All Forum Posts by: Terry Lao

Hindsight is 20/20. This post originated around Feb'19, with title " Found a property in LV but worried about peak".

LV SFR median Feb'19, $296.2k.

LV SFR median Feb'20, $316k. If bought SFR, then gain 20k or 6.7%.

LV SFR median Feb'21, $355k. If bought SFR, then gain additional $39k or 12.3%

In hindsight, not sure if anyone could have predicted a pandemic that resulted in low inventory and low interest rates that fueled the real estate market to new highs. 

So, to answer the original question " found a property in LV but worried about peak", the answer is yes, should have bought.

Here's an example of 50k gain in a matter of a month on purchasing 4plexs. If you bought the lowest 4plexs in Las Vegas, in complex called Carriage Park Villas, for around $300k built in 1984, you could have gained $50k appreciation. The below comp just closed a few days ago at $355k. At first I thought maybe a fluke. However, spoke to the buying agent, and another listing at $310k, will close around the $350's.

Lesson to learned, is that the lowest priced multi's that sat on the market, are suddenly being snapped up, and for way higher than list.

https://www.redfin.com/NV/Las-...

The loan amount is $65k, and one issue you will have is finding a lender with such low loan amount and it's an investment property. If owner occupied, it would be easier. Your origination points and loan fees about $4k. If fannie mae and freddic mac does not do loan, then you will need to call local banks and credit unions. You might not get the best rates, but at least they will do the loan.

@Jacoby Atako

I redid the PITI and gave her generous property tax at .50% of sales price. I'm at $766 PITI, but lets say that close enough for PITI.

That means to net $450 per month, you would need to leave out water, sewer, trash, home warranty, repairs/maintenance, and cap ex?

Here are my below calculations, to get $450 net per month. Are we missing some expenses?

@Jacoby Atako

One of the variable factors is interest rate. At 4%, PI is $748.59. At 2%, PI is $579.56, and makes it plausible. However, are you really going to get non-owner occupied investor at 2%? I even commented that maybe you buy owner occupied 1-2 years ago, and now rent out. But 1-2 years ago, interest were still in the 3's. It's only late part of Q4 2020, that rates for owner occupied got to the low 2's.

Rent amount is referenced in the earlier question. I ran the numbers and you can see my calculations as why do not think can net $450 per month.

Where are your calculations?

The 1% rule, 50% rule, 70% BRRR rule, are all good reading and principles to understand. It's especially important for beginning investors to understand. The intermediate and experienced investors should know, and can deviate with knowledge or information that others do not have.

I use the 1% rule as a quick and dirty to save time and eliminate those that are not good ROI. If I had to analyze every single property, then would take too long.

FYI. My above example, $310k 4plex meets the 1% rule, as rents 850x4=3400.

 @Bill B.

Let's ask the above question to a SFR investor and LV resident of many years, if above numbers are correct? Mainly net $450 month on SFR purchase of 196k, 20% down, and if PITI is $750?

@Casey Powers

I'm looking at the numbers because as investors, it's all about the numbers. So if your PITI is $750, then the loan needs to be 2% interest rate 30 years fixed for non-owner occupied loan. In order to get that low rate, only thing that makes sense if it was owner occupied when bought, then turned it into an investment after one year.

Your example could be the exception, but not the rule. Brandon Turner of Bigger Pockets, talks about 1% rule, 50% rule, and that is generally true. Your example goes against these rules.

In fact my 300k 4plex is the exception. In this current market, it is difficult to find positive cashflow properties.

@Casey Powers

I agree with you and the drama/issues with 4plexs in bad areas. I'm just saying based upon your numbers above, I don't see a $450 month, net positive cashflow. The PI payment alone is $750, but your PITI is $750. Maybe your numbers pan out if you bought during the bottom of market in Feb'12, but not today.

I put my numbers for lowest price 4plex currently in LV for comparison.