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Frequently Asked Questions From Investors (Usually Folks From Out of Town) Does it get really hot in the summer? Yes
Late August gets close to a nuclear melt down. Vegas didn't spring up until after air conditioning was invented. There are days on end that reach 115 degrees. That's why I get up early and keep a low profile at 4pm.
Where are the good neighborhoods? What is good?
Good cash flow? Good equity? Good schools? Pride of ownership? All white? No foreclosures around? This is the most frustrating question of all because your idea of a good investment is different than mine. I'm white and I never buy in an "all white neighborhood" because the cash return is terrible. I have always lived in and invested in colorful neighborhoods because I make more money there. Making investments based on race or ethnic makeup of a neighborhood is just plain foolish.
What is the correlation between desirability and crime? Crime is equally distributed among all neighborhoods.
Yep. Don't believe me? Plug in an address in Clark County's crime statistic web site and do some homework. I live in a neighborhood full of half million dollar homes and we get more crime than 3 of my rentals combined!!! My theory is that the crooks prefer those areas. One reason could be that exclusive neighborhoods are more likely to report crime. Perhaps crooks prefer to rip off rich people...
Are gated communities safer? No
Half the time the listing agent doesn't have the gate code and I just coast in behind someone else. Gated communities keep out friends, people you are trying to rent to and folks trying to deliver pizza. Still don't believe me? Go here and punch in an address in a gated community, you will discover no correlation between crime and gated communities. My favorite story I love to tell is about a $800k home inside a guarded gated community that was occupied by squatters for 2 months. I have NEVER been held outside a gate by a guard. I show them my 2 cent business card, act official, make up a story, and I'm in.
Is Las Vegas safe to live in? Yes
Relative to Oakland or Detroit, this place is "Mr Roger's Neighborhood." Ever been to El Salvador? You haven't seen dangerous until you've been in a war torn country. Las Vegas does have more crime than the national average. However, the high number of foreclosures is due to "White Collar" crime in the mortgage industry. And another thing: "CSI - Las Vegas" is shot in Los Angeles - not in Las Vegas or North Las Vegas. This is another reason you should stop watching TV.
When will real estate prices hit the bottom? We are there.
On 5/5/09, I witness for the first time in 4 years properties go up in list price. My investors that focus on 3/2/2 houses NEVER get the house they want. Foreclosed properties between $50k and $100k are currently being outbid. Properties in "desirable" areas are going up in list price. The last time I had an offer accepted below list price was November 2008.
Why does the media keep preaching the end of the world is near? People love to buy fear.
The media doesn't make money by telling you the world is peachy and that there is no news. They drum up drama so you have a reason to consume it. The Review Journal is the last place to know what is happening on the street. By the time the statistics show list prices are rising, its too late to jump on the train.
Are the rumors true that there is another tidal wave of foreclosures? I don't know.
I can't find any evidence that there is another tidal wave coming. I chit chat with listing agents and keep my ear to the ground and there isn't a person in my industry that has produced anything to show this is true. However, assett managers are an illusive bunch and they would probably lose their job if they told the truth. I'm not convinced there is someone who truly knows. My guess is that banks will slowly "drip" these foreclosures into the system to keep it from sinking. This is just a theory of mine and I have no evidence to support it.
How do I know that the content on your website isn't a bunch of crap? Ask someon else.
Get on the phone and call my investors or call someone you know in Vegas. Call a real estate agent and ask their opinion. Pick 3 agents out of a hat and ask the same questions and see if you don't get the same answers. I created these pages to save you and I a lot of time.
Are people still moving to Las Vegas? Yes
The latest census numbers, say the Las Vegas metropolitan area grew by 38,091 people from July 1, 2007, to July 1, 2008. That is a "Net" influx of about 3,100 people per month or about 100 people per day. It is no longer the fastest growing cities which everyone here is thankful for. 100 new people per day need a place to live. In the meantime, all those foreclosed properties are not available to move into. Rents are holding steady or slightly increasing.
What is the job market like? Worse than last year.
Las Vegas got clocked like everyone else. The national average is 8.9 while Las Vegas is at 10.1. Three years ago it was closer to 3. The bulk of the jobs are of course related to the gaming industry. My gut feeling is that it won't get any worse than now. I also predict that Las Vegas will rebound faster than most other cities.
Why are there so many foreclosed homes? Foolish investors walked away.
Investors flocked to Vegas about 5 years ago and purchased everything they could get their hands on with outrageously bad loans. I actually met guys who purchased 6 homes with nothing down with negative amortization loans. I distinctly remember telling many of these people to stop because they were getting in way over their heads. After the music stopped, they couldn't unload their portfolio and had to walk away. The other irresponsible crowd was the folks who took out large lines of equity and purchased toys. Very very few victims were the actual down trodden owner who lost their job.
Do you like living in Las Vegas? Yes!
The standard of living here is way better than most other parts of the country. It is also a paradise for real estate transactions.
Do you gamble? Only on real estate and stocks.
I don't gamble in casinos because it's a guaranteed losing proposition. I have always made money on real estate investments. My real estate investments have always out performed my stock picks. This just shows you that I'm not very good with stocks so don't ask for my stock advice! The only reason I have stocks is because I'm told that I should be diversified...
Will Las Vegas run out water? No.
Water is still ridiculously cheap here. Crazy people are still planting grass in their yards. There are plans to build more pipes. Intuition tells me the water authority will eventually crank up the price of water which will force people to conserve water. Once you add conservation with increased production, you get plenty of water. I predict water will become more expensive. My water bill will probably go from $35/month to $50/month - no big deal.
Why aren't banks motivated to unload these vacant properties? They already made their money.
The first 4 years of interest paid for the house. They could burn it down and still have made money. Banks are not emotional about an asset. They list a home at a price they want and then lower the price gradually until it sells. No mystery. No emotion. If you don't want it at that price, go somewhere else. Nothing personal.
Why does it take a week for a bank to respond to an offer? The bank just waits for offers to pile up and then makes a decision.
The listing agent puts all the offers in a basket. At the end of the week, the agent tosses out all the dingle nuts who didn't put an offer along with proof of funds and an earnest money deposit. They don't even look at those. They then take the remaining 20 offers and sort them according to bid price. The top 3 bids get a courtesy email that says "The bank is considering your offer. Here is a 20 page addendum that your buyer must sign." If a buyer doesn't respond within 24 hours, they move to the next buyer. The other 17 offers at the bottom of the pile get thrown away. Occasionally, the selling agent sends a courtesy email "thanks for playing."
Can I offer less than list price and still get a house? Not likely.
Generally for homes that just need "carpet/paint", if you offer 5% less than list price, the chances of getting the property are about 5%. If you offer 10% less than list price, I won't even submit your offer because you are just wasting my time. Offering at list price gets you about a 50% chance of closing. 10% above list price and the property is yours!!!
Every single one of my investments is a 3/2/2 in a middle class neighborhood ranging from $110k - $130k. My style is primarily houses that have have average income and appreciation potential = SMACK DAB IN THE MIDDLE of what people want. However, you may have a different style. Some of my investors for example love the low price, high income properties in less desirable neighborhoods. My style could be different than yours. No big deal, tell me what you like and I'll find it for you.
Do you rent or lease/option your homes? Strictly Lease/Option
20 years of managing properties have proven to me that Lease/Options are way better than straight renters. Before you consider doing lease/options, you absolutely must read this page. You can lose money in a lease/option. Not all investors have the stomach for it. I don't care if you have someone else rent your property or you manage it yourself. Here are your 4 management solutions.
After I purchase my property, how can I get a tenant? There are 4 solutions.
I don't care which solution you choose and you may elect to use all 4 at the same time. The only thing I ask is that you let me know IMMEDIATELY if the property is no longer available.
Is it easy to evict a tenant? Yes.
Nevada laws are extremely landlord friendly. Unlike most states, your tenant will be out on the street in 30 days in most cases. 80% of the tenants come to Jesus on a 5-day notice. The eviction process is easy and I can do this for you for free in most cases. There is no correlation between eviction frequency and neighborhood desirability. I evict just as many folks in upscale neighborhoods as the poor family living in the "hood."
How easy is it to rent a house in a neighborhood that is not desirable? Depends on price.
There is no relationship between desirability and speed. The speed at which a property moves is a function of price. Here is an extreme example: A bling bling house in Summerlin won't rent out at $3k/month - EVER. A dive home in the worst part of Vegas will rent within 1 week if it is advertised at $400/month. I took the mystery out for you. The rent shown on my web site shows you what your net rent will be within 3 weeks AFTER you bring it up to rentable standards.
How easy is it to rent a condo? Depends on price.
There is no relationship between the type of home and speed. The speed at which a property moves is a function of price. Here is an extreme example: A bling bling house in Summerlin won't rent out at $3k/month - EVER. A one bedroom condo in the worst part of Vegas will rent within 1 week if it is advertised at $200/month. I took the mystery out for you. The rent shown on my web site shows you what your net rent will be within 3 weeks AFTER you bring it up to rentable standards.
Am I the king by offering cash? Sometimes.
Many banks want the loans more than they want to unload the property. Even if you are the highest bidder with cash, a bank would rather take a lower offer if they can get the loan. If you see a foreclosed property owned by a specific bank on my web site, this means that your cash is not king.
How does "Days On Market" affect my bid price? It doesn't.
What makes all the difference in the world is how long a property has been on the market at the current list price. For example, if the price dropped $20k yesterday, the property won't last until the end of the week and it is recommended that you bid above list. If the property is in poor condition and been on the market for months at the current price, it would be safe to bid below list.
What should I be concerned about when looking at condos? You want to make sure the unit isn't under litigation.
If a unit is under litigation, you will not be able to get a loan to purchase the property. It also means that if you paid cash, you could be stuck with the property until litigation is resolved - if ever. Many of the "Condo Conversions" are in litigation so be very careful. Many newbie investors step on this land mine.
What's your opinion on commercial real estate? I think it will be the next train wreck.
Cash flows don't make sense and there are vacancy signs everywhere. And they are building more! I suspect in about 2012 you can pick these up for a song. That's when I will unload my residential stuff and buy commercial. The most money I have ever made was with commercial real estate. However, I think it's a bad move at the moment. FYI - I have never lost money in real estate and every single one of my properties has positive cash flow.
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