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Old 09-29-2017, 12:03 PM
 
8 posts, read 9,022 times
Reputation: 12

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Hey everyone, read the other housing threads, but I wanted to keep this topic to the luxury condo/highrise market close to The Strip.

Moving from NYC, I'm used to the apt/highrise lifestyle and considering purchasing vs. renting in places like Veer/Mandarin/Panorama/The Martin/Turnberry.

Most of the 2 bedroom units are priced $600k to 1.3 million. I was looking into one of these units but debating on whether this would be a smart investment. I'll be personally living there 2-3 years before moving to a home to grow into.

What's your opinion on those places, how's the market looking currently and what's the forecast? Are these units good long term rental investments?
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Old 09-29-2017, 02:11 PM
 
Location: The North
4,962 posts, read 8,675,201 times
Reputation: 3831
As rental investments they are terrible. As equity investments they are quite risky, but might hold their value and increase for awhile since new supply has stopped being added and the Strip becomes more visited and valuable each year.
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Old 09-29-2017, 03:28 PM
 
4 posts, read 5,592 times
Reputation: 15
They are TIMEshares some fools think........................lol.

Palms Place and Signature units are rising meteorically. Buying 1 for 2-3 years is a crap shoot. LT youll make a ton of cash.

Buying property at below replacement value is always a good thing.
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Old 09-29-2017, 07:24 PM
 
8 posts, read 9,022 times
Reputation: 12
Quote:
Originally Posted by DingDongDang View Post
They are TIMEshares some fools think........................lol.

Buying property at below replacement value is always a good thing.
What do you mean by this?
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Old 09-30-2017, 10:53 AM
 
10,693 posts, read 3,738,322 times
Reputation: 4683
Quote:
Originally Posted by DingDongDang View Post
They are TIMEshares some fools think........................lol.

Palms Place and Signature units are rising meteorically. Buying 1 for 2-3 years is a crap shoot. LT youll make a ton of cash.

Buying property at below replacement value is always a good thing.
Signature units are rising more slowly than most Las Vegas properties about 5% per year. Veer is not rising at all...been flat for about 3 years.
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Old 10-03-2017, 05:12 AM
 
4,317 posts, read 5,265,036 times
Reputation: 4213
Quote:
Originally Posted by kreddy05 View Post
What do you mean by this?
Replacement value is what it costs to build something. My dad is a real estate developer (senior living, apartments, and high-rise office buildings plus he's invested in high rise condos as well) and it's something we discussed during The Great Recession. For instance we knew that my condo (which he had invested in) in Downtown Los Angeles fell below the replacement cost. It's not possible with union labor and with the material costs to build a condo to those construction standards in a major market like that for short of $300 per square foot for the most part. So a 1,000 square foot condo has a $300,000 replacement cost. If suddenly the market turns south fast and you can buy that unit for $200,000, it's a good "long term" deal because it's simply impossible to build what you just bought for so cheap.

Of course, the reverse leads to overdevelopment sometimes. If developers know they can find the land to build a new condo building and average $300 per square foot, but they can sell for $500 per square foot, you can bet any developer with any solid investors / banks in their good graces will find a way to put together those deals. It's easy money, basically, as long as you can finish the building before the market turns South. Of course, as we see, sometimes that doesn't happen. In fact that's how I got such a steal on my Pearl District (Portland) condo. The building was in serious financial trouble when the market hit its worst point. It was $16 million over budget on a $90 million budget, and rather than come up with the cash, which would have clearly been impossible unless the developer was extremely wealthy and felt like risking his money (why?!) in a horrid housing market, he just handed the property back to the bank and said have fun with it. The bank tried to sell the units as condos and it was one of the most epically pathetic things in history as they didn't get a single offer in 6 months. They ended up converting the entire building to apartments during the down turn just to make whatever they could off the thing. Finally, years later, they turned it back into condos and started selling the units. Because the condo building wasn't anywhere close to 70% owner occupied that meant no Fannie or Freddie financing, so it was pretty much cash only. I paid cash for my condo and sold it two years later for a $135,000 gain, by which point it was 100% full.

So the lesson is, condos can be a great investment if you hit the market at the right time, under the right circumstances, just like housing. That was the largest gain I've ever had on a house / condo. I lost about $30K in Los Angeles (not bad, given I sold during the recession), made about $25,000 in Long Beach, broke even in Beaverton, and made a killing on my Portland Pearl place, and these were all places I held for less than 5 years and usually about 2.

My personal observation about the Vegas high rise condo market is that it must be run by very very wealthy out of town types, because there is just too big of a difference between everything. It doesn't make logical sense, so I'm assuming it's some emotional thing, like "We have a condo in the best building on the Fabulous Las Vegas Strip!" This isn't a thing elsewhere. Condos in Los Angeles are cheaper than houses for sure, and usually by far. Condos in Portland are more expensive than houses by square foot, but not substantially so. The Pearl is a world-class neighborhood, literally emulated throughout the United States and in other countries as well for turning a formerly industrial / run down part of town into the richest area of the city. Even so, you might be looking at $400-500 per square foot for most places compared to the city in general which is still going to be $300-400. When you hit the suburbs you can start to see $200 per square foot.

In Vegas, I've seen very nice condo buildings right on the edges of the Strip for incredible deals, like $200,000 gets you a solid two bedroom place, or maybe $300,000 for a good 1,100 square foot high rise two bedroom with a bunch of amenities, etc. Then magically the building has a special name like "Veer" or one of the City Center places and the same size unit is $1.5 million. It really doesn't make sense. I don't understand how that can be a good long-term investment. Why would I want to pay 5 times as much for just living in a different building in the same part of Las Vegas?! Oh wow I could be a bit closer to... City Center. Ok? Or I can pay 5 times less and just take an Uber to City Center if I felt like it, because there's just as much cool stuff on either end of the Strip. It's like paying $2,000 for a Louis Vuitton purse, it's just brand name recognition and nothing else. That makes me nervous when it comes to real estate, unless people continue to agree that it's worth paying silly, laughable sums.

It's also a bit concerning to me if you consider that you could get a similarly sized house for like $125,000 in Las Vegas (let's be a honest a 1,200 square foot house is, uhh, not a nice house, that's TINY) compared to a $1 million condo of the same size. That's an enormous and concerning discrepancy. I'm not sure I've ever seen that in another real estate market.
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Old 10-03-2017, 08:35 AM
 
3,574 posts, read 4,013,599 times
Reputation: 3051
Oh man, I'm jealous of you. I'd love to live in the Pearl District. We have friends who live in the Metropolitan Condos there. It's the most ideal, walkable, modern neighborhood I've ever seen. Too bad the weather sucks though.
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Old 10-03-2017, 02:52 PM
 
Location: Southern Highlands
1,151 posts, read 714,505 times
Reputation: 975
Some condos are worth far less than their replacement cost. Take a look at Lake Las Vegas for example.
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Old 10-04-2017, 12:51 AM
 
Location: The North
4,962 posts, read 8,675,201 times
Reputation: 3831
Quote:
Originally Posted by JonathanLB View Post
Replacement value is what it costs to build something. My dad is a real estate developer (senior living, apartments, and high-rise office buildings plus he's invested in high rise condos as well) and it's something we discussed during The Great Recession. For instance we knew that my condo (which he had invested in) in Downtown Los Angeles fell below the replacement cost. It's not possible with union labor and with the material costs to build a condo to those construction standards in a major market like that for short of $300 per square foot for the most part. So a 1,000 square foot condo has a $300,000 replacement cost. If suddenly the market turns south fast and you can buy that unit for $200,000, it's a good "long term" deal because it's simply impossible to build what you just bought for so cheap.

Of course, the reverse leads to overdevelopment sometimes. If developers know they can find the land to build a new condo building and average $300 per square foot, but they can sell for $500 per square foot, you can bet any developer with any solid investors / banks in their good graces will find a way to put together those deals. It's easy money, basically, as long as you can finish the building before the market turns South. Of course, as we see, sometimes that doesn't happen. In fact that's how I got such a steal on my Pearl District (Portland) condo. The building was in serious financial trouble when the market hit its worst point. It was $16 million over budget on a $90 million budget, and rather than come up with the cash, which would have clearly been impossible unless the developer was extremely wealthy and felt like risking his money (why?!) in a horrid housing market, he just handed the property back to the bank and said have fun with it. The bank tried to sell the units as condos and it was one of the most epically pathetic things in history as they didn't get a single offer in 6 months. They ended up converting the entire building to apartments during the down turn just to make whatever they could off the thing. Finally, years later, they turned it back into condos and started selling the units. Because the condo building wasn't anywhere close to 70% owner occupied that meant no Fannie or Freddie financing, so it was pretty much cash only. I paid cash for my condo and sold it two years later for a $135,000 gain, by which point it was 100% full.

So the lesson is, condos can be a great investment if you hit the market at the right time, under the right circumstances, just like housing. That was the largest gain I've ever had on a house / condo. I lost about $30K in Los Angeles (not bad, given I sold during the recession), made about $25,000 in Long Beach, broke even in Beaverton, and made a killing on my Portland Pearl place, and these were all places I held for less than 5 years and usually about 2.

My personal observation about the Vegas high rise condo market is that it must be run by very very wealthy out of town types, because there is just too big of a difference between everything. It doesn't make logical sense, so I'm assuming it's some emotional thing, like "We have a condo in the best building on the Fabulous Las Vegas Strip!" This isn't a thing elsewhere. Condos in Los Angeles are cheaper than houses for sure, and usually by far. Condos in Portland are more expensive than houses by square foot, but not substantially so. The Pearl is a world-class neighborhood, literally emulated throughout the United States and in other countries as well for turning a formerly industrial / run down part of town into the richest area of the city. Even so, you might be looking at $400-500 per square foot for most places compared to the city in general which is still going to be $300-400. When you hit the suburbs you can start to see $200 per square foot.

In Vegas, I've seen very nice condo buildings right on the edges of the Strip for incredible deals, like $200,000 gets you a solid two bedroom place, or maybe $300,000 for a good 1,100 square foot high rise two bedroom with a bunch of amenities, etc. Then magically the building has a special name like "Veer" or one of the City Center places and the same size unit is $1.5 million. It really doesn't make sense. I don't understand how that can be a good long-term investment. Why would I want to pay 5 times as much for just living in a different building in the same part of Las Vegas?! Oh wow I could be a bit closer to... City Center. Ok? Or I can pay 5 times less and just take an Uber to City Center if I felt like it, because there's just as much cool stuff on either end of the Strip. It's like paying $2,000 for a Louis Vuitton purse, it's just brand name recognition and nothing else. That makes me nervous when it comes to real estate, unless people continue to agree that it's worth paying silly, laughable sums.

It's also a bit concerning to me if you consider that you could get a similarly sized house for like $125,000 in Las Vegas (let's be a honest a 1,200 square foot house is, uhh, not a nice house, that's TINY) compared to a $1 million condo of the same size. That's an enormous and concerning discrepancy. I'm not sure I've ever seen that in another real estate market.
There are no houses for $125,000 in Las Vegas that anyone would want to live in. Also don't forget the HOA in your thinking, they are triple the amount for high rises compared to "normal" Vegas condos or more.

Agree on your observation about the wide gulf in pricing for Strip condos compared to the other housing stock. Few of us with any savvy could ever fathom the gap being logical. The rents in the high rises are more expensive, but not anywhere near enough to justify the higher prices either. Its just a unique market that is drawing almost 100% investment from other more expensive places. You get irrational buyers in LA or SF (or China or Europe or etc.) saying well for that price I can't get anything in my city so I'll buy in Vegas. It makes zero financial sense, but there is no other way it happens. For someone to buy a condo on the Strip and think of it as an investment there just has to be some near term desire to spend quite a bit of time in it and attach some value to having a place as opposed to just paying for a hotel for your trips. Maybe in 10 years it will appreciate enough to prove to be a worthwhile investment, but you can't cash flow it enough to do it on that so some leap of faith and risk.
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Old 10-05-2017, 12:11 AM
 
1,525 posts, read 844,820 times
Reputation: 1158
Someone paid 14,000 PSF in Hong Kong recently, for about 4950 sf. But, there are entire cities and States selling below replacement value...like the entire Rust Belt. Those places in LV cost too much to just sit empty...I would like to see the numbers in Chinese buying in the high HOA fee buildings in LV....many were stingy long before they were rich.
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