Investing After Covid (updated 7/9/2020)
The real estate market will be changing dramatically over the next 12 months. Casinos can’t sustain this prolonged lockdown without cutting payroll. 25% of the workforce is unemployed. Some jobs will never come back. Ever. 3 Casinos have been closed indefinitely. Even if all casinos were to open soon, who would come? 90% of the flights to Vegas have been cancelled. The only people coming are from California and they will be losing their jobs soon too. Let’s not forget all the conventions, concerts and sporting events that have been cancelled. I spoke with an employee at MGM who told me 10s of thousands of employees will be cut August 31st. Numerous restaurants have been closed forever.
It will get much worse before it gets better.
Real Estate Market
We predicted a correction back in October 2018 and we are sticking to our expectations of a considerable drop in prices. We expect prices to drop about 35% over the next 20 months. We are witnessing the same sequence of events that followed the last crash. People who were stretched thin, ran out of reserves and stopped paying the mortgage about month 6. The government is just prolonging the inevitable. It was socially acceptable back then to tell banks to pound sand and it will happen again. Investors who are leveraged and have tenants who can’t pay rent are going to be the first to go. All of our listings are getting significantly lower offers every day. One listing in particular was lowered 25% in the last 2 months and we still can’t unload it.
When will he hit bottom? We are guessing middle of 2023. The government is scrambling to throw money at distressed owners but we all know printing money isn’t sustainable. It is difficult to know exactly when the government will run out of steam. As we approach the bottom, I be increasing the frequency of these broadcasts. Investors who followed our advice in the last recession snapped up properties and made significant profits. We will do it again. Don’t worry, we will let you know when it’s time to buy.
How will you get notified when to buy?
You will need to subscribe to my newsletter. We made investors a LOT of money after the last recession and we will do it again. I have been broadcasting this newsletter since 2007 and you will find old articles here. When the bottom of the market approaches, I will be letting everyone on my subscription know about deals to be had. Don’t worry, there will be a lot of properties to choose from and the buying frenzy will take about 6 months. You will get individual attention if you are prepared.
Investors who missed that last boat didn’t have their tickets in their hand. We will only have time for investors who are ready to buy. You have almost a year to prepare so do it now. This is what you need to do now:
- Set Up A Trust or LLC:
- Trusts – These take a long time to set up and you have plenty of time to that NOW. Not a year from now. If you have a family, a living trust is imperative. These are painful to set up but in the long run, you will reap a lot of benefits. Not only will you create a seamless transition when you check out but it will also afford you with protection from potential lawsuits.
- LLCs – These are cheaper and easier to set up but they don’t provide as many benefits.
- Keep Your Money in the Stock Market – There is no need to pull it out now. Create a method to transfer your money into your LLC or Trust accounts when the time comes. Before we go hunting, you will need to provide us with proof of funds.
- Credit – It’s too early to shop for a lender now and conditions will change a LOT between now and then. However, this is a good time to review your credit and fix anything that may be on your credit. You would be surprised to find some bogus stuff on there. Clean it up now.
7 Steps in Investing in Las Vegas (starting about 3/1/21)
Step 1 – Determine how your assets will be held.
Decide how title will be held. LLCs are recommended if you want to keep the wolves at bay. DO NOT HOLD TITLE WITH PARTNERS unless the partner is your spouse. These things blow up right about when you are too sick to deal with it or your partner runs out of money. We can send you pictures of burned out buildings if you want to see the end results of partnerships. We see tweakers light these on fire just about every week and will be happy to tell you stories of how those partners got started 20 years ago. Video.
Step 2 – Determine who you will work with.
Do your research on an agent or broker before you throw your life savings at this. If you really want to know what returns the best money, talk to companies who also manage them. Trusting information from a listing agent is the fastest way to get your clock cleaned. Here are our YELP reviews. Video.
Step 3 – Line up your financing before traveling.
The days of easy finding came to an end in the real estate crash in 2008. If you are paying cash, you will need to prove it before you can make offers. If you are getting a loan, talk to a loan professional today. If you need a referral, we have some awesome people who can help you with either residential or commercial loans. We are not going to drive around in the heat until you can show us you have the ability to purchase. Do you go to Walmart without your wallet? Neither do we.
Step 4 – Arrange to go hunting for properties.
Once you have some financing lined up AND you have scheduled some time to look at some properties, we will do a free, no hassle, no pressure hunting mission with you. We are not time share people and there is no reason for us to force you to buy something that will make you lose money. We will probably be managing your property so we are going to get really cozy for very long time.
Step 5 – What you should be doing while in escrow.
Please read this important information about The Las Vegas escrow process. This will save you lots of time and headache. You also want to get the property management ball rolling. DO NOT WAIT UNTIL IT CLOSES TO FIND A TENANT!! We offer a variety of property management services and this page covers all our property management solutions.
Step 6 – Get your property ready for tenants.
Do not waste time or money waiting around or making fancy upgrades. Read our Rehab 101 page for dos and don’ts. You can do your rehab or you can hire us. We charge 10% over invoice. We do about 2 rehabs a week and can probably do it much cheaper and faster than you can.
Step 7 – Collect money!