Category Archive : Investing

National home values have risen and your investment properties probably gained values too. The Internal Revenue Code Section 1031 gives investors the ability to defer capital gain tax when you exchange business-use or investment property for another business-use or investment property.

There are many ways of exchange. For example, sell a vacation rental home in Hawaii and buy three investment properties in Las Vegas to generate more stable and higher income, sell an old apartment building which always needs repairs and buy a Triple Net Leased commercial property, sell a farm land in California and buy a hotel-condo in Florida. It can be exchanged for personal properties too.

Flipped properties don’t qualify, but if a property listed for rent for a few months without finding a tenant then changed it for sale, can qualify, as well as vacant land which didn’t generate any income. (Per Certified Exchange Specialist, Carmine at First American Exchange)

There are two deadlines for successful 1031 Exchange;

1. Replacement properties must be identified within 45 day.
2. The exchange must be completed by the earlier of 180 days from the date of the first relinquished property closing.

For fully deferred exchange, replacement properties must be greater or equal value of the relinquished properties, and all proceeds from the sale of the relinquished properties must be reinvested.

It’s important to select a Qualified Intermediary with financial backing of $1,000,000 Fidelity Bond and $250,000 Errors & Omissions Bond. Nevada is one of nine states which enacted the QI law.

Sachi Reeske

If you’re thinking to utilize the 1031 Exchange, please feel free to contact me at (702) 461-5694 or atsuko @ shelterrealty.com. Atsuko Winston, Licensed in Hawaii and Nevada, Realtor / Property Manager.

www.vegasfudosan.com

Las Vegas Investors, small and large, can only prosper when they are totally flexible and adaptable to market changes, and, to be sure, the market is and will always be in a state of flux. Some changes may linger for awhile but to be sure, change is inevitable.

To be successful, the investor must keep up with and take advantage of the global changes brought on by the integration of many international economies. The current value of the U.S. dollar in comparison to the Euro for instance, has continued to attract international investors interested in properties within the United States, particularly Las Vegas.

Tax shelters designed to shield capital gains are less effective when market prices are falling, and sound, fundamental management is what is required to maximize property income during both good times and bad.

The astute investor in real estate must keep up with the way in which advances in communication can affect demands for certain kinds of investments.

Will the ability to complete entire transactions on the world-wide web have serious implications in regard to the demand for office space and traditional brick and mortar retail stores?

There will always be opportunities for the small investor in good times and bad, particularly since larger investment firms are rarely interested in smaller apartment houses, office buildings and single family home properties.

The small real estate investor must be sure of the kinds of investments he/she are most knowledgeable about, and most comfortable with. What are the goals?

What is your risk tolerance? Are you investing for Capital appreciation, current or tax-free income? What are your exit strategies, and time frame?

Additionally, the investor must estimate a time frame for return OF investment (return of the originally invested funds) and the return ON investment (profit.)

Investors in general look for properties which are easiest to convert to cash, (investment liquidity) at market values.

Liquidity is certainly very important, but location is one of THE most important factors in determining a property’s overall performance.

Evaluating trends in the local market and surrounding areas are a crucial part of deciding the worthiness of a particular property as an investment objective.

The investor must also examine possible restrictions as to use of the property, such as zoning laws, how demand for the property may be enhanced or diminished by interest rates, building codes and environmental laws, an oversupply of similar properties in the area, and such.

All of the above constitute greater or lesser risk factors. A certain amount of risk is an unavoidable factor in any investment, whether it be real estate or a new business start-up. However, the successful investor knowingly assumes only “calculated” risks, factors in the investment that have been carefully thought out and investigated before making a commitment.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com

The knowledgeable Las Vegas Real Estate Investor can be differentiated from the less astute investor by the fact that the overeager investor often looks to purchase any property or properties he or she can find based almost entirely on price: if the price is right, the property is purchased!

However, the really successful investor will only purchase properties that fit within particular financial parameters as well as pre-established goals and guidelines that are not strictly based on price. These are the investors whose real estate deals are consistently profitable.

Certainly, an investor whose buying strategy is based strictly on buying low, may not always be able to sell high. The reason for this is that little or no attention has been given to so many other factors that could, and probably will often negatively impact the resale value of these properties.

Differentiating between a desirable and a not so desirable property takes experience, and a backup team of realty, legal and taxation professionals.

The successful investor will make no offer to purchase any property unless the residence meets the investor’s established guidelines and the long or short term profitability of the purchase is confirmed, and only after consultation with the investor’s team of experts.

Part of the evaluation process –aside from price – that is used by the successful investor to determine the worthiness of a property include the following:

• The neighborhood:  Property located in a stable, established, well-kept neighborhood may pose a better opportunity for a profitable resale than a newer neighborhood which may or may not develop into as desirable a location. Certainly, property in newer developments have often appreciated nicely, but an established neighborhood with a history of consistent value appreciation is the safer goal.
• The Location: Houses located on Cul- de- Sacs or corner lots may be more desirable and appreciate a bit more than the surrounding properties. The property’s current and future value is additionally dependent upon a neighborhood location that would be most desirable to families.
• The physical condition of the property is another important consideration. If the home is in less than perfect condition, are the defects merely cosmetic, or would it take an expensive rehab job to get the property into saleable condition?
• Will this home be suitable for purchase as a rental property in order to generate long-term cash flow, or purchased for a quick resale?

Of course, we’re just scratching the surface here, within the limited scope of this article but the bottom line is that the key to real estate investing success is to understand the market and which way it is headed. No easy task, unless you have the experience and the back up of a knowledgeable investment team to guide you.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com

The term of “flipping” generally applies to buyers who purchase a property or properties, and then immediately put the properties up for sale, looking for a fast turnaround and quick profit.

Some scenarios involve “finders,” people who work with investors. Their purpose is to find and investigate properties for sale that meet an investor’s criteria, similar to a broker or Realtor, but unlicensed, and in many states illegal.

Since “finders” are basically engaged in the business of bringing buyer and seller together, they are, in fact, acting as unlicensed brokers. Furthermore, investors, knowingly working with “finders” may be skirting the law as well.

In fact, most are untrained and do not have the skills or resources needed to properly evaluate the fair market value or profit potential of a given property, as would a licensed Las Vegas Real Estate Agent or broker.

Although no knowledgeable investor would associate or work with “finders” some naïve investors think that through these finders they can buy and immediately sell real estate (or “flip”) for a fast and easy profit. Nothing could be further from the truth!

Buying properties and immediately selling for a quick profit requires exceptional negotiating skills, and an in-depth market knowledge gained through long experience. In fact, it is a market strategy that only the most skilled and astute of real estate investors can consistently profit from.

The real estate crunch of the past few years has unfortunately created a false impression among naïve dreamers that anyone at any time can become an overnight real estate millionaire.

There has also been a proliferation of so-called real estate “Gurus” who write books and conduct expensive seminars, that propose to show how anyone can gain financial freedom through real estate, buy property with no money down, etc.  A few may offer good advice, but others are just money making schemes for the authors and seminar holders.

Additionally, many fraudulent real estate practices have been  associated with flipping, as get rich quick schemers have evolved practices designed to skirt the law, such as using false appraisals to alter the real fair market value of a property, kickbacks, falsified loan documentation, quick claim deed manipulation, and more.

In a market of zero price appreciation, legitimate flipping, for the most part, can make money only on rare occasions, and only if handled by the most skilled of investors. As housing prices begin to rise, flipping becomes a bit more advantageous.

It pays to remember that even when the market is good, and flippers can make a profit, consideration has to be given to the fact that the property may take a more than anticipated time to sell, and if so, did the buyer pay cash or will there be mortgage payments to consider until the property is sold?

If the property is a rehab, what about the costs involved in repair?

Approach any real estate deal with caution, and remember, if a deal looks too good to be true, beware!

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702.376.0088.

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com

If you are a new player in the Las Vegas Real Estate Investment game, one of the first steps you should take as part of an investment strategy – that you have hopefully planned out meticulously – is to find a good real estate agent to partner with you.

Find an agent who is in sync with your strategies (some agents prefer not to work with investors,) and has the experience and expertise to help you achieve your goals. You need an agent who can help you find and qualify the good deals, handle much of the details, and one who has worked with investors before.

Although word of mouth is one of the best ways to find a qualified agent with a solid track record of success and great references, Las Vegas Real Estate Investment Clubs are another source.

When discussing your plans with an agent you are considering partnering with and who is interested in working with you as well, be sure to explain exactly what kinds of properties you will interested in buying. Assure the agent that you will both make money from this partnership, and that you are a high-energy, aggressive and eager investor.

Another thing to keep in mind, is that if your buying strategies involve sending out a flood of low-ball offers in order to consistently close deals, some agents would rather not work with you.

That is why it is so important for the agent or agents you are interviewing to understand what your investment strategies and goals really are. You have to be as forthright and honest with them as you expect them to be with you.

Now, what about buyers? Certainly, your strategy for investing in Las Vegas Real Estate has included contingencies for dealing with willing buyers who are handicapped with marginal credit.

Many of your buyers may be able to acquire a mortgage on their own, but buyers with a passable, but not very impressive FICO score, probably would not qualify with most lenders.

This is where another very important member of your investment team, your mortgage broker, steps in. If you are closing on properties monthly, you are going to attract brokers willing to work with you. Find a broker who has the expertise and lender contacts to obtain mortgages for people with marginal credit.

Don’t expect miracles, however. A buyer must meet certain, even minimal standards of acceptance, but if those criteria are not met, obtaining a mortgage will not be possible.

If you are a quick-turnover investor, you will need a broker who can close deals quickly, and will be available when needed. Assure the broker, as you did your real estate agent, that you want everyone on your team to make money. Consistently closing deals will be all the assurance they need.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702.376.0088.

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com

Negotiating to buy distressed properties from a lender certainly shouldn’t trouble the conscience of an investor; however, some investors feel pangs of guilt when trying to negotiate a deal with a Las Vegas Homeowner in financial difficulty.

If you are a creative investor with a conscience, you are not trying to take unfair advantage of anybody. You are not a predator. Instead, you will be attempting to promote a win-win situation that relieves the homeowner of his/her burden, and creates a profitable deal for yourself. This can be done, and is frequently done.

Las Vegas Homeowners in financial difficulty, and who are in danger of losing their home, but are not as yet in a pre-foreclosure situation, would certainly welcome the opportunity to sell at a fair price, and the lender would equally be freed of the expense and difficulties involved in foreclosing and trying to recoup at least a part of their investment.

Seems only fair that the investor should earn a certain profit for his efforts and output of funds. Besides, depending upon the condition of the home, the investor may have additional expenditures for repairs and upgrades necessary to increase the property’s value.

If the homeowner is already in a foreclosure situation, the investor must contact the borrower first, and cannot approach the lender or learn details of the borrowers overall financial situation from the lender without written permission from the borrower.

Once the negotiation process has begun, the investor, regardless of whether dealing with a bank, private lender, or a government agency ( FHA, VA, etc.,) will no doubt have an exit strategy that will include contingency clauses in the proposal. These clauses basically gives the investor an “out” if, for example, the appraisal report is negative for one reason or another, or if a home inspection reveals certain serious problems, such as structural damage.

Additionally, the investor may -unless it is an all cash purchase- specify in the proposal agreement that the purchase is contingent upon the investor obtaining financing under specific terms and conditions.

We are only scraping the surface at this point, since there are many other factors to consider as an investor in foreclosure and pre-foreclosure property.  Since this type of real estate investing can be as complex as it is profitable, it probably should be avoided by a new player in the field, and left to the expertise of a more seasoned investor who conferences with advisers that have considerable experience in this specific area of real estate investment.

Negotiating the purchase of a pre-foreclosure, buying a property at a foreclosure auction, or purchasing the foreclosed property from a lender each take a different negotiating tactic which will be covered in brief in the second part of this article.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702.376.0088.

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com

The Las Vegas Condo-hotel Concept Pt. II

As with any potential real estate investment, a buyer should cautiously examine contractual details, make observations, and examine facts before deciding on whether or not a Las Vegas Condo-Hotel is in line with your goals and lifestyle.

• The location of your prospective purchase should be in a desirable area. Although the condo home itself may be a well designed and luxurious unit, location is an important factor in desirability and will most certainly reflect upon the ultimate appreciation of the property.
• Is the unit located in a structure built specifically as a luxury hi-rise, or has the building been converted from a standard hotel or apartment complex into condo units?
• When was the structure built? Some older condo conversion buildings may have smaller floor plans, less desirable locations and fewer amenities, but are usually much less expensive.
• Good management and a developer of excellent reputation is a most important factor in value appreciation of the investment.
• The units themselves increase in desirability if they have spacious, well-designed floor plans, high ceilings, sizeable balconies, impressive views, top quality appliances, granite counter tops, and marble vanities.
• What amenities are available? Among the most desirable features are: a state-of-the-art security system, secured parking, 24-hour front desk, concierge services, work-out room, swimming pool (or pools,) lighted tennis court, on premises maintenance crew, card room, library, clubhouse or meeting room. Nicely landscaped grounds add to eye appeal.

Owner/management agreements generally include the following specifications:

• Amount of net (after deductions) rental revenue shared by condo owner and the management
• Condo-hotel owner responsibilities for insurance, real estate taxes, capital improvements, debt service, etc.
• Management responsibilities, including maintenance, housekeeping, administrative, front office, marketing, other operational expenses, etc.
• Rental program agreement specifying number of days annually that the unit will be available for rental purposes and notice requirements, and contingency procedures

Although it is, of course, not a requirement of purchase to rent a condo-hotel a number of times per year, or rent it at all.  Renting the unit, however, not only defrays owner costs but is profitable as well. In fact, that convenience is the primary reason, of course, that these kinds of units are purchased in the first place.

However, some come-and-go condo hotel owners may eventually decide to stay permanently. In that case, the rental agreement with management would be canceled.

In fact, a condo hotel purchase should be considered similar to investing in a second or vacation home, but with an added part-time rental feature, and hassle-free, with no maintenance or grounds keeping chores to come home to.

Feel free to give us a call at 702.376.0088 with any questions about the Las Vegas High Rise Condo market.

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com

Condominiums

Investing in Las Vegas condominiums is no different than any other real estate property investment. Knowledge of current market conditions, working with an experienced, knowledgeable Realtor, and having a real estate attorney and CPA on your team will certainly help to ensure that intelligent investment decisions will be made.

In the recent past, certain cities, such as Miami and Las Vegas, for example, experienced explosive growth in condominium construction, and condo homes were being sold as fast as they were being built, with even pre-construction units being quickly snapped up.

Current market conditions, particularly in these two cities, reflect an entirely different scenario. Despite a glut of willing buyers, and an equal glut of distressed condo units on the market, many selling at “bargain” prices, sales are not overwhelming, and the inventory of unsold units remains high.

Does that mean that investing in Las Vegas condo units as rental investment properties should be avoided, particularly during these difficult economic times? Certainly not! Many of these kinds of investments can still become profitable, if careful planning and forethought are the guidelines used before making a purchase commitment.

Forecasting the future of any investment is never a sure thing, particularly in a downside marketplace, with no firm indications as to when and to what degree an upturn will occur. However, investment knowledge and skills, backed by reliable advisers will certainly maximize the chances of an investor making the right choices.

Condos are still popular with young professionals and retirees, and offer many amenities not available to the average apartment dweller or single-family homeowner, such as workout rooms, spas, swimming pools (sometimes more than one), tennis courts, concierge services, secured parking, building and condo unit security systems, libraries, card rooms, a clubhouse, and, balconies, city,  or mountain views, and more.

Another big plus for many condo dwellers, is they do not have to deal with the many maintenance issues involved in single-family home ownership. Some condos are part of a mixed-use development complex, with retail shops and restaurants on the premises.

Investing in condo conversions, however, are unlikely to offer the same profit potential as complexes designed and built as condominiums. Condo conversions are simply apartment buildings, with units originally rented on a lease basis, and are now tenant owned.

Cosmetic changes, simply painting the premises and possibly landscaping the property may be the only upgrades from apartment complex to a condo conversion the owners are willing to make.

Chances are, the building is an older structure and may have expensive plumbing, electrical, heating, cooling and structural problems in the near future –or sooner.

Overall, although a condo investment may not realize the future value appreciation of a single-family home, they are normally less expensive an investment, and with careful investigation and planning, a good way to leverage your real estate investment dollars.

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com

Call me crazy but I don’t understand why there aren’t any lending programs for Foreign Investors.  Right now in Las Vegas, home prices are at historic lows and it’s drawing the interest of real estate investors from all over the world.  I get numerous emails and phone calls every day from people outside the United States inquiring about Las Vegas Home prices and the process of buying a home in Las Vegas.  Unfortunately, I have to inform them that if they don’t have cash for the entire purchase, they won’t be buying an investment property in Las Vegas.

Doesn’t real estate play an important role in the economy?  I think we all know the answer to that question is an emphatic “Yes”!  So why aren’t there Loan Programs for Foreign Investors?  Many of these large Banks like Wells Fargo and Bank of America could easily create Loan Programs for Foreign Investors that required Foreign Investors to put down at least 30%, open a bank account in the US and anything else they would need to lower their risk.  In most real estate markets like Las Vegas, home prices have pretty much bottomed out thus minimizing the risk for the Banks if the Foreign Investor defaulted, especially if they required 30% down.

Creating loan programs for Foreign Investors will benefit local real estate markets and the economy in several ways.

1. More buyers will enter the local real estate markets absorbing many of the foreclosures that are plaguing neighborhoods.
2. Requiring a minimum of 30% down will generate a large cash infusion for banks, increasing their ability to lend money.
3. It will generate much needed tax revenues for local and state governments.

I am sure we could list numerous reasons as to why there should be loan programs for Foreign Investors but what I want to know is “why aren’t there any loan programs for Foreign Investors.”  What am I missing?

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com

Anyone that is following the Las Vegas Real Estate Market is aware that home prices are at historic lows. Due to the fact that Las Vegas has been leading the nation in foreclosures, Banks and Lenders have been placing homes on the market far below market value which is driving down home prices. Even though many Las Vegas Homes are selling above list price, the fact they are priced so low is still causing home values to fall.  This trend could continue as foreclosures are still prevalent in the Las Vegas Valley.

With such great deals to be had, Investors are flocking to Las Vegas just like they did in 2004 and 2005 but the big difference is the price of the homes.  If an Investor purchased a home in 2005 and rented it, chances are their mortgage payment was higher than the amount of rent they collected.  In today’s real estate market, you can find great deals on homes that will net you positive cash flow.  We currently have several Property Management accounts where our Landlords are cash flowing over $400 a month.  That just wasn’t possible in 2005 unless you had put down a size-able down payment which really defeats the purpose of investing.

Even with the amount of rental homes hitting the Las Vegas Real Estate Market, rental rates have not fallen as demand is so high.  So many Las Vegas Homeowners have lost their homes and have no choice but to rent.  It will take years before they can buy a home again due to changes in lending guidelines and many won’t buy a home again due to the traumatic experience of losing their previous home.

If you are thinking about buying a Las Vegas Investment Property and want to know rental rates for a particular area, feel free to give us a call at 702.376.0088.

Tony Sena

Tony Sena is broker/owner of Shelter Realty in Las Vegas Nevada. For more than a decade Tony and his partners have provided residential real estate and property management services to sellers, buyers, investors, and property owners in the Las Vegas Valley. A Las Vegas native and former police officer for the City of Henderson, Tony brings to the table a unique local perspective that continues to serve his clients well.

www.shelterrealty.com