All Forum Posts by: Eric Fernwood

Hello @Cailyn Aune,

Thank you for your kind words. My partner and I are engineers and we believe that almost everything can, and should, be converted into a process. Only a process can be repeated, adjusted and improved. You might find the articles linked on my profile page interesting. 

As to our service locations, just Las Vegas. I was living in NYC when I decided to go into real estate. After a lot of analysis, I chose Las Vegas due to the fact that properties here met what I consider to be the three key criteria for investment properties:

• Sustained profitability - The property must generate a positive cash flow today and into the foreseeable future.
• Likely to appreciate over time - You would never buy a property just for appreciation but appreciation is very desirable. Especially when using a 1031 to reinvest equity or adapting to market changes.
• Located in an area where you can make money and risks are low. Key factors include state income tax, property tax, insurance cost and landlord favorable regulations. Regulations include property related laws like the time and cost of evictions, rent control, code compliance requirements, etc. 

I wanted to move to Phoenix, Albuquerque, even Orlando. I do not smoke, gamble or drink so Las Vegas was not a preferred location. However, none of the other locations met the above criteria plus, I discovered another huge factor which impacts profitability and that is reoccurring costs. This includes property taxes, insurance, on going maintenance, etc. For more information on the unique nature of Las Vegas, go to my profile page and click the link titled: "Is Las Vegas for You?"

People were very kind to me when I was just starting in real estate investing and my way to pay them back is to help others. So, feel free to send me an email or post a question and I will do my best to respond.

Thank you again for your kind comments.

Thank you for the votes, kind words and excellent follow-on questions. I will attempt to answer all the questions in this post.

On North Las Vegas: We recommend few properties in North Las Vegas except for one relatively small area. The problem with most of North Las Vegas is that there are too many vacancies (too little demand) resulting in rents that are lower than Las Vegas or Henderson and a longer time-to-rent. The numbers just do not work.

On Apex, it might alter the real estate investment landscape in the future but it has not as of today. I cannot recommend properties to clients that might be profitable in the future when we can consistently find good properties that generate a 4% to 8% return today and a high probability of appreciation. Below is a comic that is part of a book I will publish later this year on investing which depicts my opinion of buying for future gain.

On Strip investments: The majority of non-commercial strip investments are high-rise condos. We've looked at all the high-rises and the cost + HOA fees vs. typical rents generally do not allow you to break even let alone make a profit.

@Matt R. @Account Closed

We have clients who have experienced evictions taking from 6 months to 9 months in California. How long it takes depends on how informed the tenant is and how hard they resist. The time and cost of evictions and inability to find positive cash flow properties is one of the reasons so many of our investors are from California.

You may own 50 properties in California and never have to evict. However, I view a troublesome eviction as I do cancer. The odds of your getting pancreatic cancer is 1.5% which is very low. However, if you get pancreatic cancer, averages go out the window and it is a nightmare for you. The same would be true if you get a tenant who is determined to fight eviction. Having a non-paying tenant in your property doing damage for 6 to 12 months would be a financial disaster for most people.

@Yi Roberts

On your friend's trouble renting a $270K home: In my opinion, it is very difficult to profitably rent a $270K property in Las Vegas (except in Summerlin or Green Valley). The problem is the target tenant pool income vs. the amount of rent needed to be profitable. 

In any location you are considering, you need to understand the income range of the probable tenant pool and how it defines the price range of viable investment properties. Explaining my previous statement will take a bit so please bear with me.

The maximum rent a tenant can typically pay is approximately 1/3 x their income. So, if your target tenant pool has a medium income of 4000/Mo., then the maximum rent they can reasonably pay is 1/3 * 4000 or about 1300/Mo. If you were to plot demand (the number of tenants who can afford the rent) vs. the amount of rent you would get a curve something like the one shown below. This is called a bell curve due to its shape.

Simplistically, you can subdivide the bell curve based on the rent range. Below a certain rent, the majority of the tenants will be cash based; they may not even have a checking account. Cash based tenants tend to have little or no concern about leases, eviction, skips or property damage judgements. They live cash based lives so they carry no "credit history"; what they did in their financial past has little or no impact on their present or future. Above a certain rental level the majority will be credit based. Credit based tenants tend to respect leases and are less likely to do damage or skip because it will impact their future ability to get credit. And, above a certain rental rate, potential tenants are what we call transitional, they have sufficient income to buy a property so they are only renting because of a specific issue that will likely resolve over time. These types of tenants respect leases but tend to only stay one or two years until they buy a property. These are generalizations and are certainly not true under all conditions. To illustrate these groups, I marked them on the curve below. 

The goal of every landlord is to get a good tenant in the property as soon as possible and to keep it rented to a good tenant. Before I continue I will define what I consider to be a good tenant:

• Pays all of the rent on schedule
• Takes care of the property
• Does not cause problems with neighbors
• Does not engage in illegal activities on the property
• Stays for multiple years

Good tenants are the result of effective screening by the property manager. In most cases, effective screening is only possible with credit based tenants. But, even with credit based tenants you need several applicants so the property manager can select the best of the applicants. The best way to have multiple applicants is to have properties that rent profitably in what I call the "rental sweet-spot", which I marked on the curve below. Properties renting in this range attract the greatest number of potential tenants which gives the property manager the highest probability of selecting a good tenant. 

Based on our experience, I believe the rental sweet spot in Las Vegas to be between $1000/Mo. and $1400/Mo. Using a free tool that we provide, you can estimate the purchase price of a property that rents for $1000/Mo. and $1400/Mo. I would provide a link to the tool here but every time I did in the past the link was somehow removed. So to access the tool, go to my Biggerpockets profile page and click on the Break-Even Estimator link. See the video to learn how to use the tool. Below is a screen shot of the tool with typical Las Vegas values, a 4% return and $1000/Mo. rent.

What the above shows is that the estimated maximum price you can pay for a property in Las Vegas that rents for $1000/Mo. with a 4% return is about $168408. The key word in the prior statement is "estimated". This is optimized for ease of use as opposed to accuracy. Below is the same calculation but for $1400/Mo.

So the price range of properties that will rent in what I believe to be the rental sweet spot is between $160000 and $242000. 

Going back to the property your friend purchased for $270K: In order for the property to generate a 4% return, it must rent for about $1550/Mo. as you can see below.

Check the rental comps and time-to-rent around your friend's property and you may discover that it will be difficult to get $1550/Mo. This is why we work backwards from the rent to determine the maximum (or break-even) price we can pay for any given property. Our software enables us to perform a break even analysis vs. listing price (plus about 50 other tests) on the 10000 to 14000 available properties in seconds. Typically, less than 0.1% meet all our investment criteria. If you would like to see some sample properties, click the link on my profile page titled, "Click here to see our recent investor newsletters." In each newsletter we include sample single family and townhouse properties as well as Las Vegas investment analytics and an investment article. You may find this interesting. 

I hope I answered your questions. If not, please post them and I will do my best to answer.

Hello @Yi,

An interesting thread. If I summarize your question and some of the following comments I think the question is, "Is Las Vegas still a good place to invest?" 

Before I talk specifically about Las Vegas, I want to establish a common understanding. I believe that every investment property and investment location must meet three criteria:

• Sustained profitability - The property must generate a positive cashflow today and into the foreseeable future.
• Likely to appreciate over time - Appreciation should never be the primary goal of investment but is advantageous in that it offers you future flexibility. Appreciation is dependent upon ongoing demand, which is a function of population growth and sustained job quantity and quality.
• Located in an area with investor friendly taxes and legislation - Taxes include both state income tax and property tax. Regulations include property related laws like the time and cost of evictions.

Select Las Vegas investments meet all three of the above criteria. I will cover each of the above criteria below as they apply to Las Vegas.

The Problem with ROI

ROI and similar measurements only show how a property is likely to perform today but real estate investing is a long term proposition. Typical hold times are 10+ years so how the property performs over the foreseeable future is just as important as how the property performs today. I will talk first about short term factors and then long term factors.

Short Term Profitability 

We are able to consistently find properties which generate between 4% and 8% (assuming 20% down conventional financing) using the formula below. This formula closely reflects what our clients actually experience. There are many variants of the ROI calculation and most show much higher return because they do not include all the recurring costs or include such things as unrealized gain.

Note that good investments in Las Vegas, like everywhere else, are not common. We are able to consistently find the 0.1% of the available 10,000 to 14,000 properties that are good investments using software we developed over several years. Without our software, it would be very difficult to find any good investment properties. 

Other major factors affecting short term profitability compared to other locations include property taxes, state income taxes and insurance. Below is a comparison between Las Vegas and two other locations. Costs such as state income tax, property taxes and insurance are direct hits to bottom line profitability.

Longer Term Profitability 

Longer term profitability factors can slowly change a high performing asset into a financial nightmare. Below are some of the more common factors but each location might have others.

Incentives to Pay All the Rent on Schedule

In order for a tenant to consistently pay rent they have to have both the ability to pay and the willingness to pay. The ability to pay is dependent upon the target tenant pool for the property remaining employed at similar wages. The willingness to pay is driven by incentives to pay or not pay. For example, in California it can take up to one year to evict a non-paying tenant. Tenants know that they can skip paying the rent for months with little risk of being evicted; the incentive to pay the rent in California (and places with similar anti-landlord legislation) is very weak. In Las Vegas, a typical eviction takes less than 30 days and costs less than $500. Tenants know this so they prioritize paying the rent because they know that they will be quickly evicted if they don't. Thus, the incentive to pay all of the rent on schedule in Las Vegas is very strong.

Population Trends

If people are moving out of an area, housing prices and rental rates are likely to fall due to decreasing demand. If people are moving into an area, then there is likely to be appreciation and rising rents due to increased demand. However, even if the general area population is stable, specific sub-areas could be losing or gaining population. One major cause of this is urban sprawl. People want newer floor plans and newer homes and, if they have the money and freedom to do so, they will move to areas where they can buy such properties. As people with money move out of an area those left behind will, on average, have lower incomes. Property prices will then start to fall due to decreased demand. As property prices fall, property tax revenues will fall. City services are largely dependent on property tax and local sales tax revenues so as these fall, cities have no choice but to cut services. This starts a downward trend from which few locations have recovered. Below is an illustration showing the effects of urban sprawl on investment properties.

Las Vegas is one of the few major cities not subject to urban sprawl because it is virtually an island; it is surrounded by federal land. The map below shows the Las Vegas metro area. The gray area is federal land. Las Vegas has extremely limited undeveloped land in desirable areas.

Unlike other cities, there are few alternative cities from which people could commute to jobs in Las Vegas. As you can see on the map below there is little development within commuting range outside of the Las Vegas metro area. Also, since most properties in Las Vegas are still selling below replacement cost, prices in the few surrounding cities are not significantly less than metro Las Vegas so commuting does not make sense. 

As far as the Las Vegas population trends, depending on which study you choose to believe, Las Vegas' population is projected to increase by 1% to 2% per year for the foreseeable future. When you combine a growing population with no room for expansion we feel that appreciation and rent increases are almost inevitable.

Job Quantity and Quality

The value of a property is no better than the jobs around it. In many parts of the US, manufacturing and similar jobs are going away and what remains are service sector jobs. Service sector jobs tend to pay less than manufacturing jobs so the families of these workers have less disposable income. Less disposable income means that they cannot afford to pay the level of rent they did in the past. A key indicator is inflation adjusted per capita income over the past few years. If you see an inflation adjusted declining per capita income you need to carefully consider the long term value of the investment.

Inflation adjusted income in Las Vegas has been slowly increasing (except during the 2008 to 2011 crash) and projections are that the increases will continue according to a Federal Reserve Bank study.

Ongoing Maintenance Cost

Ongoing maintenance costs can have a significant impact on profitability. Below are some generalizations about ongoing maintenance costs:

• Older properties require more maintenance than newer properties.
• Composition roofs require more maintenance than tile roofs
• Properties in climates with hard freezes require more maintenance than properties in milder climates.
• Properties in locations with a lot of moisture require more maintenance than properties in dryer climates.
• Wood siding requires more maintenance than aluminum or stucco siding.
• Properties with lush vegetation require more maintenance than properties with little or no vegetation.

Below is a typical Las Vegas single family home.

As you can see, there is not a lot to maintain. 

Summary

Las Vegas is an excellent place to invest but finding good properties is challenging using traditional approaches because less than 0.1% of available properties are good investments. For the foreseeable future, population growth, inflation adjusted per capita income, job quality and quantity are predicted to be positive. Nevada's eviction laws incentivize paying all the rent on schedule. 

I hope I was able to communicate why Las Vegas continues to be an excellent investment location.

Hello @Nick Liu,

Great question. I will attempt to answer it from going through the 2008 crash in the Las Vegas market.

Buy the Right Properties to Start Off

During every market crash, some locations are hurt far worse than others. For example, the current drop in oil prices has hit North Dakota hard but has had little impact on Nevada. The same is true of business sectors within a metro area. Some sectors are hit far worse than others. However, it is hard to determine which are the affected by looking at the gross numbers provided by the news sources.

If you only looked at the unemployment rate and number of foreclosures in Las Vegas during the 2008 through 2014 period, you would expect all Las Vegas investors took a terrible beating. However, our clients reported that rents and time to rent did not change for class A and B properties. When one of our clients asked for specifics we dug into the data. In order to answer her question we analyzed MLS sales and rental data during the period from 2008 to 2014. One of the problems with most data is that it is too "averaged" to be truly useful. We decided to narrow our focus as follows:

• Single family
• 3 bedrooms
• 2 car garage
• 1,200 to 1,500 SqFt

We also restricted the geographical area to the region marked in green below. 

Restricting the data to this property profile and area matched the majority of our investor's properties at that time, which are A or B class properties.

We started by exporting data from the MLS for conforming properties that sold or leased between 2008 and 2014. We then computed the average $/SqFt by month and plotted the results as shown in the graph below.

As you can see, the average $/SqFt sales price plunged by almost 50%. What happened to the average $/SqFt rental price? As you can see below, rental rates remained virtually unchanged. 

The data showed what our clients were experiencing; A & B class investment properties saw little or no change in cash flow or time to rent during the 2008 to 2014 period. However, C class properties fared badly with vacancy rates exceeding 20% in some areas. We believe that the reason C class properties were disproportionately impacted by the crash has to do with the job sectors in which the different tenant pools worked.

Class C properties in Las Vegas generally rented in the range of $450/Mo. to $700/Mo. and were largely occupied by construction workers and hourly service workers. When construction virtually stopped in 2008, a great many of these people became unemployed and thus the high vacancy rate and falling rents. However, the tenant pool for Class A and B properties (largely casino workers), which generally rented in the range of $1000/Mo. to $1400/Mo., suffered income reductions but comparatively few became unemployed. Even those who lost their homes through foreclosure or short sales still needed a place to live and desired to stay in the same general areas so they became renters.

It is important to consider how the industry/business sectors which employ your target tenant pool are likely to perform during a downturn. We feel this is far more important than observing various purchase "rules" because it does not matter how little you paid for the property if there is no tenant paying the rent. Rental properties are only as good as the jobs in which the tenant pool works. 

There is another factor that contributed to the class A and B rental stability in Las Vegas: eviction laws.

Eviction Laws

Incentives are strong determiners of how people will behave. A great example from history is the survival rate of prisoners transported to Australia during the 1860's. Originally, ship captains were paid a fee for every prisoner that walked onto a ship bound for Australia. Under this incentive program, only about 40% survived the transit. When the incentive changed to being paid for every prisoner that walked off the ship in Australia, the survival rate increased to about 98%. 

In some states like California it can take up to one year to evict a non-paying tenant. So, if a tenant is undergoing financial stress, there is little incentive to pay the rent. As one client put it, "In California, tenants pay their bills in the following order: car payment, credit cards and, if they have leftover funds, the rent."

In Las Vegas, a typical eviction takes less than 30 days and costs less than $500. Tenants have a strong incentive to pay the full rent on time or they will be out on the street in less than 30 days. Due to Las Vegas eviction laws we believe that tenants in Las Vegas pay their bills in the following order: car payment, rent and, if they have leftover funds, credit cards. 

What about the class C tenant pool? We feel that two factors made the crash very hard for class C property owners. First, if the tenant does not have a job, they can't pay the rent. When construction virtually ended in 2008, so did the related jobs. Second, in our experience, class C tenants tend to be cash based (class A and B tend to be credit based). Cash based tenants have little to fear from evictions and judgements because they carry no financial "history"; what they did in the past has little impact on their present or future. Such cash based tenants have little incentive to pay the full rent on schedule; they can always move to another property.

In Summary

• You need to buy properties where the tenant pool is credit based and their job pool is likely to be stable even in turbulent economic times.
• Tenants constantly pay rent only when there is a strong incentive to do so. Do local eviction laws incentivize paying the rent or do they have the opposite effect?

Hello @Cory Mccarthy,

You posted an excellent question but one without a simple answer. 

Investors were likely to be impacted by the 2008 crash in two different ways. First, if you sold the property during the crash under most conditions you would have lost money. However, if the property was still generating a positive cash flow during the crash few people would choose to sell so I will ignore this potential impact.

The main challenge for many investors was that they started losing money due to falling rents and rising vacancies. However, not every property in every location fared the same. Las Vegas was one of the hardest hit cities in the US during the 2008 market crash. And, if you only looked at the unemployment rate and number of foreclosures in Las Vegas, you would expect all Las Vegas investors took a terrible beating. However, our clients reported that rents and time to rent did not change. When one of our clients asked for specifics we dug into the data. In order to answer her question we analyzed sales and rentals during the 2008 to 2014 period ourselves. 

One of the more common mistakes people made when doing such a study is to combine everything together and compute an average. Usually, the results of such averaging will be of little value. For example, would you be comfortable living in an environment with an average temperature of 70°F? Sounds pretty good? What if I told you that the day time temperature is 450°F and the night time temperature is -310°F? The average is 70°( (450 - 310)/2 = 70°).

In order to provide valid data we narrowed our research to the typical properties the majority of our clients purchased. The property profile we used is as follows:

• Single family
• 3 bedrooms
• 2 car garage
• 1,200 to 1,500 SqFt

We also restricted the geographical area to the region marked in green below.

Restricting the data to this property profile and area matched the majority of our investors at that time, which would be considered A or B class properties.

We started by exporting data from the MLS for conforming properties that sold and leased during the period between 2008 and 2014. We computed the average $/SqFt by month and plotted the results as shown in the graph below.

As you can see, the average $/SqFt sales price plunged by almost 50%. What happened to the average $/SqFt rental price? As you can see below, rental rates (and time to rent) remained virtually unchanged.

Our clients who purchased investment properties prior to 2008 saw little or no change in cash flow or time to rent. However, C class properties did not do well. Depending on the area, class C properties vacancy rate increased to over 20% and rents fell as well. Why did Class A and B properties do well while Class C properties did so badly? 

Location and price range will primarily attract a specific tenant pool. In 2008, Class C properties, which generally rented in the range of $450/Mo. to $700/Mo., were largely occupied by construction workers and service workers. When construction virtually stopped in 2008, a great many of these people became unemployed and thus the high vacancy rate and falling rents. However, the tenant pool for Class A and B properties, which generally rented in the range of $1000/Mo. to $1400/Mo., suffered income reductions but comparatively few became unemployed compared to the tenant pool for Class C properties. So while the tenant pool for Class A & B typically had reduced income, they chose to prioritize paying the rent. Why? Based on our research we believe that the reason the rental market was so stable had to do with the eviction laws in Las Vegas, in addition to job stability. 

In order for a tenant to consistently pay rent they have to have both the ability to pay and the willingness to pay. If the tenant pool remains employed, even at a reduced rate, they have the ability to pay because of the income requirements required by the property manager we work with. The willingness to use limited financial resources was largely due to our eviction laws. 

For example, in California it can take up to one year to evict a non-paying tenant. So, if the tenant has limited financial resources, they know that they can skip paying the rent for months with little risk of being evicted. In Las Vegas, a typical eviction takes less than 30 days and costs less than $500. Tenants know this so they prioritize paying the rent because they know that they will be quickly evicted. 

In summary, we came to the following conclusions:

• Not all jobs were affected equally in the 2008 crash. Metro averages do not provide a reliable indication for any specific tenant pool.
• Some business sectors/occupations were hurt less than others. You need to consider how the business sectors which employ your target tenant pool are likely to perform in a downturn.
• Tenants pay rent when they have the ability and willingness to pay the rent. Local eviction laws can play a significant role in ensuring the rent is paid on schedule.
• The typical hold time for real estate is 10+ years. What can be a great investment today can become a financial disaster if the market changes. You need to look at both the return today and what it is likely to be in the foreseeable future.
• Careful selection of properties which the tenant pool found highly desirable enabled properties to still rent quickly during this turbulent period.

I hope this helps, Cory. Best of luck to your success.

Hello @Allan Maerina,

Thank you for your kind words. Are there any topics that you would like me to cover in the future?

Best Wishes,

Eric

Wrote the following for our clients in mid December 2015. Would welcome comments from fellow BP members.

National Economy

We think that a quote from Business Wire summarizes the national economy fairly well.

Las Vegas Housing Market

For the general Las Vegas housing market, the Las Vegas Review-Journal summarized the 2016 outlook as follows:

What We Are Anticipating in 2016

Our predictions are based on the following assumptions:

• Interest rates will rise in 2016 but at a modest rate. "Interest rates are headed up, but at a fairly mild pace." Forbes - Interest Rate Forecast 2015 - 2016

• China's economy will continue to slow down and there will be less cash property purchases in 2016. "China's Economy: More Volatility Ahead in 2016?" Bloomberg Business

• There will be no significant world events that will create volatility in the world economy.

Assuming the above, we predict the following for class A and B investment properties in Las Vegas:

• Sales Volume - The sales volume in 2016 will remain about the same as it was in 2015. If interest rates rise more than expected towards the end of 2016, we will see the sales volume trending down.

• $/SqFt - With sales volume declining, $/SqFt growth has flattened in recent months. We see $/SqFt as stable at least through the first half of 2016.

• Rents - Single family rents have steadily increased starting in mid 2015. Las Vegas has very little remaining develop-able land that is desirable. Because of this and continued economic growth in Las Vegas, we expect the trend to continue in 2016. For example, "Faraday chose the (North Las Vegas) site over locations in Georgia and Illinois that offered usable auto plants and better relocation incentives because it likes the business environment Nevada offered." Las Vegas Review-Journal. It is predicted that Faraday will employ 4,500 direct employees and approximately 9,000 indirect employees. We are seeing other businesses relocating from California and other states with less business-friendly laws and high taxes.
• Cash vs. Financed Purchases - With the Chinese economy slowing, we expect further declines in cash purchases. A year ago the percentage of cash sales was close to 50% and now it is down to 23%. The large number of cash buyers was making it difficult to get financed offers accepted through the first half of 2015.

In Summary

We do not see any significant overall change in the market if interest rates do not increase significantly. Las Vegas remains one of the few large metro areas with:

• Positive cash flow with 20% down financing 

• Business friendly environment

• No state income tax

• Low property taxes (~0.86%)

• Low landlord insurance (~$500/Yr)

• Timely and cost effective evictions (28 days / $500)

• Almost zero urban sprawl since Las Vegas has little develop-able residential land in desirable areas

• Steadily growing population.

• Steady economic growth.

Hello @Sean Autry,

I've been in Las Vegas for about 9 years. I was living in NYC and when I decided to change careers (in my last life I traveled internationally 200+ days/year), I chose real estate because there was little or no viable software for selecting good properties. I considered many locations in the US and Asia but decided on Las Vegas due to its unique characteristics. So far, the market has not disappointed me.

Hello @Sean Autry,

Welcome to BiggerPockets. I am a realtor in Las Vegas and most of my clients live in other states or countries so I frequently have discussions with potential clients concerning how I would determine where to invest.

So we are on the same page, I believe all investment properties must meet three criteria:

Below is a description of each level.

Metro Level Considerations

I would only consider metro areas with:

Location Level Considerations

Once you have filtered prospective locations through the above criteria you will likely have a relatively small number of potential metro areas to consider. Now you can focus deeper into each one remaining. To do this you need detailed location level information. Where can you get such information? Local property managers. Every day property managers deal with marketing properties, maintenance, tenants issues, rehab, local regulations, finding and screening tenants and many other rental property related issues. Local property managers know what works and what will not work. Google the name of the city plus the words "property management" and you should get a number of hits. Go through their web sites and look for mid sized property managers. Select 3 or 4 and call them. The minimum you need to know is:

Have a list of well formed questions before you call and take notes. (I created a list of property manager interview questions. If anyone would like a copy, send me an email.) If you hear the same information from multiple property managers, then it is probably true. When you finish your property manager interviews you should have a reasonable guess to the answers to each of the following:

Detailed Location Investigation Considerations

With the property profile you should know exactly what you are looking for. The next step is to contact a local Realtor. Provide them with your selection criteria (where, type, configuration and purchase price range) and they will send you conforming properties and you can do further analysis. If everything still looks good it is time to go see the location yourself and start to assemble your investment team.

Your Investment Team

It is imperative that you have a trusted local team. At the minimum you need a (good) property manager and a Realtor. For more details on the investment team check out this BP post.

Sean, I hope I answered your questions. If not, please post them. You can find out more about real estate investing through the links on my profile page.

I wish you success.

Hello @Antony S.,

Profitable flipping is extremely difficult in the current market. Several factors must line up in order to make flipping a profitable business. It was great in 2005 but not at this time. Please see A Process for Increasing Your Odds of Profitably Flipping Properties (BP Editor's Choice Award) for more on flipping.

On formulating a multi-year plan, we do this with our clients. You need to determine your destination before you can choose a path. Some of the questions I ask my clients include:

• Goals - Appreciation, cash flow, balanced cash flow and appreciation?

• Available funds

• Time frame - When do you need what?

• Risk tolerance

• Credit - Leverage is highly desirable in real estate investing

In terms of the Las Vegas investment market, as @Phillip Dwyer stated, good investments are hard to find (the same is true for everywhere). However, we spent years developing and tuning software for selecting good properties. Today prices are higher but so is the rent. We are constantly finding properties with a real return (including all recurring costs) in the 5% to 7% range (single family). However, these properties represent only 0.01% to 0.1% of the available properties on the MLS so we can only do this because of our proprietary software.

Antony, I have never seen a "60 day subject to financing" clause. You need to line up your financing before you make any offers. You need to know all your costs (including financing) before you consider any purchase.

Best of luck.