MGM Auction Sets New Low Comps for Signature Towers

I recently attended the public auction held to sell 20 units in the three MGM Signature towers located just off the Las Vegas strip. The auction was held on April 21st and was attended by about 125 people. All units were sold.

MGM has been forced to clamor for capital since its flagship project, the record setting City Center development in Las Vegas, ran into funding difficulties and innumerable construction setbacks and delays. MGM's major financial partner in the deal, Dubai World, announced that they would not honor their obligations to the project. This announcement brought the already struggling MGM Mirage corporation to the edge of Chapter 11 bankruptcy filings as they struggled to find alternative financing. MGM Mirage has financial covenants due to expire on April 29th and May 15th. There has been speculation that they may need to sell off some major assets, such as the Beau Rivage in Mississippi or the MGM Grand Detroit. Just recently, however, investor Carl Icahn and private equity fund Oaktree Capital Management have stepped up and acquired hundreds of millions of MGM Mirage bonds. Should this deal go through it might save MGM Mirage from having to sell further assets in order to stay afloat.

In the meantime, MGM's loss was investors gain in the Las Vegas condo market. The auction saw new record low sales prices for both one bedroom and studio units in the MGM Signature complex. The top one bedroom sold for $255K and the low sold for $185K. The previous low comp for a one bedroom unit was $274K. So this sale brought the comp down quite a bit from $274K to $185K. The top studio unit sold for $200K and the low sold for $142K. The previous low comp was $174K. So again the comp came down from $174K to a new low of $142K.

It will take approximately one month for these units to officially close and for the new lower comps to register in the MLS. There are still 24 REO/bank owned units available within the Signature towers. Once the new comps register, there will be another great buying opportunity for anyone still interested. I will then be advising my investors to put in some cash offers for lower than the new low comp prices and test the waters.

This MGM auction, and others that are coming up shortly at different locations, are proving that high rise prices in Las Vegas are finally coming down to levels where they are extremely affordable as a second/vacation home option and even as an investment. If you have any interest in the MGM Signature condos or other high rise properties please feel free to give me a call to discuss your options.

Trump Says, "Buy Real Estate!"

Donald Trump, billionaire and real estate mogul, echoed what real estate agents have been saying for months in a recent appearance on Good Morning America. "This is a great time to go out and buy a home," he said. "You might even lose your own home and you'll end up getting a better one." As home prices around the country plummet, it creates a unique buying opportunity for both would-be homeowners and investors.

Trump acknowledged, however, that financing is difficult to come by these days and criticized banks for not easing lending restrictions. "What the banks are doing is terrible," he said. "The banks have billions and billions of taxpayer money, and they're not giving that money or loaning that money to the taxpayer," referring to banks that have been receiving funds under the government's Troubled Assets Relief Program. Trump believes that banks that are taking government assistance or bail out money should be subject to guidelines and restrictions on what they can do with that money. Certainly some of it should be used to infuse the economy with cash by lending to consumers.

So how can the average investor or home buyer make a purchase these days? Trump suggest buying bank owned properties (REOs.) Banks will help buyers finance the homes they're trying to sell, Trump said. The banks "don't want these homes; they've got thousands of them," he said. "They don't know what to do with them."

Las Vegas is the number one city for purchasing REO properties. Leading the nation in foreclosures for the last two years, Las Vegas has more bank owned properties than any other city in the nation.

If you are interested in purchasing bank owned homes for occupancy, investment or cash flow, please contact me as I specialize in this area.

Las Vegas Real Estate Insider Club April Meeting Roundup

Wednesday, April 8th saw the Real Estate Insider Club meeting for the first time at our new location at the Fairway Hospitality Center at Putter’s Bar & Grill on Rainbow at the 215. Since reformatting the club earlier this year, attendance has grown each meeting and we quickly outgrew our space at Tommy Bahama’s.

This meeting was another success as attendees enjoyed presentations from several guest speakers as well as our usual commentators. As we helped ourselves to the dinner included in the $25 entry fee, Jenna Bohannon from Old Republic spoke about home warranty options. She detailed which pre-existing conditions can be covered by home warranties and which are excluded as well as other general information.

Jenna was followed by regular presenter and “Las Vegas Realtor on the street” Scott Meservey. Scott presented sales statistics and MLS data from March and pointed towards inventory that is depleting month over month and median sales prices that are holding steady as possible indicators that we may quickly be approaching a bottom in the beleaguered Las Vegas real estate market.

Rich Warren shared his viewpoint on the broader national economy. With government intervention at an all time high, Rich noted that the billions of dollars being spent by the Feds to stimulate the national economy may be exacerbating the nation’s woes. By desperately trying to throw money at the problem, the government is quite possibly simply delaying the inevitable upcoming crash and thereby delaying the start of a recovery period as well.

We were then privileged to hear from James Jackson, a government employee who works with the Section 8 housing program. He explained the benefits landlords can achieve by seeking Section 8 tenants for their properties. He also explained possible downfalls and how to protect yourself as a landlord. His talk was well received and he fielded several questions on specifics from interested investors.

Tamara Bostrom from Spiral Digital Media shared with the group several tips for how entrepreneurs, investors and small business owners can use internet marketing to generate leads and increase exposure. She specifically mentioned that establishing yourself as an expert within your particular niche is a great way to effortlessly network and bring in new clients. She also discussed the importance of projecting a professional image through great design. Hiring a graphic design firm, such as Spiral, to create a logo package, design business cards and produce a great website will help businesses to stand out from the crowd in these tough economic times.

Our final speaker of the night was Darci Poloni of Poloni & Associates. She discussed the benefits real estate investors can achieve by placing their properties in separate LLC entities as opposed to keeping them held in the name of the individual. She touched on spreading liability, umbrella insurance policies and other protections. She also discussed some of the specific practices that must be maintained once LLCs are formed in order to insure that the corporate veil cannot be pierced if litigation is ever brought against the entity.

We are looking forward to another great meeting on Wednesday, May 13th from 6-8:30pm at the same location.

If you would like to contact any of our speakers regarding their services:

Jenna Bohannon
Old Republic
(800) 445-6999
jennab@orhp.com

James Jackson
Section 8 Housing Program
(702) 451-8041 X1530
jjackson@haccnv.org

Tamara Bostrom
Spiral Digital Media
(435) 275-5980
tamarabostrom@gmail.com

Darci Poloni
Poloni & Associates
(702) 616-9240
poloni-law@cox.net