Las Vegas Real Estate News
Is There A Correction Coming?
2019 could be the year you unload your property in Las Vegas. The chart above shows prices of homes and the red line is my prediction of what is to come. People are paying way over market value to get a property and lending standards are lowering. These conditions always lead us into a storm that will probably burst in the fall / winter of 2019. The time in which these storms break are difficult to predict but there is no doubt the clouds are building. All it takes is some weird catastrophic event for the market to crash. The internet goes down for a week, China attacks Russia… Godzilla rises from the ocean. Who knows. What we do know is that when something like that happens, people freak out, businesses pucker up and people lose their jobs. You want to be sitting on a pile of cash when there is blood in the street. When there is a correction, we will be here for you to pick up cheap abandoned houses. It probably won’t be as catastrophic as last time but it will be significant.
In January we will be reaching out to all the tenants with expired leases and increasing rents. We will also be cleaning up a lot of our files with updated property management agreements. There are few clauses in those agreements that do not conform to acceptable practices. Don’t panic when we reach out to you for an updated property management agreement. Our terms are the same and you can quit anytime.
We have started doing annual inspections as I feel that’s a part of the business that’s been below standard. This effort is to reduce damage due to leaks, water heaters bursting and air conditioner filters not being changed out frequently. The results have been excellent as tenants are making sure their property is in order and we have found some issues. If you have questions about this, contact your property manager.
We are so frustrated with Home Warranties I need to address them. Here are the 4 reasons you should not renew or even get a home warranty:
- Home Warranties don’t cover 95% of the issues that occur. That’s right. Home Warranties will show you the fine print just before they throw you under the bus. In the last decade, we have never ever never had a home warranty replace an HVAC unit. Ever. In a best case scenario, they will patch up that unit and you can squeeze another 4 months AFTER they charge you for parts and labor. After you have spent hundreds of dollars putting bandaids on that dying HVAC unit, you will end up buying a new one anyway. Every single one of our owners cancelled their policy after they dealt with an HVAC warranty.
- Home Warranties will piss off your tenants every single time. We have never had a technician respond to a tenant within 6 hours. The average response to a broken Air Conditioner is 48 hours. Every year, we lose a tenant because a home warranty dilly dallied. By the time they tell you your AC isn’t covered, a week has gone by. You have no idea how hostile tenants get when it’s 110 degrees and their AC has been out for a week. The most frustrating thing for us is that the tenants put the blame on us. We get negative reviews because of these stupid home warranties. Grrrrr.
- Home Warranties will create more damage because they don’t jump to the scene. About every 10th warranty issue caused more damage to the property because they took 2 days to get to the problem. This happens frequently with plumbing leaks. In one case, the lack of response created 3 times the cost of repair because of sheet rock damage.
- Home Warranties usually end up costing you more after all is said and done. Most warranty companies will charge $75 per trade call. In many cases a maintenance event requires multiple trades with multiple visits. Those add up and we have found that if we had just sent out an handyman, the cost would have been less.
Lease / Options Have Ended
In case you didn’t get our last broadcast, we ended our lease/options about 6 months ago. Here are the 6 reasons why have discontinued lease/options:
- Despite all our efforts to educate tenant/buyers with the perils and low success rates, we have been attacked with multiple lawsuits and have been getting at least one Real Estate Division complaint every quarter. There is no reason to drag our investors through the mud anymore.
- From a business perspective, the revenue Limestone Investments earns from these sophisticated instruments are tiny. The return for all that hard work isn’t worth the lawsuits and division complaints.
- We expect a major correction within the next 2 years. This means that investors who are in the middle of a lease/option could get their clock cleaned. The last thing we need is to have a bunch of investors at our gates with pitchforks and torches.
- Our available inventory of properties has dwindled down so much that it isn’t practical to keep that old marketing program going. That advertising effort made sense when we had 25 properties available.
- Our tenant screening process has improved leaps and bounds from our old methods. In the last year, our evictions and the number of difficult tenants have dropped sharply. Our “regular tenants” are outperforming our “lease/option tenants.”
- If investors want to squeeze out a better return than a “regular tenant”, “short terms rentals” have been doing well. The returns are double that of a “regular tenant.” HOWEVER, before you jump into short term rentals, you need to digest this page first: Short Term FAQs.