Double Dip? Probably, But That Shouldn’t Scare Real Estate Investors Away

As a full time real estate investor, with a portfolio of over 20 properties in several states, as well as a licensed Realtor, I have made my living by following the trends and helping my investor clients to do the same. For the last four years, those trends have kept me here in Las Vegas, NV...the foreclosure capital of the United States. I have risen to become the 4th busiest buyers’ agent in all of Las Vegas for two of the last three quarters, selling almost exclusively to investors who have come rely on my advice and ability to find strong, cash-flowing, turn-key investment properties for them.

Many of my clients have been asking me if Las Vegas home prices are heading for a “double dip” as the recession continues to drag on. I don’t know if I would call it a “double dip” since I definitely don’t predict that home prices will experience any further drastic declines in the Las Vegas market. I do, however, believe that home prices will continue to trickle downward until the economy as a whole begins to really improve.

So, in light of this prediction, what advice am I giving investors now? BUY, BUY, BUY! I can’t say it strongly enough that now is the time to buy investment property in Las Vegas. Why? Three major factors:

1. After losing between 50% and 70% of their peak value, average property values in Las Vegas have continued to decline over the last year at the rate of approximately 1% per month. To put this number in perspective, it means that a home that was worth $115,000 in May of this year will have been lowered in value to about $112,000 as of today. These decreases might scare away the average investor, but it is important to note that the key factor when decided where to invest should be CASH FLOW. If a property has a strong rate of annual return at the price you are currently purchasing it, then it can be a very good investment even if prices dip slightly over time before they inevitably recover. Because home prices have plummeted much lower than rents over the last several years (home prices falling around 70% and rents only 15%), cash flow in Las Vegas is stronger than we have seen it in the last five decades. We are currently achieving 8-10% CAP rates for our cash buyers and over 15% for our financed buyers.

2. Interest rates are currently at lows that we are unlikely to see again in our lifetimes. Once the economy begins to recover, interest rates will be the first things to change...and quickly. Interest rate hikes usually precede the general public’s notion that a recession has ended. Purchasing property now with a low interest rate will save the savvy investor thousands of dollars in the long run over trying to pick the exact bottom of the real estate market.

3. Lastly, demand for properties in Las Vegas is even higher than statistics may indicate. June of 2011 saw over 5500 single family homes close in the Las Vegas market, but many more untold numbers of buyers would have purchased a home if not for the continued difficulty in obtaining financing, difficulties getting appraisals that match sales prices, trouble finding homes to purchase that haven’t already been snatched up by cash buyers, etc. When credit availability improves, appraisals rise to reasonable levels and distressed properties take up a smaller portion of available inventory, we will likely see an influx of buyers that have been trying to purchase homes but have not yet been able to do so...this influx will inevitably drive prices up.

Many potential investors are understandably nervous about the rocky ride we have been experiencing in real estate over the last several years. I encourage you, however, to take a good look at the facts. Now is a great time to invest in real estate...probably the best time to invest since the Great Depression. Savvy investors...make your move.

If you are interested in purchasing Las Vegas investment properties or learning more about the Las Vegas real estate market, please contact Glenn Plantone.

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

FHA Reform Bill is a Dose of "Tough Love" for Potential Home Buyers

Earlier this month, the U.S. House of Representatives overwhelmingly passed a bill aimed at shoring up the shaky financial position of the Federal Housing Administration (FHA). While the FHA does not actually lend money, it insures the loans of millions of borrowers who, without this insurance, would not be able to qualify for a conventional lending product. FHA guidelines traditionally allow borrowers to qualify for loans with a much smaller down payment than those without FHA insurance. (3% down with FHA insured loans as opposed to 10-20% for borrowers who do not use the FHA program.)

As the credit crisis continues to slow the recovery of the housing markets nationwide, the role of the FHA has been radically expanded, with lenders less and less willing to risk writing loans that are not insured by the Federal Housing Administration. Less than four years ago, the FHA insured only 4% of America's home loans; now, that number has risen to roughly one third of all new home loans that are written.

As their involvement and importance has grown, however, the financial position of the FHA has worsened. By law, the FHA is required to hold 2% of the total volume of loans insured in the FHA's Mutual Mortgage Insurance Fund. As of September 30th, 2009 the FHA reported that its reserves had fallen to just $3.6 billion, representing a scant 0.53 percent of the $685 billion worth of FHA-insured loans at that time, and roughly a quarter of the reserves they are required to have on hand.

In order to improve the FHA's financial position, this reform bill, introduced by Rep. Maxine Waters(D-Calif.) raises fees for borrowers, gives the FHA the power to oust lenders that are costing the agency too much money in claims, and makes it easier for the FHA to protect itself from fraud-related losses. The fee hike is considerable in that it allows the FHA to raise the rate it charges borrowers from 0.55 percent of the amount of the mortgage to 1.5%...nearly triple. These premiums are paid by borrowers over the life of their loans, and the FHA says the premium increase will cost the average borrower around $42 per month.

Although a companion bill has not yet been introduced in the Senate, it is expected that legislation will be taken up after the July 4th recess and will most likely pass easily.

If you would like more information on purchasing investment properties in Las Vegas, please contact Glenn Plantone: (702) 769-9872 or gsplantone@gmail.com

2009 In Review

2009 was a year of expectations and a year of hopes.  Some of these were met, some were exceeded, and others will wait and continue to seek fulfillment in 2010.  We all knew that the foreclosure wave would continue to sweep over the nation’s beleaguered real estate markets.  And it did.  Las Vegas once again led the United States in foreclosures as more bank owned properties than ever flooded the market.  We hoped that this influx of affordable properties would lure some investors back into the stagnant Las Vegas real estate market.  But no one expected just how tantalizing that lure would be.  As investors from California, Canada, and all over the world sought to purchase cheap Las Vegas real estate that was suddenly cash flowing positively for the first time in years, home sales in the valley boomed.  Throughout the summer of 2009, Las Vegas posted sales numbers that exceeded those of the boom years in 2003 and 2004.  As quickly as foreclosures re-entered the market, they were gobbled up in their REO form by eager investors cashing in on what had become the greatest real estate buying opportunity of our lifetime. 

And we all hoped that this re-energizing of the real estate market would spread to the economy at large.  It didn’t.  To spite the high hopes of many generated by the seemingly endless stream of economic stimulus packages introduced by the new Presidential administration, an economic recovery failed to materialize and December saw some of the worst unemployment statistics since the recession began.

And yet, this bad news for the economy at large, may translate into good news for investors looking to purchase real estate in 2010. Normally, the excess of demand that we have been seeing in the Las Vegas market would push real estate prices higher.  But the general economic downturn may curb those price hikes and keep properties in Las Vegas at their historically affordable levels through the next year.  Especially for those willing to acquire properties through the trustee sale, properties that need a little work, or unconventional properties like high rise condos. 

As the supply of turn key, single family REOs has dwindled over the latter half of the year, my investors have found that the best way to acquire profitable real estate in Las Vegas is to think outside the “herd.”  We have been investing with great success in properties purchased through the trustee sale auction, high rise properties like the MGM Signature Condos, and properties that are not “turn key” such as “stripped” foreclosure homes.  Since the vast majority of investors are not purchasing these types of properties, we are able to continue to get great deals on investments that will generate strong positive cash flow.

I look forward to 2010 as a year that will continue to allow my clients to purchase Las Vegas real estate at deeply discounted properties.  Hopefully, the nation’s job, credit, and financial markets will begin a steady recovery and everyone can begin to benefit again from a robust economy.  Until then, we are wise to once again remember the words of the great financial giant Baron Rothschild who made his fortune largely during the years of the Great Depression, he said, “Buy when there is blood in the streets...even if the blood is your own.”  Now is truly the time to take advantage of every opportunity to create wealth for our future. 

If you are interested in taking advantage of this historic opportunity to purchase great Las Vegas real estate, contact Glenn Plantone at 702-769-9872.

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.