Las Vegas Market

9 Replies

is the Las Vegas real estate market still good for investors? I'm not seeing the great deals I saw a year ago. 

And a year ago wasnt 2 years ago, or 3 years ago. Prices have stopped going up but there are still deals going on. I'd be watching what the HOA Lien guys are going to be doing with their properties.

@Troy Fisher   and @Jaime Botello   home prices are still going up in most areas here in Las Vegas and Henderson but just not as fast as they were over the past several years. 2012 and 2013 we saw 30% annual appreciation. The last figures I heard for 2014 was an 11% annual appreciation. Inventory is still rising gradually but consistently week after week as it has been for months now. This time last year we saw a big increase in inventory and then it leveled off after Dec 2013 (unexpectedly). It will be interesting to see if the holiday season levels off again like last year or if it will increase.

If you are a buy and hold investor you can still find good cap rates of 6-7% if you are looking hard. An average cap rate will be closer to 4% after expenses, repairs, ad vacancies.

If you are looking to flip you will need to think outside the box and find properties off the MLS. As most of the properties on the MLS are still selling close enough to appraisal value that there is not enough meat left on the bone to cover all closing costs, ownership costs, rehab costs, and still be able to turn a profit. (I am not saying it is impossible but it is hard to find on MLS.) I have written up over 30 offers on properties on the MLS in the past 2 months to find something to flip for my personal portfolio and have yet to get one accepted. If you plan to buy and hold and then flip you will have better luck with MLS properties.

In regard to the HOA liens the Supreme Court just ruled in favor of the HOA lien wiping out the 1st. I think there are still several obstacles for these investors to realize their huge profits with without risk but from what I can tell HOA liens have now gone from about 20-30 cents on the dollar to closer to 90 cents on the dollar so honestly the time to buy those HOA liens were prior to the courts decision but that is when it was much more risky. More Risk = More Reward.....imagine if you bought those HOA lien properties the decision went the other way.

@Lee P. and I were actually discussing this about 8 months ago when he had come across and investor trying to sell off a chunk of his portfolio for 50 cents on the dollar. At that time we had decided that was too high for the risk involved and passed on the opportunity. Now that it is a 90 cents on the dollar it sounds like a bargain but if the decision went the other way we would have lost $$$.

Please feel free to contact me directly to discuss the market or your investment strategy. I would be glad to help if I possible.

Take care.

The HOA lien situation may force more foreclosures for banks that had been kicking the can down the road. We'll see, but I doubt it will amount to much.

Resale inventory has been slowly increasing over the past year. As of this post, MLS shows 7924 available SFR listings throughout the valley. Meanwhile 2155 SFR sold during the past 30 days. That's about a 3.5 month supply which is still in shortage territory.

Builders are still opening new developments, but several are offering huge agent incentives.  

@Robert Adams  summed up the probable cap rate scenario nicely.  You're likely looking at a 4 cap unless you get a short sale under market.  

I am in Las Vegas as well. I never buy from the MLS, you'll never get a deal there. Must be bought off market. Now a question of: how to find deals off-market would make a great new dicussion.

@Phillip Dwyer   all the new homes being built still blows my mind. Las Vegas should take note how other parts of the country limit building by limiting the amount of permits they approve. Even places as close as Boulder City manage their growth better than us. It just goes to show you how strong the builders' lobbyist are here. It is crazy seeing people that bought new builds in 2011 and now they are short selling in 2014. If you bought ANY resale home in 2011 you gained around 60% appreciation over the past few years. That is a huge difference. I honestly can't sell a new build to a buyer and feel good about it. I tell all my clients that are interested in new builds these facts and most of them had no idea that was happening. 

Here is a prime example of what I am talking about "6485 GRAND MAYNE CT". It was bought in 2011 as a New Build for $296k and now in 2014 that same home is being short sold for a list price of $285k.

I also agree that the banks will most likely be making a lot of changes due to the decision. Why would a bank want to lend in a community with HOA's if their secured asset can be taken out from under them if the HOA isn't paid? I am guessing they will start treating HOA dues more like required hazard insurance payments. It will be interesting to watch it unfold.

@Mark Kemp any time you say "never" you open yourself up for rebuttals. I have found a ton of great deals on the MLS over the years. Right now it is VERY difficult to find deals good enough to flip on the MLS but it is not impossible. And just like any other market it is always changing so what not be readily accessible right now might be abundant in the future. That's my honest opinion.

@Robert Adams  I don't think you should feel bad about selling a new build to a client if you give them the info.  There will always be buyers that prefer new to resale.  It's the same with cars.  People shouldn't buy a primary residence if they plan to move in such a short time span.  That's where they get hurt.  

I am loving all the wonderful feedback here. Thanks to each and everyone of you who took the time to chip in.

With that being said, any advice on how I can find deals of MLS? Websites, direct mail, networking etc.... I am primarily looking buy and hold deals..

I'll gladly unload my 4 plexes at 6% Cap Rate if someone has an investor interested.  (1 Out in Hollywood, and the Other out by NLV Airport)  They need to go together.  

Also good to hear that inventory is not as tight as it was 2 years ago.  Any thoughts about what Blackstone is getting ready to do?

@Troy Fisher  Send me the addresses and desired list prices and I will see if I can find any buyers for. In regards to Blackstone do you have a link to what you are talking about specifically?

@Phillip Dwyer  I always explain to them the scenario on both resales and new builds and ultimately it is up to them as to what they want to buy. It is my job to educate them on the market of both and then represent them on whichever way they want to proceed but I much rather represent them on something I know will make them money vs lose money.

@Jaime Botello   there is no magic formula to finding off market deals or any website that I have found that lists awesome deals for everyone. It takes thinking out side the box and $$ and hard work. Being patient and diligent and eventually you will find one. All the things you mentioned in regards to networking, direct mailers, can help you find off market properties. 

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