Investing in Las Vegas
Investing in Las Vegas Real Estate can and should be a rewarding venture. This is not always the case though. Many times beginning investors jump into the market before researching the trends or their personal objectives. They use inexperienced real estate professionals that just want to sell them a home or property with no long term relationship objective.
If you analyze the current Las Vegas Market you will find almost 30% of the current listings are vacant and owned by banks, commonly called REO's. Another 50% are short sales and owner occupied. REO's are the easiest to buy because they are vacant and your dealing directly with the bank, well almost. You work through a buyers agent and through an REO Broker, we specialize in both. Short sales may or may not be vacant but are very time consuming, get ready to wait, and wait. However the closing ratios have increased a little for short sales, previously only about 10-20% of short sale listings actually closed. Now it's around 35%,,but rarely on time. Most all bank owned listings are sold. The only exception are bank REO's that end up going to an auction. A couple good web sites to check out are http://www.foreclosureradar.com/coverage and www.foreclosure.com. You can also search foreclosures on my site.
First time investor or seasoned pro, you must submit a good offer. Almost 75% of the offers we receive on our listings are poorly written or missing information, they will not get submitted to the bank. A properly written and submitted offer will get submitted same day 24 hrs.
Right now the market is dominated with Short Sale and bank owned REO's. Both State and Federal Governments have declared "No Foreclosures", so what was an REO market has turned into a Short Sale Market. Both short sales and REO's offer good opportunities to enter the Las Vegas real estate market. My team of professionals can help you find the best deals. You must know what the Asset Managers and Banks want to see in an offer, only an experienced REO's Broker and Short Sale certified agent can do this for you. Both myseld and licensed real estate assistant are CDPEs (Certified Distressed Property Experts).
As a buyer in today’s market, you’re bound to see numerous short sales and foreclosure properties. Deciding on buying a short sale vs. foreclosure can be a difficult decision.
On one hand, a foreclosure is quicker, if the bank accepts your offer you have almost a 100% chance of closing. On the other hand they may need a lot more work to be livable. A short sale can take ages to close, but they usually are in much better shape compared to a foreclosure. In a declining market the home may be worth less tahn your original offer. Also only about 60% or less actually close escrow.
So the question is, should you buy a foreclosure or a short sale? In my opinion, you should understand the short sale process as a buyer first. A foreclosure is basically the same as buying a normal sale, except it’s owned by a bank rather than the homeowner. A short sale is still owned by the homeowner, but you have to negotiate with the bank. To help you understand that process, I have outlined a few things you need to know as a buyer:
The initial short sale process is the same as buying any other listing. Interested buyers negotiate with the seller/owner of the home before their offer is submitted to the lender for approval. In our current market there is likely multiple offers as many agents price them low to entice offers. The seller will choose the most suitable offer from the potential buyers and negotiate further until they come into an agreement.
The seller would then submit their short sale package with offer included to the lender. This is where things slow down. There are literally dozens of short sale programs and they very bank to bank. The are different for Fannie, Freddy, FHA, VA, and HUD insured homes. All requiring a different set of forms. Add to this the different experience levels of the listing agents. The lender would then counter, approve, or reject the offer, depending on the debt owned by the seller, the mortgage investors, and the offer given by the potential buyer. This process can take weeks to months depending on the banks current workload and time frame it takes to track down the holders of the mortgage not.
Pros and cons of buying short sale properties
- Advantages – There was a time when the main advantage for buying a short sale was price. Short sales are usually priced below market value to get an offer submitted to the bank, banks (were) happy to get some sort of payment instead of foreclosing on the home. Now the price you get depends on the amount of offers on the home and current market conditions in the area. Banks have typically down 3 BPO's (Broker Price Opinions) so a below market value price isn’t guaranteed. Also, as stated above, a short sale is usually in better condition compared to foreclosures.
- Disadvantages – On the other hand, closing a short sale deal can be tricky as the seller doesn’t have the final say. Short sales can take months to close, if they ever close at all. Many Realtor’s put the numbers around 40 to 60 percent of short sales listed that are finalized. It’s also extremely frustrating dealing with the big banks. It’s like pulling teeth trying to get an answer from some lenders, and if you don’t have the patience to wait for them to respond, a short sale may not be the right choice for you.
Tips for buying a short sale
- Hire A Great Agent – If you’re interested in buying a home listed as a short sale, the first thing to do is to hire an experienced real estate agent. A good real estate agent is the only chance you have at a successful closing. In-experience and laziness will kill your sale fast. Do your homework when choosing an agent, or you won’t get the deal done. Myseld and my licensed short sale assistan are both CDPEs Certified Distressed Property Experts, we know both sides of the process very well. We list short sale properties as well which gives us a clear insight into the process from the buyers perspective.
- Make A Reasonable Offer – When making an offer on a short sale, don’t think you can get a steal just because someone online told you that you could. Low ball offers are almost always countered and usually rejected, making the time frame for closure longer. Also, keep in mind, if the short sale is priced well, you’ll be competing with other buyers. If you really like the house, you’re going to have to pay a reasonable price. Be prepared to pay market value.
- Communication Is Key – It’s very important that you maintain good communication with your agent and the listing agent. A good buyers agent will continue to contact the sellers agent and give you updates as they come in. If you haven’t heard from your agent after a couple weeks, be sure to check in with them and see if they have any news. Short sales are a timely process, so don’t let your agent drop the ball.
- Be Prepared To Wait – If your looking to buy a home quickly, short sales are not your cup of tea. The average time-frame from offer to close on a short sale is between 3 to 6 months. Do you have that much time to wait to purchase? If not, don’t even think about submitting an offer. You’ll be wasting your time and your agents, and you could potentially lose out on another home that isn’t a short sale.
One final thought, the liability of owning anything today is undeniable, people are sued for almost anything. It is my recomendation that all investment property be held in at minimum an LLC. An Irrevocable Trust is even better but an LLC is minimum. If you are going to own multiple properties you may consider a Nevada Series LLC which is explained in more detail here:
What is a Series LLC?
Series Limited Liability Company (LLC) is a business entity that was introduced by the State of Delaware nearly nine years ago. The concept is innovative and based on the fact that several series or “cells” may be created within a single LLC. Basically, a Series LLC possesses the ability to divide its assets and liabilities into various sub-LLCs or series while still controlling them from one umbrella company. The closest analogy in the business world would be a corporation with several subsidiaries.
What are the advantages of a Series LLC?
A Series LLC eliminates the expense and administrative duties related to forming multiple LLCs. A Series LLC is preferred to a corporation with subsidiaries because it does not have the taxation, expense or formalities associated with a parent-and-subsidiary corporate structure.
Each cell in a Series LLC has its own profits, losses and liabilities and is legally separate from the other series. These sub-LLCs also have their own economic structures, members, managers and assets. The assets in a sub-LLC are protected from legal enforcement against the assets of another LLC.
Another, lesser-known advantage is that a Series LLC may not be required to pay sales tax on rent paid by the operating series. The business must own the real estate and the rent must be paid to the sub-LLC owning the real estate series. In this respect, the Series LLC may also be compared to an S-Corporation with Q-subsidiaries.
What States Currently Offer the Series LLC Option?
Though Delaware was the first to form the Series LLC, other states are also adopting the practice. Currently, Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas, Utah and Wisconsin also allow the formation of Series LLC.
Who Will Benefit from the Series LLC?
The Series LLC is preferred by savvy investors or ambitious entrepreneurs. Many business owners use Series LLCs as planning tool for venture capital funds, hedge funds, oil and gas deals and fractional share arrangements. Such complex business arrangements often use the series LLC as a management tool. The concept may also be used for Mutual Funds to avoid filing more than one application for separate classes of funds with the SEC. The Series LLC is also useful for entrepreneurs with multiple business ideas or for franchise businesses. Many companies may also use a Series LLC to establish incentive compensation for employees, to own intellectual property or for real estate investments. This concept may also be used as a part of family gifting.
Real Estate investors with multiple properties often use the Series LLC to isolate each property and the liability associated with it into a separate sub-LLC. To save on annual filing fees, the Series LLC may be registered as a single foreign entity in the states other than its home state.
IF YOUR UPSIDE DOWN ON YOUR INVESTMENT AND WANT TO GET OUT BEFORE THE HOLE GETS TOO DEEP YOU NEED A PROFESSIONAL MORE THAN EVER. I can give you the best alternatives in selling and or even keeping your investment. The most important thing is to not throw good money after bad. If your in a bad investment the chances are it's not going to get better any time soon, call us now, don't delay.
PROPERTY MANAGEMENT is also a major consideration. Here is a link to Realty One Group's management company. http://managementonelv.com/ More To Come....
Here are some links from national research companies relating to rental property investing, best places to buy rentals, and typical rate of returns. I try to update these as often as possible. John
http://www.usatoday.com/USCP/PNI/Business/2012-03-24-PNI0324biz-vhv-marketwatchPNIBrd_ST_U.htm