Real Estate Investment Start Page
Las Vegas Real Estate Market Update 9/15/2023
We have entered The Twilight Zone of real estate in Las Vegas. There is very little inventory and yet there are no offers on what’s available. All the entry level homes that most of my subscribers look for are not available for purchase. The remaining bling bling properties (larger homes with pools and features) are out of reach for most home buyers and they make terrible investments.
Las Vegas Realtors reported 3,524 single-family homes listed for sale without any sort of offer in July, a 4.2 percent drop from June but a 51.9 percent drop from the same time last year.
A study Florida Atlantic University’s College of Business by proves Las Vegas is ranked #6 in the list of overpriced homes.
“We are in the grocery store where everyone wants apples but there are none for sale. There are plenty of oranges but few can afford them. Folks who can afford oranges don’t want to buy oranges because they don’t like the way they taste.”
How does this happen? This is stuff that’s not hitting the main stream media:
- Forbearance – You mean that’s still happening? Yes. All those investors and home owners who are struggling with mortgages are still being carried by the government. Strangely, this has not made the news. The FHA is offering a free ride until the end of 2024.
Employee Retention Credit – The government is still throwing money at small business owners. “You still have time!” – I get one of these calls every day from some telemarketer telling me there is free money to be had. This free money is supporting small business owners who own real estate. Will the government keep handing out free candy? Probably. What’s stopping them from printing another 20 trillion dollars?
- Institutional Investors – There are a dozens of privately held hedge funds and Wall Street investors who own tens of thousands of these smaller homes. According to CNN, they own a large segment of the entry level homes investors are looking for. No one knows for sure if these institutions are profitable or just massive pyramid scheme. That inventory may never come on the market. Since these are not on the market for sale, they are only available for rent. This explains why the rental market is tanking (see article below).
This isn’t just research by the way. I had an investor who attempted to purchase this 3 bed, 1 bath, no garage home in a really rough neighborhood. It was on the market at $200k and someone paid $210k cash. It needed at least $40k in repair (video). Whoever bought that would be lucky to squeak out a 5% return.
In summary, there is nothing worth buying for the small investor in the foreseeable future.
Rents Still Declining
|Studio – $874
|1 Bed – $1,340
|2 Beds – $1,462
We are also past the rental season. Anyone who has a property vacant now is going to feel even more pain as we approach the holidays. A strategy we have been offering our clients is to get very aggressive on pricing but only offer a 10 month lease so we can adjust the terms during peak rental season.
It will probably get worse as owners cut prices to attract tenants. In the meantime, there are a LOT of multi units coming down the pipe. This page lists all the thousands of units that will be constructed.
Turn-Key Rental Property Management
Real Estate Investment FAQs
Are Multi-Family Properties Good Real Estate Investments?
What about those multi family properties for your Real Estate investment? They look enticing. The listing agents are using smoke and mirrors. We used to manage about 30 of these multi family buildings. Our investors got out of them while the market is hot. They were barely returning 6% even after we got them at killer prices in 2010. What listing agents won’t share with you is they are very old buildings requiring constant maintenance. They are also full of crackheads, drunks and people who have issues. 95% of our lawsuits and evictions used to come from these buildings. We don’t manage them anymore because of that. Here is more on why mulit-family buildings are terrible Real Estate investments.
Are Airbnb Short Term Rentals Good Real Estate Investments?
What about those Airbnb? Are they good Real Estate Investments? Short term rentals make a lot of money! That is true but you can’t get a license except for that needle in the haystack in Henderson. The majority of the short term rentals you see on the market are not licensed. The chances of your short term rental getting caught is about 90% within 6 months. When you get caught, you are done. If you don’t stop after getting a love letter from the government, the fines are $1000 a day. They also don’t make as much money as you think. After all the expenses, platform fees, management fees, and repairs, they only make about 20% more than a long term rental, and are therefore poor Real Estate investments. Here is more about short term rentals as Real Estate Investments.
Are Commercial Properties Good Real Estate Investments?
What about commercial property? Is this a good Real Estate investment? Commercial mom and pop strip malls on the “East Side” are about the only remaining asset class worth buying. They return about 5% and your 12 year old can manage it because those leases are all NNN (tenants pay everything). The other nice thing about them is leases are generally between 3-5 years. Buy one and you don’t have to play with it very often.
The only downside to these East side properties as Real Estate investments is you have to have a lot of cash. The cheapest mom & pop strip mall in Las Vegas starts at about $800k. Commercial loans are no picnic and you will need to budget about 50% down. Unless you are sitting on about $500k in cash, you can’t play this game, and commercial properties may make poor Real Estate investments.
What Are Investment Returns Currently?
What are the investment returns right now? It isn’t pretty. Here is what to expect:
- Commercial Mom & Pop Strip Malls -> 5%
- 3/2/2s in the barrio -> 3%
- 3/2/2s newly built -> 2%
- 3/2/2s in upscale neighborhoods -> 2%
- Condos in upscale neighborhoods -> 1%
- Condos Under $100k -> -4% What? Really? You lose money on these? Rents don’t cover HOA, repairs and management expenses.
- 5/4/3s in guard gated exclusive neighborhoods -> -5%
- Fourplexes -> -8% We no longer manager these.
- High rise condos -> -10% (Why do people buy these? To impress their friends I guess.)
Our Real Estate investment clients were getting about 14% returns and doubled their investments when we told them to purchase in the last recession. The returns on Real Estate Investments are so terrible right now we have been telling investors burning a hole in their pocket to keep it in their pocket.
So, How is Jim Eagan Investing HIS Money?
Alright smarty pants. What you doing with YOUR money? I’m walking the talk. I’m sitting on a lot of cash waiting for the Real Estate investment market correction. Some of that cash is in gold and there are some smaller investments in hard money lending. I don’t understand bitcoin so I’m not swimming in that water.
7 Steps to Real Estate Investment in Las Vegas (starting about 3/1/24)
Step 1 – Determine how your assets will be held. Partnerships make shaky Real Estate investments.
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. Partnerships make shaky Real Estate investments.
Step 2 – Determine who you will work with in setting up your Real Estate Investment.
Do your Real Estate investment research on an agent or broker before you throw your life savings at this. If you really want to know what Real Estate investment 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.
Step 3 – Line up your financing before visiting potential Real Estate investment properties.
The days of easy Real Estate investment discoveries 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 Real Estate investment properties.
Once you have some financing lined up AND you have scheduled some time to look at some Real Estate investment 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 Real Estate investment property so we are going to get really cozy for very long time.
Step 5 – What you should be doing while your Real Estate investment property is 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 Real Estate investment property management ball rolling. DO NOT WAIT UNTIL YOUR REAL ESTATE INVESTMENT PROPERTY 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 Real Estate investment property ready for tenants.
Do not waste time or money waiting around or making fancy upgrades to your Real Estate investment property. 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.