Las Vegas Homes, Condos, Land and Commercial Real Estate Blog

This part two of

Investing in Las Vegas real estate from a first time real estate inventor’s point of view

So far Brian has discussed why he is sick of having his money managed by others; I don’t blame him, the proof is the large losses that investors have suffered through their managed investments.

You can learn a great deal about how Brian not only has calculated his initial real estate investment cost along with a thorough analysis of the worst case conditions that most of current Las Vegas commercial and residential real estate investors didn’t prepare for, resulting in losing their property to foreclosure and ruining their credit.

Why Brian has decided to invest in Las Vegas investment real estate:

I have been researching real estate prices in Las Vegas and other communities for some time now, and the combination of the disappointments realized above, and the faltering market in Las Vegas right now has primed me to take the plunge.  The way I see it, I have relatively little risk here and I will explain why.  Keep in mind that my ideal property is going to run me around $105,000, will be a small 2-3 bedroom single family home, or a 2-3 bedroom condo (also in the same aforementioned price range).

I do have approximately $20,000 in our checking account right now, but I do not want to dip into that too much if I can’t help it.  My wife and I would like to spend $5,000 or so on getting new flooring put into our principal residence and I know I will have to dip into the checking account a little bit to finance the property.  I plan on liquidating the IRA account and utilizing that towards the down payment on the property.  I figure that at a real high level, the down payment will be around $20,000 and the total closing costs will be around $5,000.  I can roll $4,000 (4% of the property price) of the closing costs right into the cost of the load (this is something Masoud has taught me – we are able to do this solely because most Vegas properties will appraise for much higher than the sale price).  If my 105k property only appraised for 105k, then I would not be able to do this.  Therefore, I will only need to come up with around $22,000 to close my deal.  I will get the majority of that from liquidating the IRA.

So now my next concern is can I afford the place EVEN if I did not have a tenant?  This is not a problem because the mortgage, property taxes, insurance, etc… should come out to around $750-800 per month.  As long as I feel comfortable paying that, when I do get a tenant, much of that cost will be defrayed.  I am comfortable with this figure.  Right now, I am investing $900 per month via direct deposit.  Therefore, all I have to do is suspend those investments, and I will have no change to my current lifestyle.  I will get more into this when I get closer to finding my ideal property.  Obviously, finding a place that is live in ready will be key, as I do not really want to put down $800 for a fridge, $1500 on carpeting, etc…  I do have some contacts in Vegas to get this type of work done, I just don’t really want to outlay the cash if I don’t have to.

The reason why I do not think I have much risk here is that I am throwing $20,000 into a $100,000 property, one that sold for around $240,000 just two years ago.  I plan on paying the mortgage faithfully, and I hope to secure a long term tenant, or at least keep a tenant in the property 80% of the time or better.  My goal is not necessarily to gain positive cash flow here.  A neutral position would be just fine.  In 10-15 years (or possibly sooner) I would like to have the place paid off.  By then, I may be in a position to go out there and reside in the property for 2 years so that I can sell it without paying capital gains taxes (however may pay tax on what I previously depreciated, have to read up more on how that works).  At any rate, even if the Vegas market doesn’t rebound that quickly, I have to believe that the property will still be worth more than what I paid for it.  If it isn’t, well then I have a house in Vegas don’t I?  I can keep renting it out and keep the excess now as profit.  Either way, I have something of value in my portfolio, and I have to believe that it will be worth more than the crappy Ameriprise IRA that I cashed in to trade for it.  If not, well I did buy in Vegas didn’t I?  I am willing to take the chance that this does not work out exactly as I envision it coming into place.
In my next post, I will talk more about why I chose Las Vegas, and I will talk more about how I met Masoud, and how our interactions have helped keep me focused on my goal.

Brian’s chance of failure is non-existent because he is looking at buying an investment property as two distinct processes:

Procuring financing for the investment property in an optimal fashion and be prepared for the worst case.

And

Finding a suitable property for his comfort level.

This will be ongoing and I will let you know when Brian makes his million dollars, he is well on the way to success.
Related web site pages: Getting the best deal for your Las Vegas home or condo, Buying Las Vegas homes for sale, Las Vegas homes, condos and commercial real estate