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

While Las Vegas condominiums and homes for sale prices have fallen by as much as 50%, rents have not dropped significantly. This makes a nice cash return possible. To explain this in detail I will start a series of blog posts that discuss this with real life examples. But before I do so I want to discuss the difference between real estate investments and buying safe investments such as United States Bonds or simply parking your investment in a bank’s saving or checking account.

1: If you decide to invest in a bank or buy a medium or long term bond then the risks of losing your money is very small, the interest rate is known and the investor knows exactly how her/his investment will be doing over time. For example 5 year and 30 year treasury bonds pay 1.65% and 2.65% and 30 Year mortgage interest rate is 5.54% (Dec 29/08). It is easy to compute how much the investment earns at any point in time throughout the investment period. However what is not known is the inflation over the same period which will significantly reduce if not wipe out any interest gained from this type of investment; unless the inflation rate is less than the interest rate, the investor’s gains from investing in a bank or treasury bonds will be a negative return on their investment.

Any other kind of investment other than the government FDIC backed bank accounts or treasury bonds are a bet on one or many future events by the investor. Betting on the future events involves taking a risk (gamble), were one can win or lose. Unfortunately people tend to hope for the win and ignore losing which guaranties losing in long term.

Investing in real estate generally and Las Vegas real estate in particular is more complicated than opening a bank account or buying treasury bonds, but then again the return on the investment can be much higher than safe investments.

Issues involved in investing in Las Vegas real estate:

1: In addition to the final negotiated price of a Las Vegas home, condo or commercial real estate, the buyer will have closing costs that are associated with the transaction such as transfer tax, recorders and escrow fees, title insurance fees and if the investor decides to finance his/her purchase an appraisal is mandatory and loan origination fees will be involved. For cash transactions the closing costs are low however if the buyer is getting financing the closing costs can be in the 3%-7% range, depending on the loan origination cost and whether the buyer wants to buy down the interest rate.

Some of the best deals in today’s Las Vegas real estate market are foreclosures and most foreclosures are sold as is. Thus, depending on the condition of the property the buyer may have to pay repair costs to make the property usable.

Most investors lease their properties and the smart ones use a real estate agent to do it. There will be additional costs associated with renting the property and needed repairs when a tenant leaves. Absentee owners should hire property managers to look after their property. The cost can be in 6%-10% range for a Las Vegas home or condominium.

So as you can see a lot more than the final negotiated price is involved and investors have to account for them.

Related web-site links: buying Las Vegas condos for sale, Buying Las Vegas new homes for sale, buying Las Vegas Homes for sale