Transactional Funding Proves Profitable for Investors

The recent credit crunch and rapid decline in home prices in Las Vegas has created an environment that is once again ripe for successfully flipping properties. I have been acquiring properties at the Trustee Sale in Las Vegas, performing very light rehab, and then immediately flipping them for a modest profit. In many cases, the people buying the houses are investors looking for a turn key property that they can begin renting right away for strong positive cash flow.

I have now completed this process with almost a dozen properties and it has been a win-win-win situation for all parties involved...the third party being the transactional funder. My transactional investors are receiving returns of over 100% annualized on their money!

Here is a recent example:

We purchased a townhome at 9122 Dancing Snow for $62,500. After closing costs, repairs, and costs to sell, we were into the property for $68,651. I was able to sell the property to a happy investor for $74,995. This resulted in a profit from the flip of $6,344. The funder, who had invested $65,000, was repaid in full plus their funding costs of $1,900 in 10 days! This resulted in an annualized return of 108% on the investor’s money!

If you would like to review all the details of this transaction
CLICK HERE.

Here is another example:

We acquired a 3 bedroom/2 bath townhome at 6868 Skypointe for $66,500. The property sold in 7 days for $79,995. This resulted in a profit on the ip of $9,156. The investor put $68,000 into the property and was paid $1,360 for their funding. This represented an annualized return of 104%.

In case you are wondering what kind of investment this made for the investor who purchased the property...once purchased for $79,995, the unit was rented for $975!

If you would like to review all the details of this transaction
CLICK HERE.


If you are interested in transactional funding, please contact Glenn for
more information.

(702) 769-9872
gsplantone@gmail.com

Earn a 30% Return on a $1,000,000 Real Estate Backed Investment

As baby boomers mature and reach retirement age, building has accelerated in mild climates worldwide to meet the coming demand for retirement housing. Costa Rica was one such locale that has experienced tremendous growth in the last several years as it has exceptional year round weather and is one of the safest countries in the world. Recently, however, the global economic downturn, coupled with the difficulty of obtaining building permits in Costa Rica, have combined to dramatically slow this growth.


There is an American developer, however, who has been extremely successful in obtaining the required building permits from the Costa Rican government. This builder's relationships with the local and national governments, his understanding of local culture, and sheer persistence have enabled him to succeed where many others have failed. He has had several projects built over the last several years in the Central Pacific Coast region of Costa Rica and he now has three current projects that are fully permitted and ready to build.


The projects have been approved to receive a $35M Hedge Fund loan to complete building. However, a $1M bridge loan is required in order to secure the larger loan. Once the bridge loan is secured, the process to fund the larger, $35M loan should take 60-90 days. Once the larger loan is funded, the builder will take the first draw of $5M and with that will pay the entire principal balance of $1M to the bridge investor. With each subsequent monthly building draw, the bridge investor will be paid interest on their original investment. The total interest amount of $300,000 will be paid in even installments over the remaining draws of the $35M loan.


The $1M bridge loan will be secured by the property and will be immediately placed in escrow until it is needed to fund the larger loan.


If you are interested in participating in this project, please contact Glenn Plantone for more details.


gsplantone@gmail.com 702.938.8888 office or cell 702.769.9872

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

Review of My Stay at the MGM Signature Towers Hotel-Condo

Over the last year I have sold several units at the MGM Signature Condo Hotel, and I decided it was time to experience the property myself from a guest’s point of view. As a result, this past Memorial Day Weekend, my family and I made the long journey to the Strip area from our home in North Las Vegas (about 20 minutes away.) With my wife, and two younger sons (ages 9 and 7), I checked into the MGM Signature on Saturday afternoon to a full house.

From the time we entered the property through the guard-gated entrance off of Harmon Avenue, pulled up to valet parking, and made our way to the individualized owner check-in inside of building 2, the feeling was that we were entering a high-end hotel. The service from the check-in personnel and the bellman bringing up our bags was excellent as expected. Our room was in the middle of the three buildings on the 6th floor - strip side with a balcony. Only about 1/3 of all studio units have a balcony. Units with balconies have higher occupancy rates in the rental pool than non-balcony units. As a result, balcony strip side studios will actually cash flow for investors that are purchasing them at today's new, low prices. The view was outstanding. We felt like we were right on top of the pool with a terrific strip view of the City Center just ahead. Later in the evening, as the sun sank behind the mountains, the lights from the strip and the pool area below were fantastic.

The boys slept comfortably on the pullout couch and my wife and I enjoyed the comfort of the main bed. Any noises from down below were drowned out by the a/c and double paned windows. With a mini-fridge, microwave, cook top, and full kitchenette we were able to bring our own food and drink, enabling us to be very comfortable in our home away from home. The boys really got a kick out of the television and phone in the bathroom, and I appreciated the DVD player that allowed us to watch our own movies instead of paying for an "all too expensive" in-house movie rental.

Many weekends a year, the MGM Signature Hotel sells out and Memorial Day, 2010 was no exception. Typical room rates are $149 for a studio unit and $199 for the larger one bedroom units. After having sold for an average price of $495K (studio) and $795K (one bedroom) just 3 years ago, prices have now come down to a very reasonable $100-200K for studios and $160-$250K for one bedroom units. The MGM Hotel Management Group is one of the many options that investors can use to manage their unit while they live their lives. As an owner, investors can come and stay in the unit as often as they like for a very minimal cost (room cleaning) and keep it in the rental program the rest of the time. (The MGM Management Group will charge 40% of the room revenue to manage the room.) Since the units that are being sold at the moment are usually foreclosures and therefore all-cash purchases, I am seeing a lot of groups of friends and investors pooling their money together in order to purchase a unit. This way, they can all use the property whenever they vacation in Las Vegas and can still share in the positive cash flow and future appreciation of the unit.

As an early riser, it was fun to watch the partiers straggle in at 4-6 am as I leaned over my balcony. We hit the gym at 7am both mornings, and shared one of the two massive onsite fitness centers with only about 10 other people. The fitness center boasted state-of-the-art equipment, including televisions that made my workout fly by. There is also a Starbucks, deli, gift store, computer center, concierge, lounge, and mail room all on site. In fact, I am told by the owners office that about 15% of the hotel condo is occupied by full time residents. All three of the towers are connected and it is only a short walk to the MGM Hotel via a long air conditioned corridor.

Each of the three buildings has its own pool or guests can enjoy the use of the main MGM pool that sits right behind the first building. The towers were built from 2005 to 2007 and have a terrific location just one block off the Strip. It is away from the hustle and bustle, but still only a 10-15 minute walk to the center of the Strip. On Sunday, we walked up Harmon to the Miracle Mile Mall for the Sushi Buffet at Todai. Afterwards, we walked the Mall, enjoyed a family massage at one of the stores, then headed up the strip to the Bellagio to catch one of the wonderful water, music, and light shows that run every 15 minutes.

On Sunday afternoon, we laid out by the pool for about four hours with the kids. I was able to catch some rays, catch up on some reading and spend some quality time in the pool with the boys. Pools two and three are connected and pool two (the one down below our room) is heated and open year-round along with the hot tub.

We checked out on Monday around 12 noon and made our way back up the 15 freeway to our home in the north. It was very nice to experience the Signature from the perspective of a guest and, as an owner, it only cost me the $35 cleaning fee for our two day stay. We are sold. It sure beats a time share.

I have the distinction of having sold the least expensive unit in the complex (a Strip side studio at only $99,900). I have been buying and selling at the Signature for over a year now. I write frequent articles and blogs about the MGM Signature and Las Vegas real estate in general. If you would like to learn more about the MGM Signature Condo Hotel or are interested in Las Vegas investment real estate with strong positive cash flow, please feel free to contact me to learn more.

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

Banks Manipulate Las Vegas Housing Floor

For the last two years, banks have been trying to force real estate markets nationwide to reach a "bottom." The wave of foreclosures that began in 2008 drove inventory through the roof in many metro areas, like Las Vegas. The credit crunch made it nearly impossible for the average buyer to qualify for a loan, and real estate sales everywhere slowed to a virtual standstill. This excess of supply and lack of demand caused real estate prices to take their largest tumble since the Great Depression. Dozens of large banks and mortgage companies closed their doors and those that survived tried desperately to cut their losses. After two years, they seem to have managed to do just that.


Many analysts (myself included) view this latest manipulation of the free market economy by the banks as just the latest abuse of power in a line of misguided liberties that brought us to this financial crisis to begin with. But regardless of whether you condone or condemn the lending institutions for their actions, you can't argue that it seems to be accomplishing exactly what they hoped for...stabilizing real estate prices by manipulating inventory.


Here's how it works: In 2009, record numbers of homeowners defaulted on their mortgages, resulting in a wave of foreclosures that flooded the Las Vegas real estate market with inventory. In June of 2009, there were 2283 available (not pending or contingent) bank owned single family homes on the Las Vegas MLS. This number represented 23% of the 10,278 total SFH listings. As foreclosures continued to process, prices continued to fall. In Las Vegas the median home price fell an average of $10,000 per month, every month, for over two years. The banks felt that they had to do something to stop the bleeding and stabilize the market. So they stopped foreclosing on homes. With encouragement and incentives from the Obama administration, banks began shifting employees from their REO departments to their short sale departments. The previously elusive short sale became more and more common through the end of 2009 and into the beginning of 2010 as banks tried to keep homeowners in their properties and avoid injecting more inventory into the Las Vegas real estate market.


Their strategy worked. From June 2009, the percentage of available listings that were post-foreclosure REO properties began to fall. In January, 2010, there were just over 1000 single family REOs on the Las Vegas MLS. In February there were 1050 REOs out of a total 8001 available single family homes...a drop in market share from 23% to 13%. These 1000 homes represented only around 10 days worth of supply.


As the available inventory of bargain priced REO properties continued to shrink, demand for these properties began to outpace supply. Rick Shelton, Greater Las Vegas Association of Realtors (GLVAR) President noted recently that the average median price of a home in Las Vegas rose in April of 2010 to $142,000. Home prices were up 4.4% over March, 2010 and up .2% year over year from April of 2009. This is the first median price increase we have seen in Las Vegas since February of 2007.


So does this single the beginning of an upswing? To answer simply...absolutely not.


From December, 2009 through February, 2010 banks foreclosed on only about 900 homes per month in the Las Vegas valley. In March of this year, we started to see a dramatic change. The banks foreclosed on just over 1500 homes in March and then really turned up the heat by foreclosing on over 2300 homes in April. This huge increase in foreclosures is starting to create an increase in the number of available bank owned properties on the MLS. As of the writing of this article, we now have 1266 available SFH REOs. This represents 16% of all the available (7996) listings. Because banks are beginning, once again, to push foreclosure, there will naturally be more inventory moving into the Las Vegas real estate market. The banks have achieved their goal of shrinking inventory, and now the goal is to match the number of sales with the number of homes being foreclosed upon. I believe the banks will keep the number of foreclosures per month around the 3000 mark, as the numbers of sales have averaged around 3000 per month rather consistently. The goal is to keep inventory low and consistent. Any raise in inventory would cause prices to go down again, creating more dramatic losses for the banks. I don't believe they will allow this to happen.


The result of all this market manipulation is a matter of ongoing debate. Many experts believe that had the banks and the government simply allowed the market to naturally run its course, that the decline may have been steeper, but that the recovery would be quicker. Regardless of your opinion, one thing seems clear. With continuing low inventory, prices below historic trend levels, prices below builders' replacement costs, and investment properties that cash flow...this is a great time to buy real estate in Las Vegas.


If you are interested in learning more about investing in the Las Vegas real estate market, please contact me: Glenn Plantone, 702-769-9872, gsplantone@gmail.com.

AOL Provides Great Resource for Las Vegas Foreclosures, Short Sales and Real Estate Trends

As many of you know, I use a lot of different tools to help me stay up to date on the latest trends and reports regarding Las Vegas foreclosures, short sales and general real estate trends. One of my favorites has always been the Google Alerts system. By simply going to your Google account page and entering your desired search terms, you will be automatically sent once a day, a list of the top five articles and blog posts relating directly to your search criteria. I, for example, have a Google Alert set up for "Las Vegas foreclosures." This alert constantly sends me the latest information on Las Vegas foreclosure trends, and helps me to better understand the Las Vegas real estate market, thereby being able to offer the best possible, most informed advice to my investor clients.

Another useful tool that I/we use is the AOL local real estate pages. These pages do a great job of consolidating lots of timely key information on local real estate markets, in one easy to access format. For example, if you go to http://realestate.aol.com/Las_Vegas-NV-real-estate you will find a wide variety of statistics such as: total inventory of Las Vegas homes for sale broken down by new builds, existing homes and foreclosures; percentage of Las Vegas properties that are owned, rented or vacant; median values of homes in Las Vegas and average monthly rent. You can also find graphs that compare average estimated value of Las Vegas homes to values from one month ago, one year ago, or any user defined time table. You can do the same thing for average sales price, total number of sales, household size and several other factors.

Whether you are an investor looking to research a potential purchase in the Las Vegas valley or a Realtor trying to develop your own niche, this is a valuable website for increasing your knowledge and expertise on the Las Vegas housing market. For more information on investing in Las Vegas, please visit my blog: www.vegasforeclosures.blogspot.com

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

Regent Short Sales

I'd like to take a few minutes in this article, and discuss what is happening in the Las Vegas real estate market in general and with units at the Regent in North Las Vegas specifically. I’d also like to briefly discuss some of the options that are available to any current owners or investors in the Regent Las Vegas.


We all know that the last few years have been very difficult for all of us who own real estate in Las Vegas. The market has fallen as much at 80% in some areas of the Las Vegas valley. Here at the Regent, prices have dropped to around 27 cents on the dollar from original pricing and as low as 19 cents on the dollar from the highs of 2007.


I have been involved with the Regent since 2003 and have seen both the highs and the lows. My wife and I own three units here, I was on the board from 2007-2010, and served as its president for most of 2009. I have been on site since 2007 and currently work in the Re/max office in the front of the complex. As a licensed real estate agent and an investor myself, my clients are primarily other real estate investors. Last year I sold over 30 of the 67 units that closed here at the Regent…so nearly half of all the sales in the entire development. I am well versed in understanding the complex as a whole.


Over the last year we have seen rental rates drop about $200 per unit. This is having an effect on the quality of the tenants, the vacancy rates, and, of course, the bottom line cash flow on Regent investment units.


The news is not all bad as this northwest area of Las Vegas is continuing to develop nicely. A new Lowes home improvement store and Walgreens are due to open within a couple of months, a new bus station opened at the end of March and the Community College of Southern Nevada has announced they will be building a campus about 1/4 mile north of the Regent.


In 2009, foreclosure properties dominated the Las Vegas real estate market, and the Regent was no exception. 75% of all sales in Las Vegas in 2009 were foreclosures, and the percentage was even higher here in our complex. 67 units changed hands at the Regent in 2009, and almost all of them were foreclosures. With 274 total residential units in the complex, this means that 1 in 4 property owners lost their unit to foreclosure last year alone. Of the 22 one bedroom units sold through foreclosure, the lowest price was $29,900. There were 36 two bedroom units sold, and the lowest was at $44,000 (2 of them). Of the 9 three bedroom units sold last year the lowest priced unit was $55,000.


I believe that foreclosures will slow down this year, but only because of a dramatic increase in short sales. This is a trend that is occurring throughout the Las Vegas valley. Because of the government’s push to get short sales approved and accepted, they have picked up dramatically in the Las Vegas market. Last year short sales amounted to 8% of all sales while REOs accounted for about 75%. Already this year, short sales have risen to 25% of all sales while REOs have dropped to 50%. At this rate, I project that we will see a total switch of REOs and short sales by the end of the year.


As of this writing, there are only two bank owned REO foreclosures listed for sale in the entire project, but there are a total of 21 units listed for short sale. Of these 21 units, only two are actually available… the other 19 are already under contract in a pending or contingent status.


There is a huge advantage to having your unit go through a short sale vs. a foreclosure. Credit experts tell me that a foreclosure will generate a 200 point hit to your credit report as opposed to an average of near 50 points with a short sale. Also, if you work with a seasoned Realtor and they are able to successfully negotiate a short sale that eliminates a deficiency judgment, you do not have to worry about the bank coming after you for the difference between what you owe and what the property fetches at the foreclosure auction.


Most analysts feel that we are in for a long ride before property values are anywhere close to the levels of 2007. At the April meeting of the Real Estate Insiders Club here in Las Vegas, Mary Riddel, Associate Professor of Economics at UNLV, made it clear that she believes we are in for about 8-12 years before we see any substantial appreciation in real estate values in the Las Vegas Market.


So what are your options at this time?


Keep in mind that I am not an Attorney, CPA, or Investment Advisor and I do suggest that you seek legal, professional counsel before deciding how to proceed. My goal here is to give you some general outlines and to summarize your present options.


Hang On: If you can, this will preserve your credit. In considering this option though, you need to determine if you can afford negative cash flow from your unit over the next 10 years or longer until values rise to more than the amount that you owe and/or cash flow becomes greater than your costs of ownership.


Foreclosure: Most likely your worst option of the bunch. If you stop making payments on your unit, the bank will eventually auction off the property and take it away. This will hurt your credit tremendously and stay on your credit report for up to 7 years. You will also be vulnerable to a deficiency judgment.


Deed in Lieu of Foreclosure: Just turn the keys into the bank and be done with it. This will immediately release you from most of your personal indebtedness associated with the defaulted loan, however you will still be vulnerable to a deficiency judgment. A deed in lieu will hurt your credit a little less than an actual foreclosure but far more than a short sale.


Short Sale: More and more property owners are now looking at this option. With an experienced Realtor, you have a good chance of being able to successfully navigate the short sale process and sell your property to the new investors now coming in. However, if you inadvertently hire an inexperienced representative, you may very well find your unit foreclosed upon before you are able to get a short sale approved by the bank and sold to a buyer.


If you are considering short selling your Regent unit, I would love to discuss your options with you. I specialize in both the Regent and short sales. I am currently successfully negotiating 5-7 short sales per month and we are seeing bank approvals coming in at a much faster clip in the last few months.


Please feel free to contact me should you have any questions at all about the market, and/or the process for properly handling your unit.


Glenn Plantone

(702) 769-9872 or gsplantone@gmail.com