All Forum Posts by: Adam Polignone

Hey Bruno. Congrats on buying your first rental! I happen to be an MLO licensed in Florida.  You can call/text me anytime regarding rental property investment (702)232-6901 . You CAN use the potential rental income to qualify. 

@John M.

Ok so I did an analysis of a high rise property in the Las Vegas area. I used a unit at the Juhl downtown. The asking price of the unit is $200,000. For my example I put the mortgage terms as a 30 year fixed @ 3% with 5% down. 

The analysis is looking at a 20 year investment period. 

Purchase Price: $200,000

Down payment: $10,000

Closing Costs: $5,000

Total initial investment: $15000

The average appreciation in the Las Vegas area since 1980 was 4.38% annually. 

$200,000 with a CAGR of 4.38% over a 20 year period will give you an estimated valuation of $471,000.

This will amount to a $378,000 equity stake in the property in the year 2041. After you account for loan amortization and appreciation. 

Thats a 17.51% CAGR! Not accounting for future cashflows. 

The property will probably not generate positive cashflow initially. However rents have increased at a rate of 4.12% over the previous 40 year period. (basically mirroring appreciation rate). The rent on this unit in the year 2041 will be roughly $3,587. 

Yeah using high leverage (5% down) this is a great investment IMO 

@John M.

Yeah I think if you plan on living there and are utilizing the amenities the high rises have to offer. (That's why the HOA is priced the way it is). It's not a bad move at all. I actually live in a high rise here (renting). The views are great and the amenities (gym,pool,tennis courts, golfing, etc...) are outstanding.

The only problem I see with the investment equation is the rent and mortgage a virtually the same. If you can get that rent revenue up it would change everything. I think the way to do this would be short term rentals like Air Bnb.

@Bhavna Virmani

Yeah not to be too cut and dry but this market here in vegas is tight. Sometimes I’ll see properties that are upgraded to the tilt and they rent for a little more but it’s more time and cash out of your pocket. As soon as a half way decent deal comes on the market it will gone fast. Too competitive for those kinds of returns IMO

@Bhavna Virmani

Sample Monthly income statement (400k purchase)

Revenue 2100

PITI 1575

Maintenance 100

Management 100

Total expenses 1775

Net income 325

Annual net income 3900

So you put nearly 100k down to close on the property and you get 3.9% annually cash on cash.

So it would be a big appreciation play in this market personally I deploy my cash elsewhere.

@Kent Santin keep it simple IMO put 20% down on 1.5M worth of property.

@Calvin Matthews aloha! I was looking into building a container home air bnb park on the big island. I think I might still do it but have to pay cash because it’s going to be hard to find a lender on such a project. My long time friend Tony Lopez builds them...

https://alternativelivingspaces.com

Land is cheap on the big island and I see opportunity for a project like this.

A lot of people made there fortunes in the Great Recession! The folks that leveraged multiple properties after the 70% drop..

In Vegas properties in Summerlin and Anthem were selling for 150k in 2009-2011 and they’re selling in the 500’s today.

If you could manage to scrape up 90k as a down payment on 3 properties. (20%) you would have 1.2M in equity as of today as well as around $4200 a month in cash flow on the portfolio.

Now take that scenario and scale it to People with BiggerPockets (pun intended). They made fortunes...

@Jacob Willett with 3.5% down it's going to have to be owner occupied for at least a year so your going to need income to cover those payments. Plus with lower down payment you'll have to pay MIP on top of a higher interest rate in your situation. If you really want to get your feet wet I would say try to find an multi family that you can live in one of the units and have it pay for itself if not cash flow a little. Be patient on finding the right deal that the numbers will work. As far as lenders... try NEXA. They have a big portfolio of lenders and more than 4000 programs. One of them might just work for your situation. But be patient and don't buy something that doesn't look good in person or on paper

Hey John! I think if you look at high rise units from a long term investment perspective the HOA will eat you alive and will tend to increase over time. Just run a simulated income statement on each unit and if the numbers work and you are satisfied with the potential return, pull the trigger. But in Vegas it's hard to find a deal right now that makes sense.