MGM Signature Towers Second Quarter Update

I have fielded several requests recently from those who follow my regular blog and email updates on the MGM Signature Towers, for sales information from the second quarter of 2010. Those numbers have arrived and I’d like to share them with you.

Sales volume showed a marked increase in the second quarter of 2010 (April 1st - June 30th, 2010.) 41 studios sold in the second quarter, as opposed to 36 in the first quarter of this year. But, more impressively, one-bedroom sales doubled quarter over quarter with 24 one-bedrooms closing in the second quarter of 2010 as opposed to 12 in the first.

While median sales prices for both studios and one-bedrooms crept down marginally in the second quarter, I noticed that demand began to increase dramatically for these properties and, towards the end of the quarter, I was having to fight against a lot of competition to secure bargain priced units for my clients.

The average price for the 41 studio units that sold this quarter was $155,000. This is slightly lower than first quarter’s average price of $160,000. The high selling price for all studios was a strip side penthouse unit with a balcony (125-3015) that closed for $210,000. The lowest priced studio this quarter was a low floor strip side unit with no balcony that sold for $100,000 (145-403). The highest priced sale of units that have no balcony was unit 135-3403 that sold for $189,888 and the highest mountain side unit to sell was unit 145-1406 that sold for $160,000.

For those of you looking to invest or purchase at the MGM Signature, it is important to note that Strip side units usually sell for a $20K - $30K premium over mountain side units, and units with a balcony typically sell for higher prices than those without a balcony by about the same margin. Conversely, studio units with a balcony do experience a higher occupancy rate in the rental pool than those without.

For the 24 one-bedroom units that sold in the second quarter of 2010, the average price was $218,000, this is down $11,000 from the first quarter average of $229,000. The top selling one-bedroom unit was a strip side, penthouse unit (135-3401...if you are interested, I have a similar penthouse unit available right now) and the lowest seller was a low floor, mountain side, interior unit with a terrible view (145-208.) All one-bedroom units have balconies.

As I look at the current inventory of MGM Signature properties, there are 17 one-bedrooms listed. Of these, there are zero REO (foreclosure) listings, 4 short sales, and 13 regular listings. There are 58 studios listed for sale: 1 REO, 23 short sales and 34 regular listings.

I am ready to go on record at this point and say that we have seen the bottom of this market as far as pricing on MGM Signature units is concerned. I do believe that there will be a lot more foreclosures in these buildings, but the demand has accelerated so steadily for these units that I believe demand is now outpacing supply. In the final month of this quarter, we began to see prices creeping upward a bit. I am also noticing as I negotiate for my clients in the “front lines” of these transactions, that it is getting harder and harder for me to secure good units at great prices for my investors because the competition is becoming quite fierce.

As always, I will continue to keep a close watch on sales trends here at the MGM Signature Towers in Las Vegas. Please follow my blog or subscribe to my regular newsletters if you would like to continue to learn more about this project. If you have any questions about the MGM Signature Towers, or are interested in looking at units for investment or personal use, please don’t hesitate to contact me. I have lots of good information on occupancy numbers, proformas, rental info and the like and will be happy to help you.

Glenn Plantone
702-769-9872
gsplantone@gmail.com

CNN Money Labels Glenn Plantone One of the New Vulture Investors? Oh Well, I’ve Been Called Worse

They say any publicity is good publicity, and I couldn’t agree more. So when CNNMoney.com featured me in an article titled “Vulture Investors: They're Back - And Making a Bundle” I was...well... pleased. If by vulture, they are implying that I am swooping in to find life and profit in properties that are regarded by many as dead and worthless, then I can live with that analogy. And they certainly are right about investors in this market being able to make a bundle. I believe we are currently living in the best real estate buying climate since the Great Depression...perhaps better.

So, it is with great pride, that I re-post excerpts from the CNNMoney.com article:

NEW YORK (CNNMoney.com) -- These are the glory days of the residential real estate investor. Low prices, rock-bottom interest rates and stable rental markets have created huge buying opportunities.

Although conditions are very favorable, investors have to be adaptable because the market is evolving rapidly... Foreclosure auctions are no longer a fertile hunting ground... Tanya Marchiol of Team Investments, which has operations in about 10 states but focuses mostly on the Phoenix market, says, “"Amateurs have come in and run up the prices. In 2009 I bought 76 properties at foreclosure auctions, at an average of about 60 cents on the market dollar. This year, I've bought four."

Glenn Plantone faces a similar situation in Las Vegas. A veteran real estate broker and investor, he has switched from buying mostly foreclosures and repossessions to short sales almost exclusively. That's because the inventory of distressed properties available in Vegas is way down, to about a two-week supply.

"The banks make better profits with short sales, so they're not foreclosing," Plantone said. "They've switched staff to processing short sales and they've gotten faster at processing them."
He tries to purchase properties for at least 10% less than what he considers to be true market value, then he does some light rehabilitation and sells them to some of the 3,000 buyers he works with.

Since prices have fallen about 70% in some Vegas communities and rents have only declined by about 20%, it's possible for his investors, who are cash buyers, to make money from the first month the homes are rented.

"We're getting cash flow (net return on investment) of 12% to 14%," he said.
He doesn't completely ignore potential profits from home price appreciation because he believes the town is bouncing around the bottom. (Homes already sell for below what it would cost to build new homes.) He does not, however, emphasize that aspect of the investment.
It's the income from rentals that's paramount right now.

The beauty of cash flow, of course, is that even if the prices decline another 10% or 20%, the investors should be able to live with that.

"I tell them to plan on holding for five years," he said. "With cash flow, there's no need to worry about price drops."

To receive more information please contact me.

Glenn Plantone
gsplantone@gmail.com
(702) 769-9872