3 Steps of Certainty in an Uncertain Real Estate Market

The age old saying is that the only two things you can be sure of in life are death and taxes.  Perhaps in Las Vegas we could add, “the house always wins.”  Well if death, taxes, and the casino edge are 10s on the list of Las Vegas certainties, the real estate market right now is somewhere between a one and a two.  AB284 has slowed foreclosure inventory to a trickle, new construction is hot but running out of available inventory, and the economic recovery remains tenuous at best.  These factors make it extremely difficult to predict whether the market will go up or down in the short to mid-term.  So what is the savvy real estate investor to do?

I recommend three solid steps for success in these uncertain times:

1. Refinance

Mortgage interest rates are at all time historic lows.  Remember two years ago when everyone said that interest rates couldn’t possibly get any lower?  They did. With home prices up 30% in only one year in the Las Vegas valley, now is the perfect time to refinance your investment properties (or your residence for that matter) and free up cash for more investment acquisitions.  Interest rates are unlikely to get any better (really) and it is very uncertain whether home prices will continue to rise.  There really is no downside to refinancing.  If home prices fall or interest rates rise, you will be thankful that you locked in your refinance now.  On the other hand, if rates fall further or prices skyrocket over the next two years, you can always refinance again.

2. List Your Short Sale

The mortgage debt forgiveness act has been extended for one more year (through the end of 2013) and most experts agree that it is very unlikely that it will be extended again.  This act forgives homeowners of the tax obligations associated with debt forgiven through the short sale of their primary residence.  Without the provisions of this act, homeowners who sell their property through a short sale and receive a waiver of deficiency are obligated to pay Federal income tax on the amount of that waiver as if it were regular income.  This tax requirement makes it very difficult for the average homeowner, upside down on their property, to be able to afford a short sale.  If you are considering short selling your home, or if you are still upside down on your property but hoping that gains in the market will erase that deficiency, you should strongly consider short selling your home now rather than waiting.

3. Consider Cash Flow

When market conditions are uncertain, as they are presently, investors should rely heavily on cash flow data when making decisions to purchase an investment property. If you purchase a property with strong cash flow, you can withstand market fluctuations.  We specialize in locating and helping our clients find investment properties with strong cash flow and appreciation potential, even in strong sellers’ markets like we are currently experiencing in Las Vegas.  If you are interested in learning more about investing in Las Vegas real estate or if you would like a referral for your refinance to a company we have used with great success, please contact me directly.