Do you know what a rare commodity in Las Vegas real estate is these days? I’ll tell you, it is cash buyer for a million dollar plus Las Vegas luxury homes and we had one a couple of weeks ago. They are relocating from the South and visited Las Vegas over the weekend to see homes.

We currently have 329 homes in the Las Vegas MLS with an asking price of more than one million dollars. Of the 329 only 14 are bank owned or REPO homes, 19 are short sales and the rest are non-distressed sales. Only 79, million dollar plus luxury homes have sold since Jan-2011. 9 have been bank owned, 12 have been short sales and 58 have been non distressed sales. This means that only 10 non-distressed luxury homes have been selling per month.

Now, if you have about 300 listings and are only selling 10 luxury homes per month, Mr./Mrs. home seller, you need all the help you can get.

Most buyers pay a great deal of attention to pictures when choosing to see a home, that is the reason that the Las Vegas MLS now allows up to 25 pictures, since pictures sell homes. In going through the home listings there a couple of homes that only had one picture of the exterior of the home.  My buyer did not choose to see these homes, while one may have matched his criteria.  It is the listing agent’s job  to help the seller, not hurt his chances of selling the home.

We also contacted 12 listing agents to set appointments on Thursday for weekend appointments. 3 never ever got back to us and the sellers will never know about this and lost their shot at a cash buyer.

However,  the most unbelievable case was two listings that demanded to see the buyer’s proof of funds before showing the listing. These were non distressed homes and there was nothing special about them to make a buyer want to see them badly. This is CRAZY, what buyer is willing to disclose their financial situation to complete strangers in order to see a listing. I am willing to bet anything that these homes will NOT sell.

The sellers or their Realtor have insured that the homes that I discussed will fail to sell. Now if a seller doesn’t want to sell luxury homes in Las Vegas, why list it? If the seller really wants to sell, stupidity doesn’t get it done.

Do you due diligence before you list your home, you Realtor can do their best to sell the listing or insure that it doesn’t sell at all. Masoud

1: Because Las Vegas housing market has over corrected and is undervalued (according to Case Shiiler) by at least 25%

2: Double digit cash on cash return is possible on one of the safest investment opportunities in today’s economy

3: Las Vegas economy has passed the bottom and is rebounding

Here is the proof;

The following graph shows the Case-Shiller Housing Price Index from January 1987 to December 2010.

Case shiller Las Vegas housing graph 2011

 The Case Shiller graph shows the median price for homes sold in Las Vegas and compares it with a ten city composite of other major cities in the United States which is shown by dotted lines.  The flat line which closely followed real pricing for Las Vegas homes up to 2002 is the median price of homes if the housing bubble and following crash did not happen.

As you can see the Las Vegas housing prices matched or were higher than the 10 city composite until 2007. Both peaked at about $225,000 in 2007. However the 10 city composite median price has fallen to about $150K which is a 36% decline from the peak values.

Las Vegas median home prices have fallen to about $100K and this represents a 56% drop from peak values. Additionally, had things progressed normally (the only thing that we ain’t got in Vegas is normal) the median prices would have been at $130K. The $30k discrepancy represents OVER CORRECTION which results in Las Vegas housing prices to be undervalued by about 30%.

Now you understand why Las Vegas real estate in general and housing in particular are such a great investment opportunity.

This is the reason that real estate investors worldwide are investing in Las Vegas housing, more than 50% of Las Vegas homes are sold to cash investors.

Conclusion: Case Shiller graph shows why Las Vegas is one of the best bets for investing in United States real estate. Since the Las Vegas housing market has over corrected it is less susceptible than the 10 city composite and cash flow is better.

I have mentioned Larry Murphy’s name as the only Las Vegas real estate analyst whom I truly respect and the following was in his last e-mail.

“If you want to look like a genius in 5 years from now, buy all the Las Vegas real estate you can buy today”.

 I couldn’t agree more, but not all real estate, or for that matter homes or condos, are the same. For example cash flow for a $300K home may not be as good as cash flow for a $125K home, however a flipper may make better margins by buying the more expensive home.

You need a Las Vegas real estate agent who can tell an investor what he/she should invest in and why and all you have to do to find one is to call Masoud at 702-478-7800.

Let me know who you are by becoming my friend on my Las Vegas real estate Face book  page or Masoud’s Las Vegas real estate tweeter page.

We have 125,000 empty homes and condos in Las Vegas, the property values will go down by 1000%, shadow investors want to unload 500,000 homes and condos in 3 years and we have zombie loans (loans in default that banks do not want to foreclose on) walking around in the day time around the Strip and nobody can see them. We got it all in Vegas, baby!

There was an article in the Las Vegas Review Journal on April 16^th that I will not give a link to which discusses the Las Vegas real estate market in the next 3-5 years. It claims that Las Vegas has about 65,000 vacant homes and assumes that if 1500 homes are absorbed per month we have a 4 year inventory.

Man it is getting so deep that I’ve got to wear fishing boots.

Silly season is on and so called Las Vegas real estate “analysts” that can’t see past the tip of their nose and have been WRONG at every turn, now are predicting what Las Vegas real estate is going to be like in 3-5 years. This is really silly because no one can predict what Global economy, which US economy and Las Vegas real estate pricing is a function of, will be like. Why global economy? Well, if gas prices stay in $3-$4 range, Las Vegas would be doing far better than if gas prices went to $7-$8 per gallon.

The other reason is that these guys assume that the Las Vegas economy will be static, meaning the same economy in 3-5 years. It may or may not be, however current numbers are showing decent gains, such as large gains in convention attendance and gaming.

Here are real numbers for you:

Total number of foreclosed (bank owned) residential properties sold through Las Vegas MLS in Greater Las Vegas since Jan, 1, 2011 = 11900

Total number of properties foreclosed by the banks and sold back to the in Greater Las Vegas since Jan, 1, 2011 = 8000

Total number of properties foreclosed by the banks and sold to the third party in Greater Las Vegas since Jan, 1, 2011 = 2385

Banks have sold 3,900 homes, condos and townhomes through the Las Vegas MLS than they have foreclosed on and purchased at the Las Vegas trustee sale auction. The mountain of foreclosures that these silly guys are predicting is failing to materialize again, for the second year in a row.

Given that these so called real estate analysts have been regurgitating the same stuff (I am being polite and didn’t use crap) in the last 3 years, don’t take what they say seriously.

I do not know what will happen in 3-5 years, or if we are at the bottom. Additionally, I am not silly enough to claim otherwise. However the best real estate deals in Las Vegas are getting multiple offers. I e-mailed 16 very good investment home listings to a Canadian investor and in 3 days 5 of the 16 were under contract.

The most important factor that governs real estate pricing in Las Vegas is zombie loans which I will discuss in the future. As for me after a very difficaut 6 month, this is the best I have felt in 15 years, Thanks for all your prayers, may the Good Lord bless you all and I love you one and all.

Investing in Las Vegas homes which have a strict home owner association (HOA) is one of the best tools to increase the odds of future appreciation

Before moving to Las Vegas I lived in Nebraska for 20 years, much of it in a log home that was 1000 feet from the nearest road, free as a bird and private as private gets. No HOA there as in many other parts of United States. When we chose to buy a home in a Las Vegas common interest community with an HOA, I had serious reservation about a home owner association dictating to me what I could or couldn’t do with my own property, but had no choice as I loved the location, plan and all other things about my home.

What is a Las Vegas home owner association? Home Owner Association controls a common interest community which normally is separated from others by a common wall around the community. Good HOAS force home owners to keep up their property and disallows activity such as parking 3 broken down cars in the drive way or front yard or someone coloring their home pink. HOAs act as an arbitrator when a problem arises between neighbors too.

Although HOA fees can run from $10 per month to hundreds of dollars per month, depending on amenities and services rendered, this fee is well worth the price. A good HOA is the best tool that an investor has in order to increase the odds of future appreciation.

We have one of the most draconian HOAS and they have upset me a couple of times with demands that I found to be excessive, but I didn’t fight them because I knew it was the same for everyone. The other side of the coin is that I live in one of neatest and best kept up Subdivisions (another name for common interest communities) in the Las Vegas area.

 Las Vegas homes for sale that are listed in my subdivision go under contract in less than a week, sell quickly and for top price.

Isn’t future appreciation one of the most important goals that a Las Vegas real estate investor is looking for?

The other point is that more than 90% of newer homes in Las Vegas are built in common interest communities and trying to avoid them will result in buying older homes or in less desirable areas as far as a Las Vegas real estate investor is concerned.

Lastly, best kept up communities demand the best rental rates and in many cases the HOA fee can be built in the rental rate as good, strict HOA communities bring more rental income than similar properties that are not in a HOA community.

Conclusion: A smart Las Vegas real estate investor not only doesn’t avoid HOAs, he or she should look for strict HOAs and they are easy to find. All an investor has to do is to look at the neat front yards and well kept common areas. Non HOA communities lack both and it will translate to lower rental income and less future appreciation.

HAFA (Home Affordable Foreclosure Alternatives) short sale program became effective on April, 2010, and ends at the end of 2012. While HAFA was created to streamline the short sale process by setting clear timelines, documentation requirements and procedures to make short sales easie, HAFA has been a total failure since a recent report from the Congressional Oversight Panel that oversees TARP states that the Treasury has spent just $4.3 million on HAFA for 661 short sales.  How much money did TARP have, 700 Billion and they spent 4.3 million, wow!

Clearly further modifications are needed and it came at the start of 2011. You can find the changes below

• HAFA no longer requires that servicers verify the borrower’s finances. This means that sellers would probably not be required to fill out an inch or so of financial documents.
• HAFA no longer requires servicers to determine if the borrower’s monthly payment is higher than a 31 percent debt-to-income ratio. No change here as the vast majority already qualify.
• HAFA no longer requires second-lien holders to agree to accept 6 percent of the unpaid principal balance owed them, up to $6,000. Servicers now decide who gets paid how much, with a cap still at $6000. So a second lien holder that is owed $30,000 or $50,000 can get the full $6,000. This is a good thing, since some of these second mortgage holders can actually make more money by settling for $6,000 rather than selling the loan to a collection agency, excellent for the poor borrower/seller.
• HAFA now requires borrowers seeking a short sale get an answer/agreement within 30 days.

There were three road blocks to doing short sale deals in Las Vegas:

1: The seller had to prove hard ship (gone)

2: Specific Performance which means that the lender can go after the borrower for the difference between the selling price and loan amount. Now the banks are willing to forgo this but Fannie Mae and Freddie Mac don’t. Naughty Feds

3: Second mortgages: The banks sell these to collection agencies as of right now after foreclosure

The bottom line is that foreclosing on a home or condo in Las Vegas costs banks 10% more than short selling it. Any vandalism, which many Las Vegas foreclosures have been  subject to, severely adds to this cost. Banks have learned by now that letting borrowers who are in default live in their home longer than 4 months will result in a happier situation and saves money when they foreclose and it is far more politically palatable than foreclosing as soon as 4 months is over. Now if the same borrowers can short sale their home without proving financial hardship, the banks will save money and that is the reason that new rules should help to drastically cut the number of Las Vegas foreclosures in a few month.

I hope what I wrote above made sense but don’t blame me if things don’t work out that way since making sense ain’t got nothing to do with how banks do things.

Silly real estate pundits have been writing about how bad Las Vegas real estate market is in the first few months of last year. Well a whopping 41,915 single family Las Vegas homes, condos and townhomes have been sold in Las Vegas, North Las Vegas and Henderson through the Las Vegas MLS and another 5,945 properties were sold to a third party in the Las Vegas Trustee Sale Auction with additional properties which have been sold through various bank owned auctions which should put the total number close to 50,000. The supply of distressed properties in Las Vegas area is not endless and we have easily burned though the majority of these.

The total number for foreclosed properties in Las Vegas was 23,920 and 19,180 of these have sold through the Las Vegas MLS in 2010. Some of the rest have sold in bank owned auctions and some are not ready to sell yet. I have shown that home prices have been going up and down in a narrow range (10%) for the type of transaction; see Las Vegas homes market for foreclosures, short sales, auction homes. Condo prices in lower price ranges are up about 10%-15% in many cases.

We are witnessing a serious attempt by the banks to raise prices in all types of residential real estate and all price ranges!!! Time after time we see Las Vegas bank owned listings have been withdrawn from the market and re-listed at 5%-10% higher. We used to have a real estate tradition in Las Vegas pre-2008 and it was; if the property didn’t sell within three months, raise the price by 10%!!! I don’t think bank attempts can succeed in the current market but banks are playing hard ball now.

We have had a couple of complaining e-mails from the listing agents along with rejection letters for offers on $400,000-$500,000 Las Vegas bank owned luxury homes because our offers were 10% below the lowest COMPS. These listing agents were attempting to teach me how to calculate the correct COMPS!!!! Unless these complaint letters are really snobby, I don’t answer them. But while I do not have any problems about paying COMP prices for $150,000 single family homes offers should be made with future direction of the market which is totally different for single family homes that are priced in $150,000 range rather than homes that are priced in $500,000 price range.

As for Las Vegas real estate market for 2011

If things go the same way they have been, we will start a slow recovery in prices which will go on for a year or two, I have explained in Las Vegas economy and its effect on Las Vegas real estate that four levels of trickle downs have to happen and we have started seeing the second level which is a double digit increase in casino and convention business. Now our casinos have to feel good enough to give their workers more hours (I am not talking about new hiring) and employees have to feel good enough and pay down some debt before they start spending money.

I will write about why I expect Las Vegas foreclosures to down drastically in the future.

We are a couple of years away from sharp recovery in Las Vegas real estate and when it arrives it will not be linear. Masoud

Here is the deal; when a Greater Las Vegas home is going to be foreclosed on or with some homes that are sold through a short sale process, the owner stops paying taxes and HOA fees for their residence. However late HOA fees, back taxes and service liens, such as sewer, enjoy the status of super priority liens since these are the first to be collected upon the sale of the home and ahead of other liens.

Nevada (Home Owner Associations) HOA’s can only collect up to nine months of late monthly fees, however there is no limit on the amount of collections fees that collection agencies can charge. A real estate attorney stated that he has seen a $5500 collection fee for $100 in late HOA fees.

The arbitrary collection fees can run in $4,000-$6,000 range and the only way to contest this fee is by filing a law suit so this led to deals being cancelled in the last minute. The collection agencies obviously didn’t like this and are contesting Mr. Burns ruling in Nevada courts, I am rooting for Commissioner Burns.

If Commissioner Burns ruling stands it could bring down closing costs for a $100,000 foreclosed home in Las Vegas by 2% or more and that is good thing.

Have you ever wondered why you see so many different figures quoted in the media regarding home prices in Las Vegas?

Some quote “Average Price” and some quote “Median Price”, and some don’t say!

There is no ONE price for EVERYTHING! Las Vegas homes prices are the function of:

1. Transaction Type: Auction, REO, Short Sale, Normal Non-Distressed Sale or New Homes

2. Time Frame Measured: For the Month? For the Quarter? For the Year? Last Year or This?

3. Type of Structure: Single Family Detached or Traditional Condo/TH or High Rise Condo?

4. Area Measured: Clark County? Las Vegas-Paradise MSA? Henderson? North Las Vegas?

5. Data Source: MLS? DataQuick? Case-Shiller? County Assessor? US Census Data?

Below you can find the median home prices in Las Vegas by transaction type.

Las Vegas home market by transaction type, foreclosure homes, short sale homes, auction homes and classic sales

As you can see this graph shows a stable market, jumping UP and DOWN in a narrow range (about 10%).

The other graph shows market shares by transaction type. Although foreclosures make up only 20% of total residential listings, still more than one third of homes sold are foreclosures.

Las Vegas homes sold market share transaction type, foreclosure homes, short sale homes, auction homes and classic sales

 The other point is that competition for homes that are priced less than the median number for each transaction type is still fierce and we are yet to get an acceptance without multiple offers;, however we win our fair share of deals even after multiple counter offers because we have become experts in writing foreclosure offers.

Lastly, I have told a couple of perspective buyers to GO FISH rather than looking to buy homes here. These buyers want to get an additional 40% discount from current prices for Las Vegas homes while there is absolutely no reason for any seller to even consider their ridiculous offers when they are getting multiple offers for their homes that are near or higher than comparables. When knowledgeable buyers talk about 40 cents on the dollar, they are talking about prices in 2004-2007 and not now.

Property taxes for many Las Vegas homes and condos have been cut by 15%-25% or more, however many listings show 2009-2010 taxes instead of the new rate. Thus property taxes have to be verified when showing or making offers on homes or condos since a $500 per year reduction in taxes for a $125,000 home can significantly affect the loan amount for buyers who want to finance their home and can equally affect cash flow for Las Vegas real estate investors.

Masoud’s Law:

A: A Las Vegas home, condo, high rise condo or commercial property seller is NOT stupid, even if it is a bank selling foreclosures.

B: Most Las Vegas real estate deals are ZERO sum deals and thus adversarial.

This is the reason that a seller would hire one or more real estate professionals to help them set a proper price for their property. Banks get at least two broker price opinions (BPO) before they list their bank owned Las Vegas home or condo. Nowadays the banks get an appraisal for short sale Las Vegas homes or condos before they OK a short sale. The buyer or his agent will not fool anyone.

Furthermore, banks have been doing foreclosure sales for a while and by now they have a pretty good idea about Las Vegas property values. However, while some banks and their agents would market the property for far less than the desired price to get bidding wars going, others will put a higher price and expect to get lower offers. Asking prices mean nothing.

70% of my time is dedicated to researching the Las Vegas real estate market. Why would I spend so much time doing research? Because an intelligent offer on  Las Vegas homes, condos or high rise condos should be made with several factors in mind.

1: COMPS or comprehensive market analysis of the property. We look at the prices that similar homes or condos in the immediate area have sold for in the last 1-6 months. By similar, I mean the same floor plan and square footage and the 1-6 month period depends on how dynamic the market is; if there are enough sales we try to keep in the last 90 days.

2: Las Vegas real estate market trends: If the market is going down quickly, we need to protect the buyer, thus the upper limit on the offer would be COMPS minus 10% or more for the offer. A couple of years ago we helped a disabled veteran buy a home for 28% below COMPS. His deal still stands as a great deal today. However, instead of paying rent he has been paying his mortgage for a couple of years now and has paid far less than he would have paid to rent the same home. Instead of paying a land lord by now he should have a bit of equity in his home. If the market is appreciating then COMPS become the lower limit for the offer.

3: Price range and type of the property: Many buyers ignore this important factor. Las Vegas foreclosure homes for sale get offers that are very close to asking price in all price ranges, however competition for homes priced under $100,000 is fierce. Buyers who think that they can lowball a bank property significantly will not succeed. Conversely many non-distressed Las Vegas luxury homes that are priced higher than $500,000 are priced unreasonably too high, we would lowball the heck out of these.

4: Condition of the property: The more work a property needs, the lower the price since the buyer has to put in his/her time and money to fix it. Furthermore, fixer upper don’t qualify for a loan, unless it is eligible for a construction loan to fix it. Fixer uppers or Las Vegas auction homes that have to sell for cash provide for some of the best deals to found today.

5: How many offers a property has: If the property has multiple offers, forget about low balling.

6: Intangibles: No two persons have the same taste, if a buyer falls in love with a Las Vegas property and tells me “Masoud, GET it for me”, then a premium has to be paid to GET the buyer the property.

7: Tangibles: Views, Las Vegas homes or condos with Strip views command a premium as well as homes with larger lots or that have a great back yard, pool, spa, etc.

8: The seller: Is the seller willing to get into protracted negotiation? No if the seller is a bank. Yes if the seller is a private individual selling a non-distressed home or condo.

Picking the right price to make an offer is NOT done through reading newspaper articles or taking guesses. A Las Vegas real estate buyer’s perception of the market condition could be their worst enemy. Only accepted offers lead to deals, not rejected offers. So here is our policy regarding making offers on behalf of our clients.

• We try to make the lowest possible offer that has a chance at getting the offer accepted

Fannie Mae is offering 3.5% of the purchase price as incentive for foreclosed (REO) properties that it sells through a special program called HomePath.  Las Vegas foreclosure home, condos and high rise condominiums buyers will get 3.5% of the purchase price to use toward closing costs, buying home warranty, appliances, repair costs, interest rate buy down, etc.

Imagine Las Vegas high rise condos and financing!!! Fannie Mea finances its foreclosures and high rise condo are not an exception due to the fact that Fannie Mae doesn’t require an appraisal for its bank owned luxury high rise condos.

This Fannie Mae HomePath incentive cover owner occupied buyers only and excludes Las Vegas real estate investors, even vacation home or second home buyers.

In order to qualify for this incentive, buyers have 60 days from the acceptance of the offer to close the deal; time frame for this incentive is from September 23^rd 2010 to December 31^st.

I heart Fannie Mea because what they do is really effective and their foreclosures bring the highest price for any bank owned in Las Vegas and this helps our real estate market.

25,941 Las Vegas homes have sold so far in 2010 which is 2,114 less than 2009, this is due to the lack of foreclosure inventory through 2010. However the number of homes sold in Las Vegas in 2010 is twice the number of homes sold in 2007 (12458) and much higher than homes sold in 2008 (17525). If the market doesn’t change drastically 2010 will have the highest number of homes sold in the past six years. 

Why is Las Vegas real estate market for homes is stable?

The average price for Las Vegas homes was $169,825 for September 2010 which remains within the same narrow range that it has been at since March 2009. This represents a 60.3% drop from the record “average” high of $428,817 in June of 2007 which was followed by significant monthly price drops until March 2009. The average price for Las Vegas homes has continued to fluctuate by only a few thousand dollars representing a 2.0%- 2.5% fluctuation each month. Proof of what I have been writing about for about 15 months, except it took guts to say the Las Vegas home market is stable more than a year ago, I hope fear mongering media publish these numbers, but then again how can they sell  papers without fear mongering.

Total sales of single family homes in September stands at $476,528,134 which reflects only a slight +0.1% increase from August 2010, total volume of sales through October 2010 is $4,205,383,551.

Bank of America said that problems with foreclosing on poor home owners are not wide spread, but “We’ll go back and check our work one more time,” CEO Brian Moynihan said. What a nice guy!!!  See ; they will go back and check (one more time), which implies they have checked a couple of times beforeJ and having foreclosed on tens of thousands of homes, illegally or improperly has absolutely nothing to do with it as there was no pressure from the Attorney Generals either and there will be no investigation by the Senate Banking Commitee (like that would do anything anyways).

At any rate, Bank of America has joined Ally Financial and JP Morgan in halting foreclosures. There has been widespread talk of Bank of America foreclosing on a significant number of Las Vegas condos and homes that they have been postponing for months. Nowadays, it takes 12-18 month to foreclose on Las Vegas homes or condos and the freeze should allow distressed Las Vegas home owners to stay in their home a couple of months longer.

Banks have wisely chosen to sell distressed homes or condos through the short sale process given that it would save them 10% or more and in a small percentage of cases they will actually do a loan modification. But many short sales don’t go through and loan modifications cannot get done due to Las Vegas home owner’s lack of employment. The reason that the number of Las Vegas foreclosures have dropped is banks are trying to get away from it and not that our economy has gotten so much better, even though our economy is picking up slowly but surely.

So Las Vegas foreclosure homes, condos inventory will be low for a few weeks or months longer. Lastly,  the Bank of America foreclosure moratorium includes properties that they turned over to Fannie Mae or Freddie Mac for insurance money.

This is a real life example about how an owner occupied Las Vegas home buyer can buy a 4 bedroom $100,000 home, rent two rooms and pay about $100 per month per month in out of pocket expenses.

 Example:

Rooms in single family homes in Las Vegas rent for about $400 dollars per month and a decent one bedroom condo rents for $600 or more. If a buyer buys a 4 bedroom home for $100,000,(it is possible to get a nice home for that price) and rents two rooms, he/she earns $800 per month .

The investor pays 3.5%, for down payment and borrows 96.5% at 6% interest rate per year. Let’s say the buyer had the seller contribute all his closings costs in order to keep this example simple. Annual taxes run between $1300-$2200 for homes in this price range, so let’s say taxes for our home are $1800 per year, or $150 per month and HOA fee of $50 per month, insurance and home warranty run about $100 per month. Since the buyer didn’t put down 20% then he/she has to pay Private Mortgage Insurance (PMT) that can run up to $600 per year of $50 per month.

Example home:

Down payment = 3.5% or $3,500

Loan Term =30 Years

Taxes = $1,800 per year or $150 per month

HOA fee=$50

PMT=$50

Insurance=$50

Home warranty = $50

Loan amount=$96,500

Monthly principal and interest payment=$ 580

Total Monthly Payment for principal, interest, tax and insurance PITI and home warranty= $930

Minus rent collected -$800

Total out of pocket expense to own home = $130

Not bad.

Las Vegas real estate is back to being a great investment opportunity due to the economic crash that in some cases has seriously overcorrected real estate prices in Las Vegas, Henderson and North Las Vegas, Nevada. I have discussed this in detail in Invest in Las Vegas Real Estate – Las Vegas Investment Properties see Case Schiller index that does a good job of showing that the Las Vegas housing market is about 18%-20% undervalued compared to 10 major cities in the US.

Different types of Las Vegas real estate investors and different types of properties to invest in

What to invest in is directly related to how much money an investor wants to invest and how he/she is going to invest it.

Invest in Las Vegas real estate series 101 that I am starting at the introductory level will discuss:

1: Investing in owner occupied Las Vegas homes or condos, lofts and high rise condos.

2: Investing in Las Vegas commercial real estate that an owner can live and work in the same unit (CRT zoning) that is only available in Un-Incorporated Clark County and NOT in Cities of Las Vegas, Henderson and North Las Vegas, or living in one unit and working at another unit in the same building (Mixed Use) zoning, that is allowed in all of the Las Vegas Valley.

3: Investing in Las Vegas residential real estate including homes, condos, lofts, townhomes and luxury high rise condos on the Strip and elsewhere for non-owner occupied investors which should include the vast majority of investors.

4: Investing in Las Vegas commercial real estate.

1: Owner occupied Las Vegas real estate investors: Investors who would live in their home

 It is important to look at an owner occupied home as an investment, because it is the biggest investment that the majority of people will have in their lifetime and I will explain owner occupied homes from the investment point of view.

Most investors or owner occupied home buyers don’t know that any residential building with 4 units or less are treated as one single family residential home as far as US government and banks are concerned. Additionally, Fair Housing laws don’t apply to these types of residences either.

Thus an owner occupied investor in Las Vegas can legally buy a home, live in one room and rent the rest. Or buy a duplex or four-plex apartment building, live in one condo and rent the other apartments. I have written a blog about these which show how an owner occupied Las Vegas real estate investor can generate double digit cash flow by having his renters pay the mortgage and have a few hundred dollars in income.

So why is this important? The reason is that the prospective owner occupied investor can obtain a mortgage with low down payment and interest rates that are reserved for owner occupied home or condo buyers. While an investor has to put up 20% plus for down payment, owner occupiers can buy a residence with as low as 3.5% down payment and enjoy a much lower interest rate than other investors that provides for a better cash flow..

I will show through a real life example how an owner occupied Las Vegas homes for sale buyer can buy a home with as low as $7,500 in their bank account and decent credit (620 FICO score), or better, can buy a 4 bedroom home for $100,000, rent two rooms and end up paying about $100 in total payments (mortgage payments, HOA fee and private mortgage insurance and home insurance) to own his/her home.

Dave K is one of my favorite people on earth and lives in Minneapolis, he and young guys/ladies like him are the greatest assets that United States has to help it overcome current problems.

Dave picked about 4 homes to make an offer on, however one of them was by far and away the best and we tried to get him that one. However, the listing agent was not the best and it took us about one month and many e-mails, including an angry call from me to get the offer accepted. But this is not the end of story.

If someone asks me “what is the best reason for buyers to use a good Realtor?” my answer is the escrow process. Dave had to obtain an investment loan and these are more problematic than owner occupied mortgage loans.

One of the drawbacks of buying bank owned homes in Las Vegas is steep fines imposed by the bank (seller) if the deal doesn’t close by the deadline stated in the contract and Dave’s loan didn’t come through on time. However we knew about a big mistake by the seller and didn’t bring it up until the day before the deadline which killed all the fines and allowed Dave to close his deal without paying the fines, thus saving him about $1,800.

At any rate, listen to his testimonial and learn that success doesn’t come to the meek. If you want a good Las Vegas real estate deal, you MUST be prepared to fight.

Please watch Dave K’s testimonial below and see: How we get difficult foreclosure deals done in Las Vegas

How Dave got a great deal for Las Vegas investment property, this is a You Tube video

I am still learning the video editing program and will upload videos from One QueensRidge, the most luxurious high rise condo towers in Las Vegas hands down, which is located in Summerlin about a 20 minute drive from the Las Vegas Strip with fabulous views of the Strip too.

I got an e-mail from Mr. Larry Murphy of Salestarq.com, the new home MLS provider in Las Vegas and the best real estate analyst in our area.

Table below shows Las Vegas detached single family new home builders along with the number of new homes sold so far in 2010, average price, price by square foot, and square footage.

A few points about these numbers

1: Pulte and Del Web used to be among the top 4 new home builders in Las Vegas and would sell what they have sold so far in less than a month in 2005.

2: Prices and especially price per square foot varies by type of building, one story new homes are sold for 20% or higher due to more expensive construction costs and need for a bigger lot due to bigger foot print of the building on the lot.

3: New buildings at Las Vegas master planned communities like Summerlin or Rhodes Ranch cost more. Some builders don’t build in master planned communities.

4: Price per square foot varies with upgrades; luxury homes cost more due to upgrades.

5: New home builders are building smaller homes now, the average square footage for the largest new home built by American West is about 2600 square feet.

6: Smallest new homes have been built by Adaven Homes.

New home builders are offering all kinds of incentives like interest rate buy downs and free upgrades to entice buyers.

I am learning to edit video files in order to start doing Video blogs for you and I will start blogging again as soon as I am done.

Lastly, new home buyers should research all aspects of their deal, including doing a comparison with resale homes, such as foreclosures or short sales. Or if they only want to buy a new home, buy a builder’s inventory home to save a bundle and have instant equity in their new home.

Fannie Mae has announced their Fall Sales Incentives for bank owned home and condos that it sells through their HomeSteps program. I have previously written about HomePath financing to buy Fannie Mae foreclosed homes or condos in Las Vegas and about investing in Fannie Mae properties Invest in Fannie Mae Las Vegas foreclosures, 10% down, no appraisal or PMI. Freddie Mac also allows you to finance their condos through the HomePath financing.

Incentives are available for owner occupied Las Vegas, Henderson, North Las Vegas homes, condos and townhomes that are sold for higher than $25,000. Investors or vacation home buyers are not eligible for these incentives.

 Offers have to be submitted from September 13, 2010 to November 14, 2010 and the escrow has to be closed on or before December 31st. Incentives include the following:

1: Up to 4% toward buyers closing costs.

2: Two year home warranty. If a problem is pre-existing (prior to close of escrow) it may not be covered by the home warranty. We always strongly suggest that a home buyer should get an inspection of the property by a Nevada licensed inspector. This is especially  true if a buyer purchases a foreclosure, since they are sold “as is, where is”.

3: Up to 30% discount for appliances. The buyer has to contact a a HomeProtect customer care specialist and he or she will help you find what you need at a savings of up to 30% off the manufacturer’s suggested retail price.

Fannie Mae is my favorite lender to buy foreclosures from. They don’t require PMI or appraisal and their bank owned homes are some of the cleanest foreclosures in the Las Vegas area and majority do not need any repairs done.

I have concluded working on my web-site in addition to many blog posts in the last three months. I put in more than 40 hours during the Labor Day weekend and 50-60 hours plus a week. I had a huge semantic error in the web-site that kept it from top Google rankings. I finally figured it out and in a month or so we should have first page links in all categories, however I am very tired and will not blog regularly for a week.

Related web-site page: Nevada First Time Home Buyers Grants, Mortgage, Down Payment Assistance

Some Las Vegas homes or condo buyers are NOT aware of the fact that a home or condominium seller only looks at the offers in terms of NET gain and pay no attention to the offer amount. To explain this I will discuss a hypothetical situation below:

A Las Vegas home for sale is priced at $200,000 and needs about $5,000 in repairs done, Las Vegas Realtors commissions are 6% and the buyer’s maximum amount allowed towards closing costs is 3.5%. Now the seller gets the following two offers:

Offer one: Is from a buyer who needs to finance his deal and offers $215,000, the buyer asks for the maximum $7,525 towards his closing costs and $5,000 seller contribution toward repairs. The net to the seller for this after deducting buyer closing costs and repairs and Realtors commission is $189,575. I am not including sellers closing costs as it remains constant for both offers.

Offer two: Is from a Las Vegas real estate cash investor at $202,000. Given that it doesn’t make sense to ask for closing costs or repair costs in a cash deal, the investor doesn’t ask for any. In this case the net to the seller is $189,880 and the seller will take the second cash offer in a heartbeat while the offer amount is $13,000 less than the first. The net for this offer is a bit more than the other but we have found that even if a cash offer nets less than the loan offer the banks will sometimes accept the cash offer over the loan because they can close a cash deal quicker and with less chance of falling out of escrow. If both offers needed financing the highest net would win.

Las Vegas homes or condominium buyers who have to finance their deal ask for seller contribution towards closing costs or repairs because they don’t have enough money to comfortably pay for them, this is not true for cash investors.

It doesn’t make sense for cash buyers to ask for closing costs or repairs because all that has to be done is to lower the offer amount by the desired number and submit a clean contract which has a much better chance of acceptance.

1: Las Vegas short sale home seller DOESN’T have to be behind in paying their mortgage.

2: No offer is needed to start the short sale process, listing a home or condo is enough. This will prevent ridiculously low asking prices so the listing agent would get an offer on the home before starting the short sale process.

3: The listing agent doesn’t have to waste a great deal of time trying to locate and open communication with an asset manager.

4: A short sale manager will contact the seller if necessary, the Realtor can be present when the short sale manger is interviewing the seller. This is awfully cool since the Realtor should be familiar with and bring up the issue of specific performance and try to get the seller out of hot water, if at all possible.

While I am on the specific performance issue, the asset manager said that he is not aware of anyone going after the short sale home seller for the first mortgage, but if a second mortgage is involved, it is sold to the type of people who have no conscience and would barbeque their own mother and eat her if there was any money in it. I am not kidding you.

5: If an offer is made on the property, the listing agent will e-mail the contract to the short sale manager which will review the contract and order and order an appraisal, NOT a BPO (broker price opinion). Unfortunately we run into low appraisals since if a home really appraises for $20,000 over the sale price the appraisal will come in at $1,000 over. Banks can obtain an appraisal from 150 mile radius of the property. Some appraisals in Las Vegas are done by appraisers in Bakersfield, California who are clueless. Wachovia will negotiate differences between their own appraisal and buyer’s appraisal that is mandated if the buyer has to obtain a loan.

6: It should take 6-10 days to obtain a bank approval for the short sale.

7: The Wachovia Short sale seller DOESN’T have to be an owner occupier. Las Vegas real estate investors are eligible to take advantage of the short sale process

8: If there is a second mortgage involved, Wachovia will try to settle the second mortgage with the lender. If a second mortgage can be settled they can close the deal in 45 days or less.

Related blog posts:

Foreclosure, Short Sale or Deed in Lieu? Which one will do less harm to your credit?

Foreclosure, Short Sale or Deed in Lieu? Which one will do less harm to your credit history? Part 2, Las Vegas short sales

Foreclosure, Short Sale or Deed in Lieu? Which one will do less harm to your credit?

Related Web-Site links:

Las Vegas short sale homes or condos for sale

 Las Vegas foreclosed homes or condos for sale

 Las Vegas homes or condos for sale