebook group for landlords can provide valuable insights from experienced investors who share their daily experiences.
When it comes to the BRRRR method, finding a good deal is key. Off-market deals can be quite exciting! Keep an eye out for expired listings or properties that have been on the market for over six months. You can reach out to the listing agent to inquire about the reasons behind it. Once you gather more information, you can make an offer that makes sense for you. Minimizing financial risk can be achieved by involving investors in your venture. Luckily, there are plenty of investors in the Bay Area who might be interested. Their contributions can help cover expenses and increase your chances of success. As for me, if I were in your shoes, I'd prioritize conventional loans for my primary residence, plan to refinance once rates become more favorable, utilize a hybrid STR/house hacking approach for cash flow, and leverage a DSCR loan for future investment properties after building reserves and a network of investors. There is a Freddie Mac product that is a 7/6 ARM that my lender mentioned as being free (please verify this with your lender as well). We are in similar situations, so I have been doing research since February of 2023. Again, please double check with your lender, as I am not a financial advisor :)
You mentioned your goal of achieving positive cash flow within a year. Maybe you can cash flow right away with your new build? I'm from the Bay so I'm used to house hacking, I'm sure you know what I'm referring to. House hacking the new build is an excellent move to offset your mortgage costs. Let's paint a picture: your monthly mortgage payment is $1,800, and you can rent out two bedrooms for $950 each per month. With this setup, you effectively eliminate your monthly mortgage costs, allowing you to generate positive cash flow. Oh, and at my current property, I do charge $50 per month for storage. So, if you implement a similar strategy, you'd actually end up $200 ahead. Of course, this is a simplified scenario, and it's crucial to factor in additional costs such as HOA fees, taxes, insurance premiums, and other potential expenses like SID/LID or master plan fees. It's important to carefully consider all these elements in your calculations.
Best of luck with your endeavors, Alex! It's a pleasure to meet you, and welcome to BP!
Investor · San Francisco, CA · Member since 2023 · 12 posts · 11 votes
3y
Thanks for the warm welcome @Zen Lenon ! It’s great to hear you were able to adjust to the heat of LV, coming from SF. There’s definitely a lot going on in Vegas and I want to be a part of it! I’m not yet ready to move to LV and hope to manage these properties out-of-state but I have family that live there so I can visit often.
Some new developments already have long interest lists. I'm hoping I'll get one. Since the new builds will take a while for me to close on- around 3 months to even be able to put in EMD, I worry my pre-approvals will expire and I'll have to take another hard inquiry hit. Hopefully I can find another deal in the meantime.
As for as rehabbing, thank you for your tip on joining a FB group for landlords. I wouldn't even know where to start in finding a contractor I could reliably add to my team. How have you been able to find off-market deals? Does the old-school postcard method work in Vegas? I will look more into the ARM products, however I don't know what restrictions there are if I'm not planning on living in any of the properties. Unfortunately it means that house-hacking is not possible for me since I have to stay here for my job.
Is there a Las Vegas Investor community that hosts meetups? It’s been great meeting folks on BP. There are definitely a lot of Bay Area investors coming to Vegas so I bet these kinds of discussions are happening quite often!
Thanks again Zen for all your advice- truly appreciate it!
If you and your credit can afford it, I’ve found buying 3 houses in 2 weeks to be a non-issue. But only you and your loan officer knows if you’ll still qualify.
I picked up a new build Saturday with a builder’s 30 year 6% interest rate (instead of 5,5% as owner occupant) and $5k in closing cost assistance. As you say, it was cheaper than existing properties. It was the back half of a 1031 I hope to repeat in November. But they’re averaging 2 homes a week in the community and with only 51 lots left they may all be gone by then.
Congrats on picking up a new build! The interest is definitely high for these new builds. Visiting the model homes were crowded and feel competitive. Hopefully there are enough new developments out there with good deals still coming in the next couple of years that missing on one community isn't too bad. I see you're a multi-family and apartment investing contributor on BP. Have you found success in picking up multi-family units? I started my search there but found duplex and triplexes in more class C neighborhoods, which is too risky for me as an early investor.
It's great to be connecting with so many LV investors. Thanks for your advice!
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
I've only done SFR directly. I don't like LV for multifamily, at least multifamily I can afford when I bought properties my criteria were less than 5 years old, stucco siding, slanted tile roofs, low maintenance yards in good neighborhoods. Almost all SMF in Vegas hits none of those boxes. Now as I've held some properties 10+ years they're getting old and I'm swapping in to new homes and neighborhoods. Only problem is my property taxes have been locked in by the increase caps. So getting hit with a $7k property tax bill on a $600k property really stings when you're used to paying $1,500 on a $350k property or $2800 on a $550k property.
Investor · Kirkland, WA · Member since 2021 · 9 posts · 7 votes
3y
@Bill B. any rationale for why you're swapping out old property for the new builds? Are you just finding that the old ones require more maintenance and costs so better to swap out or is it because the locations are no longer ideal? From a cash flow perspective you'd take a hit doing that?
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
These “Old” properties are almost 25 years old and I’ve owned this one for 22. So there’s almost no depreciation. Vegas is a great place to own these older properties. In the last 20 years with a dozen properties I’ve spent $250 on roofing, zero on siding, and maybe $500 on exterior painting. But houses were built different back then. They’d try to jam 4-5 bedrooms in to a 2000sf house. 3-4 bedrooms in 2500sf homes just live bigger.
Speaking for the areas of Las Vegas I invest in. I’ve also noticed that neighbors seem to have a natural transition about 15-20 years in. The original buyers have raised their kids to college age and move on to smaller homes in nicer neighborhoods. They tend to be replaced by people are buying the best they can afford, maybe their first home. So they either have no money, no desire, or no knowledge of how to take care of a home. You get more and more oil stains, trash and/or grass in the landscape rock, more vehicles that never move, window heat shields made of newspaper or aluminum foil. That kind of thing.
I’ll definitely make less cashflow/profit with these new builds but…
I get the $60k discount for not paying taxes, I get about r0% more rent and double or triple the depreciation. Now imagine if a year from now it doesn’t work out as a rental and I move in there instead? A few years go by and I sell because I want to go live somewhere else. It’s almost like I got paid $60k to live in a new house for 4 years.
I’m really considering buy a dozen properties in the same neighborhood. But I’m 55 and I’m already concerned about the person/people who will inherit them. For the first time I signed a 30 year mortgage that I expect I wouldn’t live to pay off if I didn’t plan to pay it off in a couple years.
TLDR: yes, the older homes are cash cows, especially wi low maintenance, and what others would probably call c-c+ neighborhoods. But real estate investing is really boring, I might want to live in my first new home ever, and I’m not a huge fan of my current home. Certainly not a perfect financial decision but nobody who buys a new car should bring that up.
Investor · Kirkland, WA · Member since 2021 · 9 posts · 7 votes
3y
@Bill B. thanks super helpful. Really good point about no longer getting depreciation and very fair point about living where you'd like. Thanks for your perspective.
I just bought an older property (1988) as my first investment and so wondered why you were getting rid of them just in case I should be aware of something. Happy to hear that older properties have still worked out well for you with minimal maintenance costs.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
It really depends on your definition of older (10, 30, 50 or 100 years old), if they have tile roofs that a huge plus, as is stucco siding. When I was in elementary school my mom painted our house, by herself, every 3-4 years. Can you imagine anyone doing that today? My one MN house still needs a new shingle roof every 10-20 years, if the hail, snow, or ice dams, doesn’t wreck it first. The cast iron pipes still fail, and so on.
Thanks for the warm welcome @Zen Lenon ! It’s great to hear you were able to adjust to the heat of LV, coming from SF. There’s definitely a lot going on in Vegas and I want to be a part of it! I’m not yet ready to move to LV and hope to manage these properties out-of-state but I have family that live there so I can visit often.
Some new developments already have long interest lists. I'm hoping I'll get one. Since the new builds will take a while for me to close on- around 3 months to even be able to put in EMD, I worry my pre-approvals will expire and I'll have to take another hard inquiry hit. Hopefully I can find another deal in the meantime.
As for as rehabbing, thank you for your tip on joining a FB group for landlords. I wouldn't even know where to start in finding a contractor I could reliably add to my team. How have you been able to find off-market deals? Does the old-school postcard method work in Vegas? I will look more into the ARM products, however I don't know what restrictions there are if I'm not planning on living in any of the properties. Unfortunately it means that house-hacking is not possible for me since I have to stay here for my job.
Is there a Las Vegas Investor community that hosts meetups? It’s been great meeting folks on BP. There are definitely a lot of Bay Area investors coming to Vegas so I bet these kinds of discussions are happening quite often!
Thanks again Zen for all your advice- truly appreciate it!
That's awesome @Alex Yee! Instead of your family managing your property, you could always hire a property manager :) Just delegate those responsibilities to professionals. Long interest list, hmm, I wonder which builders you have looked at? Did you check out the quick move-in options? They typically close much faster because builders need to sell these properties quickly. I actually just bought a new build myself, and it will be completed by the end of the year. However, they took my EMD a long time ago, around the end of March. So your pre-approval should be considered; they just pull a final credit report three months before your home is built so you can lock in the rates. Let me know if you need my help; I'm happy to make the deal you have now happen for you or if you want to see other deals, theres so many. I'm unsure if this is relevant, but I just helped Las Vegas investor purchase a new build up north, and it closed in approx. 45 days, then her home had to get completed, so we had time to shop around with 3 different lenders to find the best rates. Actually, now that I think about it, she signed the purchase agreement before she got qualified, so I'm curious if you have a good representation. Do you have an agent? It was a quick move-in as well. So both options, quick or new construction, should use your current pre-approval letters to move forward with an EMD, if you are ready, willing, and able, of course :)
Real Estate Agent · Las Vegas · Member since 2018 · 197 posts · 143 votes
3y
"I worry if I put an offer on this resale home, I won't qualify for the new build anymore. I really like this one and can see myself learning a lot from it. Should I even consider buying both?"
If you can afford both and qualify AND the numbers make sense AND you can manage both (sounds like this will be your first purchase or first investment purchase) then you could pursue it. Although I would caution against it if you were potentially losing out on the new build with all the incentives.