All Forum Posts by: Neil Henderson

Hi Elena,

Here is a link to the City of Las Vegas Short-Term Rental Map. That should give you an idea of where it's allowed. More information about the code can be found here. 
 

It's a challenge to make it work in the Las Vegas Valley given the regulatory landscape. The City of Henderson has legalized it and I think they are mostly going about it the right way. However, the issue is there are VERY few properties in Henderson that are not in an HOA. In order to get a license to operate in Henderson, you must certify in writing that operating a short-term rental would not violate the CC&R's of your HOA. To my knowledge, no HOA's in the city of Henderson allow rentals shorter than 30 days, in fact, many don't allow rentals shorter than 6 months.

What if an HOA or CC&Rs prohibit short-term vacation rentals? It is important to note that the City’s new ordinance does not alter the ability of common interest communities to prohibit short-term vacation rentals through their CC&Rs or other governing documents and to enforce those prohibitions within their community. The ordinance will require applicants for a city registration to certify in writing that operation of a short-term vacation rental would not violate any CC&Rs, bylaws, or other agreements governing the use of their property prior to obtaining a registration. In the event that a dispute arises between a homeowner and his/her HOA regarding whether a short-term vacation rental is permitted, if the HOA obtains a judicial order as proof of the prohibition, the City would not allow a homeowner in that community to register. If a property that has been registered and determined to be in violation of the judicial order regarding short-term vacation rental prohibition, the registration will be revoked by the City of Henderson. The City does not enforce CC&Rs or HOA regulations.

The conventional lender. The BP BRRRR calculator doesn't really allow you to factor in any outside loans that you use to purchase and rehab the property, like a hard money loan. I typically use another spreadsheet or I just do the math separately to calculate my holding costs.

Buy - At a discount. Let's say you buy a $50,000 foreclosure that has an After Repair Value of $100,000. Meaning, similar homes in the area, when fixed up, have sold for $100,000 or better over the last 6 months.

Rehab - The home needs to be fixed up. Let's say the rehab costs $25,000. You are now "all in" for $75,000.

Rent - You put the now, newly renovated home on the rental market and sign a tenant to a long-term lease (12 months or more)

Refinance - You go to a lender and ask to put a long term mortgage on the property. Most lenders will lend you up to 75% of the After Repair Value, in this case, $75,000. You have now paid yourself back the initial "all in" amount with the funds from the mortgage. The rental property has a 30 year fixed rate mortgage on it for $75,000 and is hopefully also cash flow positive.

Repeat - Since you have all (or most) of your original capital back, you can go do it again, and again, and again...

We use Trulia to get a high-level feel for the amount of crime in the area. Always back it up with a local market expert, but it provides some back up for what the locals are telling you. If a realtor is telling me the area is super safe, but Trulia shows a high crime area, I'm going to dig deeper. If other locals I talk to then tell me the crime is bad, I burn that realtor's number. 

It really depends. You're probably going to get a lower price on an off-market property for the simple fact that their are fewer people looking at it, but an off-market seller can be just as unrealistic as an on-market (MLS) seller.

If you're looking at Mobile Home Parks, Kevin Bupp is who you should reach out to. 

If you're looking at specifically mobile homes, look up Danny Burbol.

I'm sure there are people who do this but I'll be honest, it freaks me out. I look at HELOCs like really cheap hard money. Personally, I think you're better off using a HELOC as a short term loan to acquire a property and then refinance out of it. I'm in the process of doing this very thing.

There are no guarantees with AHP and a lot can happen in 10 years. The AHP investment could go south, the credit markets could crash and the bank could call your HELOC due.

Think short-term money with a HELOC.

I'd venture a pretty sizable bet that you could find people on this forum who were talking about the "top of the market" back in 2016. Here we are, nearly four years later, and I'd also bet a number of those people are still waiting for the market to drop.

Your caution is understandable and healthy. No one has a crystal ball that is going to tell them exactly when the market is going to drop (or where). If you are sitting on the sidelines waiting for the perfect time to invest, you'll likely be waiting for a looong time. And then if there IS a big market correction, people often find themselves lacking the necessary experience to give them the courage to invest in a down market.

The Three Immutable Laws of Real Estate Investing (courtesy of @Joe Fairless)

1. 1. Invest for cash flow, not appreciation. Cash flow is what is going to keep the lights on. It's what will allow YOU to choose when to sell and hold the asset while natural appreciation does its work.
2. 2. Invest with long term, low-leverage debt. Buy with debt that amortizes over 25-30 years, doesn't have a short term that comes due in 5 years and don't over leverage. 
3. 3. Go in with sufficient cash reserves. If there is a market correction, or you have something that goes wrong with your property, cash reserves are going to allow you to hold on while you (or the market) adjust.

If you invest with those 3 things in place AND buy a property at a discount (BRRRR), you will survive most market conditions and time (the investor's best friend) will do its work.

Would not be legal under Los Angeles' new short term rental ordinance to the best of my knowledge.