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Old 01-11-2009, 06:04 PM
 
16 posts, read 35,713 times
Reputation: 10
Default Is a small house (1150-1250sf) too small for resale value in LV?

Hello everyone,
I'm a new member but have read your posts before and have found them very informative.
My partner and I moved to Vegas in June and will be here for another 3 years for work. We are too looking to invest in a Single Family Home for the short term in order to have a comfortable haven while we're here, then plan on selling or renting until it becomes a better time to sell. I read the previous thread about whether it is a good investment for a short time period but my question is another:
We are only 2 people and would be very comfortable in a 3/2 house at 1150sf that are going for around 120K but are worried that may be too small to have some sort of decent resale value, even if we put in a pool (25K) as we would like to do.
I was wondering what anyone may say about the resale value of an upgraded 3/2 pool home with 1150sf bought at 115K, say, compared to a 3/2 home with 1750sf and a nice yard, purchased at 215K.
By the way, Summerlin is where we are looking.
I'd appreciate your input. Many thanks!
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Old 01-11-2009, 07:54 PM
 
Location: Hawaii>SouthLakeTahoe>LA>Vegas>?
162 posts, read 315,037 times
Reputation: 74
My goodness...

First off, welcome to LV

Second, read between the lines of the real estate market right now. We have only seen the 1st wave of loans defaulted on, there are 2 more to come, starting this year, and housing is not even close to bottom. Do the slightest bit of research NOT supported by the government or realtors(who both have an agenda to make things look better).

Short answer is NO, if you buy a house now, you will not have solid resale value within at least the next 5 years, probably longer. Thats it, thats all. THERE IS NO DEBATE there.

RENT. The incentives are enormous and innumerable(you don't pay for upkeep or damage you didn't cause, don't have to pay homeowners insurance, property taxes, HOA fees, etc, and you can leave when your lease is done, you assume no financial risk, etc)

And as the current financial crisis should teach people you are NOT a homeowner if you are buried in payments on a crazy mortgage anyways. Renting is the smart thing to do now.

But to each his own. Good luck, I hope everything works out!
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Old 01-11-2009, 08:16 PM
 
16 posts, read 35,713 times
Reputation: 10
Thanks for the reply, ComeBack Kid. We understand the risks and can hold out to sell by renting till 5 or so years from now. We're still weighing the pros and cons of renting vs. selling and still would like to know what anyone thinks about buying small houses in Las Vegas. Is 1150sf just too small when there's so many bigger ones out there? All constructive thoughts/knowledge on the matter are welcome. Thanks, again.
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Old 01-11-2009, 10:02 PM
 
Location: Las Vegas, Centennial Hills
2,013 posts, read 4,357,457 times
Reputation: 829
Quote:
Originally Posted by myown927 View Post
Hello everyone,
I'm a new member but have read your posts before and have found them very informative.
My partner and I moved to Vegas in June and will be here for another 3 years for work. We are too looking to invest in a Single Family Home for the short term in order to have a comfortable haven while we're here, then plan on selling or renting until it becomes a better time to sell. I read the previous thread about whether it is a good investment for a short time period but my question is another:
We are only 2 people and would be very comfortable in a 3/2 house at 1150sf that are going for around 120K but are worried that may be too small to have some sort of decent resale value, even if we put in a pool (25K) as we would like to do.
I was wondering what anyone may say about the resale value of an upgraded 3/2 pool home with 1150sf bought at 115K, say, compared to a 3/2 home with 1750sf and a nice yard, purchased at 215K.
By the way, Summerlin is where we are looking.
I'd appreciate your input. Many thanks!
I would think that a smaller home would work better as a rental than as a resale. Of course this all depends on what the market looks like when you go to sell. My first home was 1200 sq ft and it worked out great until my family grew and I needed to upsize. When I bought my second home I was looking at a minimum of 1600 sq ft, but ended up with almost 1900 sq ft. It is certainly no McMansion by any means, but very comfortable and I don't think that we would've ever bought anything smaller the second time around. So I think that buyer demographics at the time that you put it on the market will have an impact as well. Nice first home, maybe not so much with a family.

Quote:
Originally Posted by ComeBack_Kid View Post
My goodness...

First off, welcome to LV

Second, read between the lines of the real estate market right now. We have only seen the 1st wave of loans defaulted on, there are 2 more to come, starting this year, and housing is not even close to bottom. Do the slightest bit of research NOT supported by the government or realtors(who both have an agenda to make things look better).

Short answer is NO, if you buy a house now, you will not have solid resale value within at least the next 5 years, probably longer. Thats it, thats all. THERE IS NO DEBATE there.

RENT. The incentives are enormous and innumerable(you don't pay for upkeep or damage you didn't cause, don't have to pay homeowners insurance, property taxes, HOA fees, etc, and you can leave when your lease is done, you assume no financial risk, etc)

And as the current financial crisis should teach people you are NOT a homeowner if you are buried in payments on a crazy mortgage anyways. Renting is the smart thing to do now.

But to each his own. Good luck, I hope everything works out!
Right back at you.


As I've said in the other thread (which you did not respond to by the way) it is not another 2 waves of defaults coming. The next wave you are talking about is the Alt-A loans that are set to start resetting this year, except you don't realize that many Alt-A loans were 3 year ARMs originated in 2004, so if they were to default they did 2 years ago. Option ARMs are being modified. Get rich quick RE "investors" that used NINA (no income, no asset aka no doc loans) have already walked away from their rental properties. Will there be more foreclosures? Absolutely, although I believe that most foreclosures at present are current prime mortgage holders walking away because they are upside down, turning a paper loss into a realized loss (because they are obviously so financially savvy).

Blanket statements do not work. Property taxes are deductible. Mortgage payments are in line with rent payments. Mortgage interest is deductible, rent is not. Landlords do have to pay property tax, do you not think that they pass that on in the rent? What renter in their right mind would not carry renter's insurance? Many apartment complexes are now charging for water and trash, on some crazy averaged plan that is completely unfair to most tenants I might add. All of the "incentives" (you should have used benefits, incentives are something that are given as an inducement, a benefit is a positive that is realized whether through intent or happenstance) that you point to are nonexistent. Because you perceive them as so does not make them so.

That being said, source your research (not blogs from financial "experts" but hard stats) and I would be more than happy to look at it. Until then I stand by the stats and research I see every day.
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Old 01-11-2009, 10:28 PM
 
471 posts, read 111,630 times
Reputation: 31
Usually I would encourage paying mortgage than rent BUT I tell you after all this housing bubble stuff and prices dropping so sharply I'd be really scared about buying a house. I don't want to discourage you though owning your own home is a great thing.
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Old 01-11-2009, 10:33 PM
 
16 posts, read 35,713 times
Reputation: 10
Thanks for shining some light on the situation by sharing your experience, Daddys. We also took into consideration that mortgage is tax deductible. And with 20% down, 30-yr fixed at 4.5% on the loan (pre-qualed), plus insurance, taxes, and a low master plan fee, the monthly mortgage payment still averages less than what we'd pay to rent a house, much less if we go small (at 115K) but still less with a medium house at around a 200K purchase price. If we can afford to hold onto it long enough by renting it out (which we can and have calculated for 3-5 yrs) and we can find a good deal, seems it wouldn't be as bad as some believe; Am I way off? I only have experience with completely different metropolitan housing markets at a very different economic state that now. Las Vegas is unique, as are the times.
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Old 01-11-2009, 10:41 PM
 
16 posts, read 35,713 times
Reputation: 10
lexusman, we are hesitant but feel the same about renting than you do (did?). but what if you get in really low? if you've rented and lived in a condo or apartment around here you may know the great disadvantages and understand why we'd even consider the risk---for quality of life, a bit more peace and feeling of comfort, greater consideration for your surroundings, etc. Also, there seems to be a stigma on renting anything other than a house, something unfamiliar to us when we got here, unlike from where we came. Thanks for your input...
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Old 01-12-2009, 08:56 AM
 
Location: Las Vegas, Centennial Hills
2,013 posts, read 4,357,457 times
Reputation: 829
Quote:
Originally Posted by myown927 View Post
Thanks for shining some light on the situation by sharing your experience, Daddys. We also took into consideration that mortgage is tax deductible. And with 20% down, 30-yr fixed at 4.5% on the loan (pre-qualed), plus insurance, taxes, and a low master plan fee, the monthly mortgage payment still averages less than what we'd pay to rent a house, much less if we go small (at 115K) but still less with a medium house at around a 200K purchase price. If we can afford to hold onto it long enough by renting it out (which we can and have calculated for 3-5 yrs) and we can find a good deal, seems it wouldn't be as bad as some believe; Am I way off? I only have experience with completely different metropolitan housing markets at a very different economic state that now. Las Vegas is unique, as are the times.
I can't say that you will make a killing but assuming you hold for 5 years and we see 3% appreciation starting today (huge assumption mind you). A $115,000 home would appreciate to around $134,000. After about 8% for commissions and seller's closing costs (assuming you don't cover the buyer's closing costs as well) you would get around $123,000 (please bear in mind that these are very rough numbers). Also, at $134,000 that home is still well within a first time home buyers reach. I can't say that this scenario is accurate as it is based on hypotheticals and assumption, but should give you an idea. I would think a minimum of 3 years at 3% appreciation would be needed to break even.
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Old 01-12-2009, 09:12 AM
 
595 posts, read 1,512,350 times
Reputation: 157
That's a good sized home. More and more, people want location; not size. The costs of cooling a large house while you are commuting to the exhurbs, just doesn't make sense. You probably know the Chinese saying "One Child." If you could rent it out for 1% of the sales price, per month, you would be doing great. 115,000 house=1150 per month rent. Positive cash flow, and a good investment. Just make sure it's a home you would personally live in, and you won't get stuck.
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Old 01-12-2009, 09:31 AM
 
Location: Here and there, you decide.
9,317 posts, read 13,862,487 times
Reputation: 2283
good assumption barry but i dont think a 1150sf house would rent for 1150. even though that is the goal...1700-1900sf are renting for around 1200 currently.. also the cost to cool (believe it or not is cheap imo) $286 70 degrees june was my highest so far and that is a 2600sf 3 floor home.
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