In the last blog post,  $1 Billion Las Vegas real estate note auction, Retail I stated that I picked 10 good Las Vegas retail properties that will run in the note auction. Please e-mail me for additional info about them.  You can find my contact links on top of the left column.

By far and away the best Las Vegas commercial real estate deals are foreclosures or bank owned properties and there are less than 40 listed in Las Vegas the commercial real estate MLS for the whole valley. Non-distressed retail properties that are listed in the Las Vegas commercial MLS sell for around $60 per square foot for class (C) buildings in low income areas, better class (A)retail properties sell for about $250 per square foot. The asking price for a retail property in Rampart Street in Summerlin is $800 per square foot.

Conversely, comparable bank owned (REO) retail properties to those running in the Las Vegas note auction sell for $80-$180 per square foot which is 25%-30% discount over non-distressed. I project that the note for the retail properties will offer investors an additional 20%-30% discount over the comparable bank owned (foreclosure) properties.

 However, there has to be a good discount for buying the note and going through the foreclosing process (it is not as bad nor as expensive or time consuming as judicial foreclosure states) as opposed to buying the property as bank owned after the bank forecloses on the property or buying the property from the Las Vegas Trustee Sale Auction. By the way, the act of foreclosure which changes the owner of the property from the borrower to the lender takes place in the Nevada trustee sale auction.

I called several attorneys to ask about the foreclosure process for commercial properties in the State of Nevada.  Jim Smyth and Josh Correlli of Kaempfer, Crowell Law Firm in Las Vegas were kind enough to answer my questions while a few others weren’t. They said that if there are no complicating factors the commercial foreclosure process takes less than 6 months and could cost less than $20,000, due to the fact that Nevada is NOT a judicial foreclosure state. However, complicating factors which are beyond the scope of this article can make the foreclosure process much longer and costly. Only a foolish investor will bid without having lawyers involved from the beginning and I have a couple of great ones for you. Actually a couple of owners (borrowers) had tried to turn in the titles of their properties to the lender more than a year ago and the lender refused.

The other issue is that many borrowers declare bankruptcy to avoid specific performance (the lender can sue the borrower to make up the difference between the loan amount and sold price of the property). This is NOT an issue here since these are non-recourse loans and the lender can NOT bring up the issue of specific performance.

Many of the 10 retail properties that I have picked should be priced at about $150 per square foot and I project they can be purchased at below $100 per square foot, now that is called a DEEP DISCOUNT.

Summary:

 I have picked 10 of the best listings for Las Vegas retail properties which will be run in the biggest commercial real estate auction ever in the US.

These ten listings are mostly over 70% occupied and in some of the best retail locations in Las Vegas, North Las Vegas and Henderson

The reason for the note auction is that many of these listing were either refinanced or purchased in 2004-2007 and now their value is less than 40% of the mortgage.

These Las Vegas retail properties will provide the new owner with double digit cash flow.

Due to confidentiality agreement I can’t write about specifics of each property. Viable investors can call me for further info 702-478-7800. Masoud

For one thing, Las Vegas is no Detroit, there are very few undesirable properties here and the majority of retail properties are in good locations and 3-4 in the most desirable locations. For example the property that is located at 11105 South Eastern in Henderson is located at the mouth of and serves the huge Anthem community, awesome location.

  I have picked about 10 of the best listings and my picks are viable, occupancy is over 70% and are money making Las Vegas commercial properties.  Some with 70% occupancy and in the best locations, however the income gained from these operations can’t service their outstanding loans. In some cases the borrower is two years late and in one, the owner wanted to turn in the title (Deed in Lieu) and the lender refused, why? See Effect of Zombie Loans on Las Vegas real estate market 2011

 So if these are great properties, why are they broke, why are banks auctioning off their notes?

1: Well many of these properties have been refinanced in 2004-2007 for stupid amounts of money and the owner (borrower) has already taken their original investment out of the property. In other cases the loan was used to purchase the property at the peak of the real estate bubble.  If that was NOT the case many of these properties would NOT be in trouble today. Loan to value (LTV) ratio for some properties are in the 150% range while the property is 80% occupied.

2: The real estate market crash that added to their vacancy, however I highly doubt if these properties would have been viable without the crash. Banks were throwing money away in 2004-2006.

For example; one would be hard pressed to find a better located retail property than one on the corner of Sahara and Decatur. Check out the traffic count: about 90,000 vehicles a day and around 150,000 people within the 3 mile area. Now a foolish bank made a $56,000,000 or about $170 per square foot loan on this property and the post real estate crash has left it with 150% LTV. Auction.com puts the real estate value for this property at $33 million now! I wouldn’t hold my breath to see such a bid. The owner (borrower) has offered to buy back his loan at discount and the bank rejected it because it is NOT in their DNA to cut principal for a borrower, although it has happened for some other large properties in Las Vegas. Now if someone ends up with this property at, say at $15-$20 million, then the LTV ratio will go down noticeably and make this property viable again and a good investment candidate.

I will discuss other Las Vegas Retail Properties in the note auction later

PS: Nevada is NOT a judicial foreclosure state and call me 702-278-7800

I discussed what happened in the first Las Vegas real estate note auction and why it provides Las Vegas real estate investors with an unequalled opportunity to invest in Las Vegas commercial real estate at deep discounts. But first things first.

What does a commercial real estate note buyer really buy?

The investor buys an amortized schedule of future monthly payments for a loan that is backed by commercial real estate.  For example, the investor buys $1000 monthly payments for a period of 15 years. However future money must be discounted back to the present time due to inflation. We can calculate the return, by determining the net present value of an investment property’s cash flow and sale proceeds for periods of X number of years. The value of any investment is simply defined as the total cash that an investment will throw off during its existence.

A few listings in the Las Vegas real estate note auction are performing loans and will be sold as such.

Big deal so where is the opportunity?

The vast majority of properties auctioned off in 3 weeks are non-performing loans and great candidates for foreclosure. Some property owners haven’t made a payment on their mortgage for two years and there is little chance of saving the property from foreclosure. There is no reason for the borrower (current owner) to want to keep making payments on a property that is 100% upside down. These notes will be sold at deep discounts for several reasons.

1: Most real estate investors are not familiar with buying notes, thus less competition.

2: Banks do not expect full market value for these loans, if the note was performing, it wouldn’t get more than 80 cents on the dollar and these notes are non-performing.

3: Most institutional note buyers are NOT familiar with Las Vegas real estate market, and newspapers have scared that heck out of them.

4: Relatively straight forward process of foreclosing on a Las Vegas property scares investors and the reason is lack of knowledge.

Some asked me why all these banks are selling their loans now. My answer was see Effect of Zombie Loans on Las Vegas real estate market 2011.

I will discuss Las Vegas note auction that starts on May-17 further

City Place Apartments has 224 studio, one and two bedroom units. The rental average was $500/month and occupancy rate was 56%. The place was run down due to the current owner’s inability to keep the place up. I went and talked to a couple or residents there. The gross income generated from this property was $67,500.

Upon close inspection I estimated that if the owner spent $1 Million more to upgrade appliances and kitchen cabinets, carpets and common areas, the occupancy rates would go much higher than current 56%.

City Place Apartments’ note was sold in a Las Vegas note auction

The Las Vegas real estate auction didn’t heat up until the last couple of hours from dead line, the reserve (minimum price set by the note seller) was met and one very lucky Las Vegas real estate investor purchased a seriously non-performing note for this apartment building for $3.8 million dollars. Assuming that the new buyer would immediately move to foreclose on the property and would spend the additional million dollars to upgrade the property, the total cost for the new owner would run about $4.8 million dollars that when divide by the number of units his costs per unit would have run about $17K per unit. It is IMPOSSIBLE to find such pricing for an apartment complex in Las Vegas, even in rough areas.

Of course the winning bidder only purchased the note and now has to foreclose on the property, which may be time consuming, but the legal fees shouldn’t be that bad. Now let’s look at the income generated by 80% occupancy which is not unreasonable after upgrading the property. The gross income runs about $80K/month and assuming 25% (very conservative) in expenses, 60K net income per month or $720,000/year is possible. Even though I gave you the worst case scenario about the money needed to upgrade the property or 25% in expenses, still cash on cash return for this property would be 15%.
Now another Las Vegas commercial real estate note auction is coming up where hundreds of million dollars in office, retail, industrial and multifamily properties will be auction off in Las Vegas in 3 weeks.

If you are an institutional investor or have many millions sitting in a bank account which give 1% interest, you should not miss this opportunity. This is by far the best way to invest in Las Vegas commercial real estate that I have ever seen. If you are interested call Masoud at 702-478-7800.

What are Zombie loans in Las Vegas real estate?  Zombie loans are non-performing real estate loans that the borrower has stopped payment on a long time ago (in some cases for two years) but banks refuse to foreclose on the loan. These are dead mortgages that the owner (Borrower) wants to get rid of and the banks don’t want to foreclose on.

Why are banks refusing to foreclose of non-performing loans?

1: All of the sudden banks have found God and started to love their customers? Wrong

2: Banks can’t afford to foreclose on these loans? Probably right

I have heard this from two people that I highly respect and would appreciate input from those who know more than I do about this.

When the US government went over the banks books they learned that if all their assets were depreciated to present value, most banks would go out of business. So they let the bank keep the original value of their assets until it changes hands. For example if they foreclose on the property.

I am NOT an economist, however what they said matches reality, and this is the reason that it takes about two years to foreclose on residential properties in Las Vegas. Additionally, there are many commercial properties in Las Vegas where the owner (borrower) quit paying their mortgage 2 years ago while the building is sitting empty doing nothing. When I try to contact the bank, asset managers will not talk to me to sell the note (mortgage, loan) while they refuse to foreclose on the non-performing loan themselves.

Additionally, if they have to foreclose on the property they put the full loan amount as the minimum bid which assures that no other investor would bid on the property at the Las Vegas Trustee Sale auction. This way they do not have to depreciate the loan on their books and this is exactly what happens at the trustee sale auction a majority of times.  A good example of banks refusal to foreclose would be a 178,000sf industrial on Wynn Road which has been sitting empty for a couple of years and when I had a viable owner user with proof of funds and contacted the trustee in the matter, the bank refused to talk to me. Why, because they had to depreciate their books by $6,000,000 if I was successful in doing the transaction.

Now those who are making a living as a Las Vegas real estate analyst by predicting a tsunami of foreclosures obviously are ignorant of the above and it is their job to know. The astronomical bank profits that news channels report will eventually give the banks the ability to get rid of more bad assets and it is happening in real time in Las Vegas.

Las Vegas commercial real estate note auction

The best opportunity to invest in Las Vegas commercial real estate is coming up next month in the form of a non-performing note auction for tens of millions of dollars in commercial real estate notes. These are non-performing loans for multimillion dollar office, retail and industrial properties. In this auction investors can purchase non-performing loans which they can foreclose on later and get the property at deep discounts from other buying opportunities in greater Las Vegas including bank owned commercial properties. I will explain this process in a future blog.

Anyway, now you know why I titled the last blog post Las Vegas Voodoo real estate market, because we got Zombie loans all over the Las Vegas area and no one can see them.

If you want more info about the Las Vegas commercial real estate note auction, call me at 702-478-7800, Masoud.

I think the easiest job in the world would be becoming an outside Nevada Las Vegas real estate expert as there is no test for it. All you need to do is to declare yourself to be one and then you can say something completely stupid to get published in our newspapers, in this case Las Vegas Sun, even though this time they made it clear that Linneman Associates has not been very accurate. The last is a Philadelphia economic firm called Linneman Associates that predicts Las Vegas will have one of the biggest improvements in the nation within its industrial real estate.

While Las Vegas industrial vacancy currently stands at about 15.8% these guys have it at 13.1%, however they are predicting this number to fall to 9.7% by the end of 2011, 4.9% by the end of 2012 and eventually 1.9% by the end of 2013. I guess the way they are going; we will have .5% negative vacancy by the end of 2014.

The reason is that Las Vegas was invaded by aliens from planet IndustriousNoVacancy have escaped from area 51 and are gradually taking over the vacant industrial properties in Las Vegas.

Although the industrial vacancy would go down with an improvising economy, there are absolutely no signs that recovery would be fast. Even in 2004-2006 our industrial vacancy was more than 3% and there are many big box buildings currently sitting empty.

I have repeatedly written that my readers should pay no attention to these outside Las Vegas, Las Vegas real estate “experts” and I couldn’t offer a better proof.

By the way this blog is proof that I am still here, even though sometimes my injuries take me places no one should go.

Currently there aren’t any bank-owned (foreclosed) homes that can be purchased directly from the banks in bulk at wholesale prices in the Las Vegas Valley. However, some investors who have previously purchased homes or condominiums from the Trustee sale auction do have a few homes which they have bundled together for sale to investors. Some of the wholesale homes have been fixed and rented and they are selling them as investment properties, which is fine and good. Except for:

These are not the bulk sales which investors call us about. When Las Vegas real estate investors call about bulk sales, they are asking for 15%-30% or more discounts which these do not provide.

The reason is lack of foreclosure (bank owned) homes or condominiums inventory. Currently we have 10132 homes, condominiums and townhomes which are listed in Las Vegas, Henderson and North Las Vegas, only 1927 of these are bank owned.

The table above shows why we don’t have any homes for sale sales in bulk in Las Vegas at wholesale prices. Just look at the numbers above and notice the fact that these homes closed escrow or recorded in less than 30 days since most are cash deals. Bulk sale buyers usually look for homes or condos that are priced below $100,000 and most prefer properties that are priced below $50,000 and there they run into the most competitive real estate segment of the market.

Now why would banks wholesale properties that sell for cash at 109% of the asking price? A quick look at homes and condos that are sold for $50,000-$100,000 tells the same story.

At this time the only way to get wholesale prices for Las Vegas homes and condos, as well as land and commercial properties is to buy them from the Trustee sale auction or foreclosure auction one by one.

Some new home builders have gone bankrupt and have lost the improved parcels which they were planning to build. This makes it possible to buy these individual parcels in the same subdivision in bulk.

Related Website pages: Las Vegas residential real estate for sale, Las Vegas real estate auctions

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The most important duty of a Las Vegas Realtor or real estate agent is to put a correct selling price on the Las Vegas real estate for sale. If the property is priced too low, the market will correct this, there are many examples of homes or condominiums which have sold for tens of thousands above asking price. If the property is priced unreasonably high, the property will not sell because it will NOT be shown by other real estate agents.

Pricing a property correctly is different from hoping for a sucker to show up and buy their home, condo or commercial property; as these suckers lost all they had in the last crash, they are not showing up.

Before putting an asking price on a property the Realtor or real estate agent should look at COMPS. COMPS are calculated based on similar properties which are located in immediate area and have sold within 1month to one year depending on the market conditions. In Las Vegas residential properties, 3-6 month is good for lower price homes or condominiums since pricing have been flat lately.

Asking prices in your area are NOT COMPS, only selling prices are.

The other factor is the important momentum or market trends, if prices are dropping like a rock, then the asking price should be lower than COMPS.

Those who want to sell their Las Vegas homes should make their real estate agent explain about how they have arrived at the asking price, the same goes for those who want to sell their Las Vegas condos.

Finding a home for the Rabbi who is relocating to Las Vegas

A New York Rabbi who wanted to relocate to Las Vegas called me and told me that he is working with a well known Realtor in Las Vegas and was thinking about making an offer on the same Realtor’s listing.

The Rabbi was smart enough to know that the same Realtor should NOT do both sides of the real estate deal (Dual agency) since the same Realtor would make two commissions while representing no one.

The Rabbi, being a man of faith, warned me about wanting to go on with the same Realtor and that he wanted my help for this one home only. The home in question was a custom home in one of the Las Vegas master planned communities. Custom homes are more difficult to do comps for than tract homes since tract homes look pretty much alike except for a variation in lot size and upgrades which can be easily calculated to figure comps. This is not true with custom built homes.

I am very familiar with the master planned community in question, and the home that our Rabbi was thinking about making an offer on, is NOT one of the best or highly upgraded homes in the community. I pulled all the homes in the community that have sold in the last 360 days prior and the highest price per square foot was $170 per square foot. The asking price for the home the Rabbi was considering to buy was $45-$50 more than the highest sold price per square foot.

Absolute upper limit on the Rabbi’s desired home

I multiplied the square footage of the home with $170 per square foot and told Rabbi the same thing that this is the absolute highest of a price range, depending how badly he wanted this house.

The absolute upper limit on the price of the home was more than $150,000 below the asking price and at the low end, which was far more reasonable, was $220,000 lower than asking price.

Needless to say the deal never worked, however about a few weeks I heard back from the Rabbi and he wanted to switch Realtors and we are helping him at the moment.

This is 2010, not 2007 and we are in our third year of price corrections. You would think that some sellers and their real estate agents have come to understand this, NOT.

Listing Las Vegas for NOT selling them never made sense to me. The Realtor can show prospective clients how many listings they have, but the seller gets nothing out of his/her effort.

Las Vegas, Henderson and North Las Vegas real estate sellers should ask their Realtor how quick he/she sells his/her listings, rather than how many listings they have. Except that these Realtors often re-list their listings in order to cut down on their time on the market. I have found a very good blog post that discusses this issue from another point of view Unscrupulous Listing Practice?

Related Website pages: Sell Las Vegas homes, sell Las Vegas condos, sell Las Vegas commercial real estate

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Make sure that invite a veteran to your home for Memorial Day. We are having my very good friend and ex-customer Chief Master Sergeant Frank and his family over today.

Aerial View of the parcel which is located about 1200 feet from Shelburne Ave and Rainbow Blvd in S.W. Las Vegas

This parcel is less than 1200 feet from the Rainbow Boulevard in Pinnacle Peaks which is within the Coronado Ranch and is within the walking distance of Nevada Trails and easy drive to hospitals, shopping centers and less than 2 miles from high way 215 and Rainbow Boulevard interchange.

American West Homes is building and selling homes on the adjacent parcel in the Kings Bridge sub division. These homes are built on 3K-4K lots and selling for $219k-$295K as starting price.

Foreclosed homes which are larger than 2300 square foot are selling for $225,000-$295,000 in Las Vegas MLS. Although there are a few subdivided parcels around my listing which have not built yet, Kings Bridge is selling 1-2 homes per week and due to increasing activity in new homes sector, these parcels could be built out in short order.

The net acreage for this S. W. Las Vegas land is about 4.05 acres, this means 32 homes could be built on this parcel which brings the price per door to about $46,000 as you can see there is a lot of room to make a god profit on the homes which will be built on this parcel.

This parcel is located at Sonata within Pinnacle Peaks in S. W. Las Vegas within walking distance of Nevada Trails, easy 10 minute drive from the world famous Las Vegas Boulevard (Strip)

Foreclosures have taken a big toll on the vacant land prices in Las Vegas. I tell those land owners who call me to list their parcel that asking price for their parcel have to realistic and reflect the price reduction due to foreclosures. Many of these land owners decide not to sell their parcel now and wait a few years for a price increase and I don’t blame them a bit, however the owners of this parcel agreed to the realistic pricing that I suggested to them or I would not be listing this parcel.

I truly believe in cooperating with other Las Vegas real estate agents and have cut my own commission in order to provide cooperating agents with a generous 3.25% commission while most like properties only offer 1.5%-2.5% commission to selling agents.

People usually don’t believe in something unless it is reported in some sort of news outlet and the latest land news in Las Vegas is that residential vacant land like this with zoning like RS (8 units per acre are getting a lot of action.

The following is from RJ.

“Las Vegas Real Estate: Homebuilders hunt for land. Las Vegas one of areas with falling prices. Las Vegas Review-Journal 11/07/09. But now Las Vegas homebuilders are on the hunt again, vying for choice parcels even in foreclosure-riddled markets such as Las Vegas, Southern California and Orlando, Fla., where prices are cheap and there are early signs of a recovery. It was primarily investors buying lots in Las Vegas for the past two to three years. Since August, major builders such as KB Home, Richmond American and Harmony have jumped back in the game.”

This parcel of land can make someone a lot of money, so, Please call me at 702-478-7800 for more details. Masoud

Greater Las Vegas real estate market, an analytic look at the Las Vegas homes, condos and townhomes market part two

Las Vegas real estate market report, reasonably priced homes or condominiums in Las Vegas are hard to find, foreclosure inventory is low part 3

In the last blog post I wrote “I have designed the web-site and blog so it attracts educated buyers and sellers. The problem is that some of these people believe that they know the Las Vegas real estate market better than I do. NOT happening and I don’t appreciate it.  Since so far, I am the most accurate predictor of the market direction, especially since the meltdown as we started to get real numbers from the government and not “the fundamentals of our economy are strong”.

I love the blog since there is always a written record about what I write about.

Below are a few paragraphs from my Las Vegas real estate market predictions. You can find the blog post at Las Vegas Homes, Condos, Land and Commercial Real Estate Team wish all a Happy New Year.

 ”Masoud Saberzadeh’s predictions for 2009

3: Barring catastrophic economic events, Las Vegas residential pricing for homes and condominiums that are under $320,000 will pass the point of convection. (This is becoming true for homes under $200,000).

4: Las Vegas Land prices will be selling at 35%-40% of their peak pricing. (Asking for these parcels of land has not gone down to this level, but sold prices are)

5: Las Vegas Industrial properties prices will come down 40% from peak levels. (Same as above)

6: Asking prices at City Center will come down. (They kept denying this until last month, now they announced that they will cut prices, but not by how much).

7: If not now, barring catastrophic economic events, Las Vegas will offer the best investment opportunities on earth. I mean it as it is already possible to make 7% or more through investing in Las Vegas homes or condominiums. Las Vegas commercial real estate has a bit further to fall.” (10% or better cash on cash returns are possible now).

Keep in mind that it took a lot of courage and a bit of craziness to predict what I did on January 1^st, 2009 when all that was being published were doom and gloom reports.

Now comes “proof” and it “has to be right” since it was printed in a newspaper

Las Vegas area home prices edge up. Las Vegas Review Journal August, 20, 2009

A few paragraphs from this newspaper article.

 ”It’s tough for owner-occupants with limited financing to compete against guys such as Bob Schulman, chairman of Las Vegas-based Montecito Cos. He started a fund capitalized by institutional and high- net-worth investors to acquire 100 to 125 foreclosed homes in Las Vegas, targeting the Summerlin and Green Valley master-planned communities. Subsequent funds could acquire up to 500 homes.

Schulman said he looked at all potential real estate opportunities — from new construction to value-added acquisitions of existing apartment, office and industrial properties — and determined that the best value was to be found in single-family homes.

Not only had they overcorrected in price, they were substantially undervalued, he said.

“We looked at residential land here with homes on it, and they were 30 percent to 40 percent below the cost to build,” Schulman said. “Why would I buy land? I can just buy the house with no risk.”

Murphy said investors such as Schulman are really driving the entry-level market and taking those homes out of the inventory, which declined in July to 11,905 listings from 20,641 a year ago.

“Frankly, that’s where the smart money is, and I can’t fault them,” Murphy said.”

Now this Schulman guy is the smart money due to his extensive experience with the Las Vegas real estate market.

Those who read my blogs on a regular basis have seen the same in my previous blogs, except that these blogs have been written months ago.

I have only written one sentence in my blogs that we will know much more about Las Vegas homes and condos market by November. I have told my big investors to wait until November to test the market and buy in Decmber-2009 to February 2010, because I believe that we will have more inventory and a better selection of homes and condominiums. The banks will be more open to negotiate when they have a larger inventory.”

This doesn’t apply to small investors. If you find a nice deal now, get it.

Some “analyst” predicts that home and condo inventory will be affected by expiration of the tax credit for 1^st time home buyers. They should wait to see what the United States congress is going to do first.

One last point, DO NOT believe commercial real estate agents in Las Vegas that tell you I have a great deal for you. A great deal now, will not look so great in six months to a year. That is the reason that a big time commercial real estate investor is buying residential real estate now.

The current data are showing a false bottom and prices will go up and down in progressively narrow range for a while. But a good deal now for a Las Vegas home or condominium will still be a good deal come next year.

At the conclusion, real estate investors that get all their info from a few articles and think they know the real estate market in Las Vegas better than I do and go as far as e-mailing me such articles to prove their point. DON’T do it, this is not a Nike commercial.

If you like my blog posts you can subscribe to it by clicking on the RSS Feed on the top right hand column.

Contact us at lasvegassaber@yahoo.com or call us, 702-478-7800. Masoud

What are documentation fees, processing fees or storage fees in a real estate deal?

These fees are invented by the real estate and mortgage brokers in order to get additional money on top of the commission from the buyer and/or the seller.

To me it is like going to the buyer or the seller of real estate and telling them Mr./Mrs. Buyer or seller, I don’t believe that I have been paid enough on your deal, could I have more money? Keeping in mind that a Realtor can make $2,500 or more on a $100,000 real estate deal, I think that commission should suffice; I hate greed.

Although our broker charges $375 “documentation and storage fee” we always pay it ourselves and count it as a business expense, we have never ever charged our customers any fees in connection to our brokerage and never will. Our services are always free to Las Vegas real estate buyers, unless we sign an exclusive buyer’s agent contract that spells out the terms exactly.

In a closing my buyer got hit with 2 processing fees that were connected to one mortgage and I was very unhappy about this.

Nevada and United States laws are only a start for us and our ethics goes much further. For example showing properties based on commission or dual agency are perfectly legal in the State of Nevada, but strictly prohibited for my team. Charging a documentation fee is legal too, but I believe it does not serve our customer’s interest. A criterion for all our actions in a real estate deal is one thing and one thing only:

Does it serve our customers interest?

 And that should be the criteria that every action of a real estate agent, Realtors or mortgage officer’s actions should be measured against.

Related web-site links: Las Vegas, Nevada Homes and Condos for Sale, Las Vegas homes, condos, land and commercial real estate for sale, buying Las Vegas Homes for sale, buying Las Vegas condos for sale, Buying Las Vegas new homes for sale

There are three reasons for this.

1: Real estate deals in the U.S. and by extension in Nevada are adversarial by default. That is the reason that both the buyer and the seller should be represented by two distinct agents in a real estate deal. The buyer’s agents goal is to get the best possible deal for the buyer under the most favorable terms and the listing agent’s job is to get the best possible deal for the seller. There is an inherent conflict between the two.

If I have a buyer, I am representing the buyer and not the seller so why would a seller ask a buyer’s agent to see if the buyer would want to buy their property.

2: If the seller lists the property with me then I represent the seller and not the buyer.

3: There is great deal of work that has to be done prior to listing a Las Vegas commercial property for sale.  For example if the seller wants to sell Las Vegas land for sale, the listing agent has to figure out what is the current zoning and master plan for the parcel. Additionally, how far the infrastructure is away from the parcel of land, traffic studies, possible setbacks and perusing a higher zoning (if at all possible) are a few issues that must be considered.

How can an agent do all these instantly, while talking to the seller is beyond me?

The deal is that if these commercial property owners had done their homework, some of them wouldn’t be as distressed as they are now. Yet they insist on going on with their mistaken ways, that without a doubt will result in losing their property and a significant down payment that they had to put down.

These sellers have to think about what is the best way to sell it quickly. Calling others to see if they have a buyer that is willing to buy their property is akin to someone taking a piece of merchandise from store to store to see if anyone would want to buy it. If there is a buyer, he/she will want to buy the property for exceptionally large discounts that would leave our not so intelligent seller with nothing. Their down payment is gone anyway.

A much better way is to list the property with a commercial real estate agent in Las Vegas, so all commercial and residential real estate agents can see the listing and offer a big enough incentive so they would make extra effort to show the listing to their customers. This is the only way to sell commercial real estate in Las Vegas at this time.

Most of the properties that are listed with one agent are sold through another real estate agent, so the best way is making the listing for the commercial property accessible to the highest number of real estate agents in the Greater Las Vegas Valley. Also, make it a featured property and offer the seller’s agent a better commission from the competing listings and offering the procuring agent a good bonus for a quick close and then see what happens. All of the above is contingent on extremely competitive pricing of the property.

People, at some point you have to wake up to the fact that real estate can no longer be marketed and sold like it was 10 years ago, this is a new world, adapt or vanish.

Related web-site links: Buy or Sell Las Vegas Industrial Properties for sale. Lease Las Vegas Industrial Space, Las Vegas, Nevada Commercial Real Estate News, Las Vegas Economic News. Las Vegas, Nevada Real Estate

The problem is that the information is scattered throughout the web-site, blog and forum. I have tried to author the web-site as a summary of the issues that are involved in buying or selling Las Vegas homes, condos and commercial real estate. I have discussed these issues in far more detail in my blog which you are reading now and started the forum so you can discuss your ideas with other Las Vegas real estate buyers and sellers in addition to real estate related professionals like loan and escrow officers.

I have decided to do a series of articles that discuss buying any Las Vegas property from the investment point of view; bring up the issues involved in investing in Las Vegas real estate and how I have tried to address these issues in my web-site, blog and forum.

Investing in Las Vegas real estate

Any and all real estate transactions should be regarded as an investment, regardless of the fact that the property would be used as an owner occupied home or condominium or an investment property that has been purchased to make money for the investor. Had people followed this rule, the current foreclosure problem that has gripped Las Vegas as well as the rest of United States would not exist.

There are two distinct types of investors in Las Vegas real estate:

1: Owner occupiers: Or those who want to invest in an owner occupied home or condo or buy a commercial property to conduct their business in Las Vegas. Residential owner occupiers can use low down payment loans such as a VA, FHA or conventional loan to purchase their condo or home and if they are a first time home buyer can get additional assistance in form of government down payment grants and tax credits to sweeten the deal.

2: Real estate investors: These buy a residential or commercial property in order to make a profit. Investors have to put up a bigger down payment and may be able to get government assistance and grants or tax breaks if they buy in a re-development zone.

I will discuss the owner occupied investors in more detail in the next blog post. The reason that I call these regular home buyers investors, is that I hope it would help them to look at the process of buying a house that they will call a home as an investment and not an emotional decision.

So what is wrong with this headline? Well, below is what they have based their numbers on.

“The Las Vegas-based business advisory firm reported an average price of $524,725 an acre for 427 acres sold in the third quarter, down 73.9 percent from the same quarter a year ago.

And here is the market data for land that have been sold in the 2^nd and third quarter 2007-2008

SOURCE: Applied Analysis

All that these numbers say is that in the third quarter of 2007 140 parcels of land for sale sold in Las Vegas for the average price of $2.1 million dollars per acre. That is it, it does not say what was the zoning for these parcels, where was the location, etc. Given that we have parcels of land on the Las Vegas Strip that have sold for upwards of 30 million dollars per acre to residential land that is priced less than 200 thousand dollars per acre, the zoning and location provide for a wide range pricing.

To clear this I will use an extreme example, say that in the third quarter of 2007 only 100 acres of resort land on the Las Vegas Strip have sold for an average of 10 million dollars per acre and in the third quarter of 2008 only 100 acres of single family land sold for an average price of $200,000 per acre. Then can we say that the price of Las Vegas land has tumbled by 98%? All that the above numbers say is that more expensive land was selling in Las Vegas last year while cheaper land is selling in Las Vegas this year, no more, no less.

I am not saying that land prices have not gone done or are not going down. Parcels of vacant land around Highway-215 are offered at 2003 prices or close to it except that in 2003 the area was not built up and those who developed their project first had to pay a great deal of money for bringing the infrastructure to their land, and now the infrastructure is close by.

Las Vegas, North Las Vegas and Henderson land values have not gone down by 73% and I hope they never do, because a lot of good guys will go bankrupt. I have written before that price drops of 30%-40% are not out of the question and we are well on our way to getting there, but we are not there yet. But the headline saying that Las Vegas land prices have tumbled by 73.9 percent from year ago, IS RIDICULOUS.

Most of Las Vegas commercial property listings or for that matter residential listings end up being sold through another Las Vegas real estate agent or Realtor and not the listing agent. That is the way it should be done as it is my belief that dual agency (NOT representing either buyer or seller while making twice the commission) is not a proper way to represent either the buyer or seller. Although dual agency is permitted in Nevada it is banned in many other states.

About 80% of residential properties are found using the internet, the percentage for commercial real estate may be higher as no one with a functioning brain should even attempt to conduct a commercial real transaction due to inherent complications that arise from considerations, such as zoning, traffic studies, demographics of the area and other issues such as power considerations, air conditioning (swamp cooled Versus central air) etc.

Commercial real estate buyers in Las Vegas may arrive at commercial listings in different ways, one is to do a search for “Las Vegas commercial real estate or properties” in which case Las Vegas homes, condos and commercial real estate has 3 links in the top 20 and our listing will be seen by the potential buyer as a featured commercial listing.

Commercial real estate buyers may arrive at a for sale listing by going directly to commercial listing data bases such as Property Line, CLAV (Las Vegas Commercial Alliance) or Google Base. We have this covered too in addition to commercial data bases above our listings are published in the following sites:

• Lycos and Oodle classified services,
• Commercial IQ, One of the national listing exchange data bases and Commercial IQ exports the listings to:
• Vast. A vertical search platform for commercial real estate
• CIMLS. Which is one of the leading open commercial or investment real estate multiple listing Services or MLS
• Google Base. The world’s leading search engine. Listings are submitted to both the online classified service and to Google’s search indexes
• Commercial Source. Run by the National Association of Realtors.

As you can see your chances of selling your commercial property in Las Vegas is vastly improved if we at Realty One Group represent you, because, besides pricing you property correctly with respect to the present market conditions we promote them so they can be seen by the many potential buyers.

Experts point out that the reason for the current trouble of GGP is over leveraging and credit crunch. Pricing for these retail centers are computed using Net Operational Income NOI and The Grand Canal Shoppes sale price was computed based on a 6% cap rate for Net Operational Income of up to $38 million and 8% on NOI in excess of $38 million. If the NOI for these shops stayed steady or increased, GGP would have paid about $600 million dollars for the property over the next four years, this would make the price per square foot of the 490,862-square-foot Grand Canal Shoppes at over $1,100 per square foot. One of the more famous Grand Canal Shoppes tenants is Madame Tussaud’s.

The Fashion Show Mall was purchased by GGP is 1981 and underwent a one billion dollar expansion and renovation in 2003. This 1.9 million square feet shopping center includes some of the nation’s most famous retailers such as Macy’s, Nordstrom, Saks Fifth Avenue, Dillard’s, Neiman Marcus and Bloomingdale’s.

Again it is time to brag a bit, on August 12 I wrote that “I have read a few articles by other commercial real estate agents about the short term market conditions for commercial real estate in Las Vegas and believe them to be optimistic. I believe the price drops will be drastic.” And also that “As I have repeatedly mentioned, the first wave of commercial foreclosures is just hitting Las Vegas and there are many to come. In many instances, real estate prices will not become realistic with regard to present market conditions, until the third or fourth wave of commercial foreclosures hits Las Vegas and my guess is that it will happen in about six months.”

Well, BOOM, here is the first big wave, although GGP has declared that they are current on their loan payments. General Growth Properties’ stock has dropped by 96% over the last year, so a broke company hired another broke company, Goldman Sachs to sell their property. Too bad these guys are not as politically connected as Goldman Sachs or all of their problems would have been solved by a $5 billion dollar taxpayer bailout.

Now, I am looking for multibillion dollar investors, if you are out there, CALL ME.

In 2004, Clark County and the City of Las Vegas came up with overlay zonings of H1 and MUD1, H2, MUD2 etc. These zonings theoretically may entitle the builder to build a casino or high density residential, like high rise or residential with commercial on the first floor (mixed use). The reason I said it may theoretically entitle the builder is that even if all conditions are met, the application may still be denied because the neighborhood residents are opposed to it.

The only problem that came out of these overlay zonings is that they cover significant areas of Las Vegas and every one whose land is located in these overlay zonings thinks that his/her land is suited for such buildings and prices the parcel accordingly.

To give you an idea, H1 and MUD1 cover both sides of the Strip ( Las Vegas Boulevard) from Sahara To Russell, North To South and from Valley View to Sierra Vista  on the West and East side. This area is larger than 8 square miles or 5100 acres. I am not even going to discuss the south Las Vegas Boulevard overlay zoning that stretches from Warm Springs on the north to south Saint Rose and covers both sides of the Strip (probably another 3500 acres), and other lower density overlay zonings that cover Boulder Highway and Blue Diamond.

Single Las Vegas high rise projects usually use less than 5 acres, so we have in Las Vegas about 1700 high rise or mid rise condo projects and mixed use communities like The District in Henderson although The District is built up on a much larger parcel.

Now you can see the fallacy in pricing a parcel of land based on the zoning and not the practicality of the project. Good Lord, if we wanted to build 1700 towers in Las Vegas we would have to forcibly move all the population of Singapore and Hong Kong here and we would have high-rise towers to spare.

Some of these MUD1 zoned land are in industrial parts of Las Vegas or have an existing industrial building, who would want to build a high-rise in the middle of an industrial project.

I have discussed Allure condos and their pricing in detail in previous blog posts starting with

Las Vegas high rise and mid rise condominiums and luxury condos, about Allure part one

And ending with

Allure High Rise Condo Towers, Las Vegas high rise condominiums and luxury condos pricing part six

The only way that I can discuss these discounts without getting into legal trouble, which I am allergic to, follows:

If I am representing a luxury high rise condo buyer who wants to buy at Allure Las Vegas, I will offer up 30% below the asking price and am confident that Allure will seriously consider my offer. I will offer even less if the buyer is willing to buy in bulk. These condos can be purchased in the $300-$350 per square foot range.

Those Las Vegas real estate investors who choose to buy at these deep discount prices will be able to generate positive cash flow or come close to it, and that is unheard of for the Las Vegas high rise condo sector.

Why do we recommend Allure? Simple:

• These prices can’t possibly be repeated by another Las Vegas high rise builder who wants to build one in the future as I have discussed in detail in previous blog posts about Allure
• Allure has closed the escrow for all their condos in 2008 and has been selling these condos at higher prices; I sincerely don’t believe that the builder is going to offer additional discounts
• There are not too many residential high rise condos on the Strip (Las Vegas Boulevard) and the standing inventory is finite; when the current supply is depleted prices have nowhere to go but up

I keep telling multimillion dollar investors who want to invest in Las Vegas commercial real estate to wait as I believe that multimillion dollar investment properties prices in Las Vegas will drop significantly. If your niche is investing in high-rise luxury condominiums, there is no reason to wait, call me at 702-478-7800 for a great buy.

Today I got e-mail about a condominium in Panorama Towers, This 1192 square foot, 2 bed room, 2 bath condo is locate on 21^st floor of tower two and comes with 2 parking spaces and is offered for $367 per square foot. They are advertising this high rise condo as in excellent condition and ready for immediate occupancy.

I just want to clear up any misconception that I may be responsible for, NOT all Las Vegas commercial properties are overpriced; there are good deals out there. However, many of the expensive properties within close proximity to Las Vegas Boulevard (Strip) are.

PS: I don’t mind that web-site and blog sites re-publish my blog posts for their readers, that is the reason that I blog, to help all people that I possibly can. But stripping the links in posts or giving credit for my posts to someone else is stealing intellectual property.  Don’t Do IT, you know who are.

I have decided to blog about some of my customer’s inquiries in order to clear up some misconceptions and this inquiry is a good opportunity to do it.

Lease to own is offered by residential or commercial property owners in a slow market, a couple of years ago industrial builders who built a small sized warehouse would sell out before they broke ground.

Lease to own is called by other names; such as rent to own or lease with option to buy.

Lease to own a home, condominium or commercial property in Las Vegas is useful for those buyers that can’t get financing for a property due to bad credit or those who want to guarantee the purchase price at today’s prices when they would buy the property 1-5 years from now. Rent to own programs are suitable when the real estate market conditions are normal, like when prices appreciate by 1%-3%.

In a seller’s market the seller doesn’t need to offer a rent to own contract because he can sell his property for cash, no need for rent to own. In a down market like the one that we are experiencing for industrial properties in Las Vegas where the prices have and will keep going down, lease to own doesn’t make sense. Since the buyer/lessor can rent a commercial space until prices stabilize and then buy a property at much lower prices.

 A typical lease option agreement for either Las Vegas residential real estate or commercial properties requires the buyer/lessor to put down some kind of down payment which is decided through negotiations and pay a higher monthly rent for the property. The seller is obligated to credit the excess money that is paid on top of the rent, along with the deposit toward the buyer’s down payment. For example, if the owner can lease his property for $1,500 per month, he/she might increase that to $2,000 per month and apply $500 per month to your down payment. After one year the buyer/lessor would have a down payment credit of $6,000 plus whatever deposit he had to put down.

Here is where things can go wrong. If a buyer/lessor signs a lease to own contract at today’s prices and the prices go down by time that the buyer/lessor has to exercise his option to buy the property, he may have a difficult time getting the desired financing in the future if the price of the property drops too rapidly. The buyer could still buy the property, but you may have to come up with even more cash to satisfy the eventual lender’s loan-to-value limits.

One of the advantages of lease option is that the buyer is guaranteed today’s prices when the deadline to exercise the purchase option arrives and as you can see, lower real estate valuation defeat this advantage. One can get around this problem by having the seller agree to set the purchase price by some kind of the valuation of the property; say a selling price is agreed to be based on the appraised value at the time of the purchase. The problem with this is that no one can predict the future and if we catch bad market conditions like we have now, paying appraised value for a property equals paying too much, because the discount for additional price declines is not factored in the purchase price.

Many homes, condominiums and commercial properties in Las Vegas are advertised today as below appraisal, including an office that I own at 3314 Oneida, and are priced far below appraisal and not selling.

In most cases failure to exercise a lease option results in forfeiting the deposit or additional rents paid toward a down payment.

In my customer’s case, he and his partner want to open a business for one year and then evaluate whether or not they want to go on with the business and then buy a warehouse. Although I could make a higher commission if he did a lease to own contract, I have advised him against it. My advice is to lease for one year and then if he is successful to buy an industrial warehouse at much lower prices than now.

I have never knowingly made money at a customer’s expense and that is why I did not do any kind of real estate deals in Las Vegas from December 2006 until two months ago. While I could have done many deals, I dedicated all my time to designing and implementing the web-site, blog and forum. Although saving my honor resulted in financial hardship, we are very busy with tens of millions of dollars in inquiries from all over the world on a monthly basis and try to answer all quickly and with the utmost dignity. The GOOD LORD is rewarding us for holding tight to our honor.

Everyone knows about the credit crunch that is affecting all areas of US economy and has had a pronounced negative effect on Las Vegas residential and commercial real estate. The deal is that in 2007 Las Vegas homes and condos were not selling due to their pricing and did not start to sell until the end of 2007 when price drops accelerated and these home and condos became undervalued with respect to current market conditions.

 As we can see, even with the credit crunch banks are making VA and FHA loans and those who can qualify for these loans have no problem with obtaining these loans. Condominiums and homes that can be financed with these loans are selling very well and the best deals often get multiple offers.

Other than getting tax payer government hand outs, VA and FHA loans are the only way that these banks can make money. Actually many banks require the buyer for their foreclosed condos and homes to get a pre-qualify letter from one of their mortgage officers, regardless of being pre-approved by another mortgage lender so they can get a shot at writing the loan for their own foreclosed property and offer some incentives to attract the borrower to their loan package.

The price drops for Las Vegas residential real estate did not happen quickly and it took wave after wave of foreclosures during a two year period. Greater Las Vegas condominiums and homes were then priced realistically and quickly became undervalued. The same has not happen for Las Vegas commercial real estate yet, but I predict it will.

1. A gentleman contacted me from Spain asking for a parcel of land that his company can build between 100-200 condominium apartments in Las Vegas. I told him that this is not a good time to attempt such a project and a better option for him would be to finish someone else’s unfinished project or a foreclosed condo community and here is why:

The majority of commercial properties in Las Vegas are overpriced with respect to current economic market conditions. Time after time I see commercial properties that have been listed for sale for 20%-75% higher than the previous purchase price in 2005-2007. Although this could be justified in a few locations, it is crazy in most other locations. Pricing a property based on what the seller paid for it previously guarantees failure.

It is the real estate agents job to tell the seller what their property is worth and even if the agent fails in doing their job and then takes the listing, the seller should think about what happened since they bought the property to justify such an increase in their property values. If the market not only doesn’t support a price increase but points to a down market the seller should take a loss on the property. As I have stated in my last article I predict a significant price drop in commercial properties in Las Vegas which will be forced by upcoming foreclosures, but it is not here yet.

We have some one acre or less parcels of land near the Las Vegas Boulevard (Strip) or in downtown area that are advertized for high-rise buildings. Except those who would want to build a high-rise on a one acre parcel of land in the current market have no money because they are intellectually challenged.

The other problem is whoever wants to build a new project in Las Vegas will eventually have to compete with existing foreclosed (REO) resales which the previous builder could not finish or finished and now is repossessed by the bank. The bank can sell the repo commercial property much cheaper than its real cost because there isn’t any “no down payment” commercial property. The builder or the seller has had to come up with a 15%-30% down payment which is lost when the property is repossessed, and when foreclosed commercial properties number go high enough then the banks will be willing to take further losses to move them.

At the moment, the percentage of repo commercial properties s relatively low but it will grow. The best option for investors and builders is to leverage their cash to get the best possible deal by buying foreclosed or pre-foreclosure, unfinished or finished projects only.

As I mentioned in my last post, when the dust settles and commercial real estate prices in Las Vegas follow the same path as residential real estate, then Las Vegas will be the best real estate investment on earth, but we are not there yet.

One last point; Las Vegas is a global destination which attracts investors worldwide. Many of these investors do not need to finance a loan and if they do they have deep pockets and can arrange a loan, so all of Las Vegas commercial real estate problems can’t be solely the fault of the credit crunch. Overpriced commercial properties in Las Vegas are equally responsible. My hope is that the worldwide credit crunch will subside in a few months and by that time Las Vegas land and commercial real estate pricing will be forced to adjust by foreclosures just as residential pricing did.