[Gomezy3k]

Originally Posted by Swigchow

Hmmm. Down side is 20k, but upside might be a double (or 60k+). At what risk level should investors participate?

Personally I think investors should take their money and go play in the stock market or somewhere and leave the housing market alone. Investors are at least half way responsible for the housing market bust by buying homes and then selling them for outrageous amounts to people who had little choice but to buy them. Between the bankers and the investors, greedy scumbags all, the poor ******* on the street got screwed. If the greedy scum had not artificially raised the prices of houses there would be no problem...

People need somewhere to live and the greedy jerks pounce on the fact and screw as many people as they can by squeezing out every penny they can from their victims.

Rentals are no better...you have the investor slum lord ********* charging as much as they can get away with for rent and raising it every year as much as they can...

[JohnG72]

Originally Posted by Swigchow

Hmmm. Down side is 20k, but upside might be a double (or 60k+). At what risk level should investors participate?

How do you figure that upside?

To me personally, the Las Vegas market contained no mid term upside(say 5-10 years) in terms of price appreciation....not at any point in the last three years or so.

TBH, I think nearly every person who bought real estate in Vegas as an investment over the past two years had exactly one mindset: OMG! Prices so low!

And thats it....literally ignoring all other relevant data, particularly the unemployment and ability to rent. Of course there are exceptions. An all cash investor who gets a great deal and can rent to solid rentors at below market will probably see ROI that is greater than they are gonna get elsewhere. But buying with intent to break even or barely cash flow in expectation of price appreciation is a huge mistake.

[mresort]

Originally Posted by JohnG72

And thats it....literally ignoring all other relevant data, particularly the unemployment and ability to rent. Of course there are exceptions. An all cash investor who gets a great deal and can rent to solid rentors at below market will probably see ROI that is greater than they are gonna get elsewhere. But buying with intent to break even or barely cash flow in expectation of price appreciation is a huge mistake.

I could tell you that most investors who bought houses in Las Vegas recently focus on ROI more than price appreciation. IMHO many of them come from Southern California where you can't buy a reasonable house for less than 400K. Paying 400K in cash is too risky, so most of them tend to finance their houses. You have to put at least 20% for downpayment which is about 80K. (80K can buy you an low-end single family house in cash here!). And your monthly mortgage payment including property tax is probably more than $2500 which makes you almost impossible to get a positive cash flow. You are more likely to lose money every month. The only way to make money is price appreciation.

However, in Las Vegas the 20% downpayment you paid in California can buy you a house in cash. You don't need to deal with the bank anymore. If you can find a solid renter, you expect to receive at least $900 a month or $10800 a year. Subtracting all the expenses will yield 10% on investment. This is what Olecapt was talking about. If you can't find a renter in a short period of time, that's fine! Keep in mind that you own the house 100% and don't need to make mortgage payment. How much you need to spend if it is vacant?

Therefore, majority of people who invested in Las Vegas recently are more concern on ROI than price appreciation. The people you were referring to are mostly people who bought inverstment homes in California or the Northeast.

[olecapt]

Originally Posted by JohnG72

How do you figure that upside?

To me personally, the Las Vegas market contained no mid term upside(say 5-10 years) in terms of price appreciation....not at any point in the last three years or so.

TBH, I think nearly every person who bought real estate in Vegas as an investment over the past two years had exactly one mindset: OMG! Prices so low!

And thats it....literally ignoring all other relevant data, particularly the unemployment and ability to rent. Of course there are exceptions. An all cash investor who gets a great deal and can rent to solid rentors at below market will probably see ROI that is greater than they are gonna get elsewhere. But buying with intent to break even or barely cash flow in expectation of price appreciation is a huge mistake.

YOu appear to have a reality deficit.

Over the last year numerous people bought investment properties here at below $60 per SF. That provides quite robust returns under any reasonable set of likely outcomes.

Your beief that appreciation will not occur over the next few years is very improbable. Homes simply do not sell below replacement costs for a long period of time in a healthy economy.

the Las Vegas "steel mill" is intact and working. There are the large number of jobs in the tourist industry. The industry is coming back as we speak. It will provide the basis for a substantial recovery over the next few years.

The residental construction industry is on its back. I would in fact like to see it stay there at least partially...though I do not think it will. But we are beginning to recover anyway.

My worse fear is not a prolonged unending recession. It is that the boom will start again and drive up the hill to a new cliff.

And this is just the place to do exactly that.

[JohnG72]

Originally Posted by olecapt

YOu appear to have a reality deficit.

Your beief that appreciation will not occur over the next few years is very improbable. Homes simply do not sell below replacement costs for a long period of time in a healthy economy.

You make an argument assuming there will soon be a healthy economy and I'm the one with a reality deficit?

I dunno what world you live in that 14% unemployment rate disappears in a short period of time. Needless to say, it will be a very long time before Las Vegas has an overall healthy economy.

Originally Posted by olecapt

the Las Vegas "steel mill" is intact and working. There are the large number of jobs in the tourist industry. The industry is coming back as we speak. It will provide the basis for a substantial recovery over the next few years.

Yet the unemployment rate keeps increasing. Hmmmmm.....

[tomfirst]

Optimist....pessimist...flip a coin....but if I invest in LV now I am an optimist for sure and will make out like a bandit later. Problem is... it's just not LV we have to consider here. Watch closely at what is happening in DC and the rest of the country before you invest here.... and that eats away at my optimism here for sure. I vote no confidence in DC or the rest of the country now. I am waiting.

[Spraynard Kruger]

Originally Posted by olecapt

YOu appear to have a reality deficit.

Over the last year numerous people bought investment properties here at below $60 per SF. That provides quite robust returns under any reasonable set of likely outcomes.

Your beief that appreciation will not occur over the next few years is very improbable. Homes simply do not sell below replacement costs for a long period of time in a healthy economy.

the Las Vegas "steel mill" is intact and working. There are the large number of jobs in the tourist industry. The industry is coming back as we speak. It will provide the basis for a substantial recovery over the next few years.

The residental construction industry is on its back. I would in fact like to see it stay there at least partially...though I do not think it will. But we are beginning to recover anyway.

My worse fear is not a prolonged unending recession. It is that the boom will start again and drive up the hill to a new cliff.

And this is just the place to do exactly that.

Bravo!

[Natali :)]

Originally Posted by mresort

I could tell you that most investors who bought houses in Las Vegas recently focus on ROI more than price appreciation. IMHO many of them come from Southern California where you can't buy a reasonable house for less than 400K. Paying 400K in cash is too risky, so most of them tend to finance their houses. You have to put at least 20% for downpayment which is . How much you need to spend if it is vacant?

.

This is really good question !

I will open a new thread for this one .

[Slim10]

The point is that housing prices are lower than cost of construction. That means few or no new homes on the horizon.

Unemployment is bad but people need a place to live so everyone that loses a home tends to go back as demand in the rental market.

The key to maintaining price stability is demand and supply. That means cutting number of foreclosures and keeping demand. Its a matter of time cos there's a limit to foreclosures. With cash buyers, buyers may resell but one won't be foreclosing on cash sales.

Despite all the rumors of shadow inventory etc, the facts are that banks have already gone through a whole lot of foreclosures and new buyers are facing heavy scrutiny to make sure there's no 2nd wave. Most numbers point to between 6 months to 2 years worth of potential foreclosure inventory left and that's factoring in 15% unemployment.

Prices will go up because it has dropped far more than it should. One might argue that prices went up artificially by 30% but went down 60%, half of which were artificially caused by the housing crisis. That means potential 30% upside over the next few years but not more.

The end of the subsidy will see a temporary slowdown in demand but unless no one buys any housing anymore, it won't slow down for very long.

[tony soprano]

Originally Posted by Slim10

Despite all the rumors of shadow inventory etc, the facts are that banks have already gone through a whole lot of foreclosures and new buyers are facing heavy scrutiny to make sure there's no 2nd wave. Most numbers point to between 6 months to 2 years worth of potential foreclosure inventory left and that's factoring in 15% unemployment.

When you say "most numbers" what numbers are you referring to?