Observations: The Las Vegas Foreclosure Market for Summer 2011

As many of you know, my core business involves purchasing foreclosure properties at the Las Vegas Trustee’s Auction, renovating them to better-than-new condition, placing long term renters or lease option tenants in the properties, and then selling them to my investor clients as turn-key, cash flowing investments. Last year I was able to successfully turn over 25 such foreclosure properties. Half way through 2011, I am on pace to more than triple that number.

But, lately, there has been a hitch...a speed bump so to speak. The foreclosure auction just doesn’t have very many foreclosures. My team has found that where we were able to easily identify and purchase multiple foreclosures weekly only a couple of months ago, now we are struggling to find good deals on Northwest Las Vegas properties. Our personal experience is being backed up by the latest statistics.

Realty Trac recently released data showing that notices of default in the Las Vegas Valley fell to 2,701 in April down from 4,600 in March. That is a huge decline.

So does this data point towards an over-all economic recovery? Not necessarily. RealtyTrac Chief Executive Officer James Saccacio believes that the slow down is a result of delays from lending institutions in processing foreclosures. However, a recent report from CoreLogic shows that the 90-day delinquency rate for Las Vegas has steadily decreased over several months.

Regardless of the impact that declining foreclosures will have on the overall economy, one thing is certain: We will continue to hunt down the best Las Vegas real estate deals for our customers, as we have for the last three years. In the past, when foreclosures have not made financial sense, we have turned to short sales and REOs. We have already begun to shift our acquisition strategy yet again. As I mentioned in a series of artciles in 2009...being a successful real estate investor means being a chameleon...constantly able to adapt and change to fit current market conditions. As we change our strategy, we will keep you abreast of current developments in the Las Vegas foreclosure market.

If you are interested in learning more about investing in the Las Vegas real estate market please contact me for more information.

Glenn Plantone
Wynn Realty
(702) 656-3264
gsplantone@gmail.com

www.glennplantone.com

If you’d like to see more of Glenn’s articles, follow his blog at:
www.vegasforeclosures.blogspot.com

Real Estate Investing in Las Vegas Returns to Historic Trend

Real estate investing in Las Vegas is back on the historic trend lines according to the latest market data to be released by title companies. This is both good and bad news.

What this means is that real estate prices for single family homes in Las Vegas, which shot up disproportionately for three years beginning in 2004 and peaking in 2007, have now returned to the trend line that they always “should” have followed.

This may be bad news for some homeowners who purchased during the 2004-2007 price boom and were hoping for a speedy market recovery to recoup their recent losses. Instead, what will most likely occur, is a slow, but steady rise of real estate prices here in the Las Vegas valley that mirrors the average national appreciation rate of approximately 5.4% annually over the past five decades. At that rate, many of these distressed Las Vegas homeowners may have to wait 10 or more years to see their properties return to their purchase price.

However, this return to the average trend lines may be good news for new investors flooding to the area to try their hand at real estate investing in Las Vegas. Now that the average trend line has been reached, it seems unlikely that property prices will drop much further. And, because rents have not declined nearly as much as property prices, rental units are cash flowing better than ever in the Las Vegas valley. This creates a perfect investment opportunity where investors can receive monthly positive cash flow on their properties and expect steady, yearly appreciation.

If you are interested in learning more about real estate investing in Las Vegas, please contact Glenn Plantone.

Glenn Plantone
Wynn Realty Group
Office: (702) 656-3264
Mobile: (702) 769-9872
Email: gsplantone@gmail.com

www.viewpointequity.com

HUD Drops 90 Day Seasoning Rule - Makes Acquiring and Reselling Foreclosures Even Easie

The Department of Housing and Urban Development recently announced a temporary policy change that will have significant positive benefits for anyone looking to acquire foreclosures, especially those looking to fix and flip.  Previously, FHA has required that any borrowers seeking to finance their home purchase using an FHA loan, must purchase the property from a seller who has been the owner of record for 90 days or more.  This has made it difficult for investors looking to rehab gutted foreclosure properties and resell them for a reasonable profit since they then had to either hold the property for 90 days (dramatically increasing their holding costs and decreasing potential profit margin) or they could not sell to buyers looking to purchase a property with an FHA loan product.  The 90 day seasoning rule also made it difficult for investors or primaries looking to purchase REOs using FHA loans.  With the available inventory of REOs shrinking and demand rising, banks are usually able to liquidate their best REOs on the open market within days or weeks of taking title after a foreclosure.  Since the bank did not, in those cases, own the property for 90 days or more, those looking to pick up bargain priced REOs using an FHA loan couldn't do so.

This will all change starting February 1st when HUD will begin a one year period during which the 90 day seasoning requirement will be lifted.  In a document announcing the change, HUD Secretary Shaun Donovan said, "As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential home buyers.  FHA has an unprecedented opportunity to fulfill its mission by helping many home buyers find affordable housing while contributing to neighborhood stabilization."

"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. In the same document Stevens states,  "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."

The temporary lifting of the 90 day seasoning requirement will come with some restrictions that are designed to prevent abuses. Probably the most significant is a clause stating, "In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions."  It appears that all that is necessary to meet these "specific conditions" is to show that substantial improvements/repairs have been made to the property to justify the extra cost.  This should not be a problem for rehabbers as they can show these improvements via receipts, before-and-after photos and descriptions of work completed etc.

This change to the FHA guidelines is scheduled to only last for a year, so now is definitely a great time for investors interested in flipping properties and home buyers looking to purchase a residence to jump into the market.  If you are interested in purchasing REO properties for investment purposes in Las Vegas, foreclosure capital of the nation, please contact Glenn Plantone today.

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

Stripped Homes Offer Great Profit Potential

It's the newest thing in housing these days... 4 BD/3BA... no kitchen.  No kitchen, no ceiling fans, no landscaping, even no light fixtures.  Yes, it appears that appliances and hardware are the latest casualties in the nation's foreclosure meltdowns.  A recent article in the New York Times calls attention to this growing phenomenon.  It cites a recent ad in Craig's List where the owner makes no effort to hide his intentions.  " 'Stripping House — Before Foreclosure,' the ad declared, offering potential buyers the cabinets and counter tops, the sinks and toilets, the doors, the appliances, the sprinklers. Even the palm and citrus trees in the yard were for sale, with a catch. 'You dig,' the author advised."  According to the article, areas like Las Vegas, which have seen the nation's highest foreclosure rates, have also been affected the most by home strippers. 

Some metro areas, like Phoenix, have laws in place that make stripping homes prior to foreclosure a felony under a state fraud statute.  In cities like this, the FBI has been able to apprehend home owners attempting to liquidate appliances.  Although the sentences for these crimes is usually quite light (18 months probation for a recent offender), police hope that criminal prosecution may deter home owners from trying to strip their houses before they leave.  But in other cities, like Las Vegas, there are no laws that make gutting your property prior to eviction illegal.  Mortgage contracts do specifiy that homes must be kept in good order, but the lack of state law on the subject makes the issue a civil, rather than a criminal, matter.  And legally pursuing home owners that sell off a home's assets prior to foreclosure is not usually a profitable venture for the bank, as costs of a lawsuit greatly outweigh potential recovery.
 
This has led to rampant home stripping in the Las Vegas area.  But we don't need an article in the New York Times to tell us that.  I see these stripped homes first hand every day.  In fact, they have provided me and my investor clients with some great money making opportunities.

One of my most recent purchases was a 2113 square foot home that was only three years old.  When we walked through the house, it was a mess.  It had no kitchen and needed new paint, carpets, and various hardware items that had been stripped.  We purchased the house for $104,000.  It had been sold new for $319,000.  After putting in a brand new kitchen for $4500 and spending $1500 on new carpets and $1500 on new paint and accessories, we had a beautiful home for a total of $112,000 ($53 per square foot.)  We were able to turn around and lease the property under a two year contract for $1295 per month.  This created terrific cash flow for my client and translated to acquiring the home for $0.33 on the dollar at an 11% cap rate (based on the $104K cash purchase.)

These types of deals are available for anyone who is willing to put in the time and effort to revamp one of these foreclosure homes that have been gutted by the previous owner.

Surviving and Thriving as a Real Estate Agent: Through Good Times and Bad

Surviving and Thriving as a Real Estate Agent: Through Good Times and Bad

It is no secret that real estate agents, as well as other real estate related professions, have had a difficult road over the last few years. The rise and fall of the national real estate market created a feast then famine scenario …and many agents have not survived the famine. Meanwhile, over the last 5 years, I have sold over 500 single family homes, condos, or land lots…including closing on 30 properties last month alone. This volume places me in the top 5% of all Realtors in the country (in both transactions and commissions.) I would like to share with you, over my next few articles, how I have been able to achieve this success. (And you don’t even have to buy a video course or purchase a web book!) My success through these difficult times has not been due to luck but rather due to a particular mindset that has worked very well for me.

Thinking As An Investor

This mindset has entailed thinking as an investor instead of as a Realtor. My career in real estate began as an investor. I enjoyed great success purchasing my own investment properties, and began to help other investors find deals for themselves. Several years later, the natural progression was to get my realtor’s license. As a result, I have never really considered myself a Realtor by trade, but rather an investor who helps other investors. At the moment I currently own over 20 investment properties myself. This helps me to understand what investors are looking for and the challenges they face in the current market. But owning your own investment properties is not a prerequisite to thinking like an investor. In order to position yourself as an investors’ Realtor you don’t have to own a lot of properties yourself, but you do have to develop a reputation with your clients for being more interested in their bottom line than you are in your commission. I have been able to do this, and in so doing grow a large investor database, by using the following strategies that I would like to share with you:

• Develop Your Niche

• Become An Expert in Your Field

• Be Mobile/Adapt

• Develop a Marketing Campaign

Over the next several articles, I will go over each of these steps in detail. Let’s start with the first one:

Developing Your Niche As An Investors’ Realtor

The first thing I have done is to develop a niche. I don’t try to know (or act like I know) everything about every area of real estate…rather I focus on a specific area. This area may, and sometimes must, change over time. In my case, I have always focused primarily on single family homes. For a while I worked on SFRs in CA, then I moved to AZ. I went through several other locales and for the last two years have focused on Las Vegas, NV. More specifically, I focus on the new Northwest area of the valley. 80% or more of my deals are located in this specific area. This is the area that I am comfortable with, knowledgeable about, and experienced in.

By becoming an expert in a particular area, I am better able to service my clients and identify for them the most profitable investments available. Reputation is everything in this business. You need to build a reputation for being well informed and very familiar with your area of expertise so that you can knowledgably and confidently advise your client whether or not a particular property will make a valuable addition to their portfolio.

In my next article, I will discuss how to become an expert in your chosen niche.