[jwt8070]

I just came back from a field trip to Vegas to study the rental property market. Eventually I want to buy several SFRs in Vegas as rental property. The purpose of this trip was to scout the neighbourhoods. I spent five days in Vegas and visited Summerlin (89134, 89138, 89144), Henderson/Green Valley (89044, 89051, 89002) and Northwest (89131, 89143). I also had a meeting with a realtor whom I met on this board and another meeting with an ower of a property management company. I will report below what I saw and learned during this trip.

Summerlin: overall a very nice area. I stopped by an open house and chatted with the realtor there. She told me that one can buy a house in Summerlin at REO for $90-$120/sqft. This is consistent with what I learned from other sources.

Henderson/Green Valley: Seven Hills seems to be a nice place to live. Some neighbourhoods have nice views to the Strip/City due to its higher altitude. If I were buying a house for myself to live, I would serious consider this area - I like house with views. But I mostly saw expensive homes and age restricted neighbourhoods. Some neighbourhoods in 89002 are quite old and houses do not look very nice, but they still go for ~$100/sqft. I quickly gave up on Henderson/Green Valley.

Northwest: looks quiet and peaceful, but I saw more houses for sale here than in the other two areas. In some neighbourhoods, I saw as many as 3-5 houses for sale on one block. I also saw bank notices on some houses which apparantly had been abandoned by the owners so I suppose these houses will come to the market soon. I learned that here one can pick up a house for $70 or less per sqft.

My meeting with the owner of a property management company was interesting. I asked her to print out the rental rates for Summerlin and NW, and what I saw is that the rental rates in Summerlin are about 10-15% higher than similar houses in the NW. The owner of the property management company also told me the following:

* Summerlin is hot since everyone wants to live there, while NW is also a good rental market.
* Lower end market ($1100-$1300/month) is more active than higher end market.
* Avoid big houses (2000+ feet, 5 or more bedrooms) because it take longer to find tenants.
* If a house has a pool, it goes fast.
* Tenant turn over rate in Vegas is high.

Based on what I have learned, it seems that in the NW, investors will get a better return on investment if the property is occupied, but a house in Summerlin will rent faster thus have less vacancy period. Overall I think NW will still come out ahead if an investor selects his properties carefully to minimize the vacancy period. Note that I did not touch the subject of future appreciation because it is difficult for me to guess proeprty in which area (NW or Summerlin) will appreciate more once the housing market recovers.

I hope the above info will help other investors looking to buy a rental property in Vegas. Comments are welcome.

[ruready1st]

Very interesting information. I am looking to buy a home to live in and feel the NW is the best bang for my buck. I travel there next week to scout out prospective neighborhoods and schools. A realtor told me that in the last few weeks the supply of nice foreclosures has dwindled. Its become a bidding war on the foreclosures in decent condition.

Its interesting to see that I will be competing with investors for property in the NW. I'm hoping it doesn't turn the NW into a transient area with all the rentals. I thought that the restrictions the banks were putting on lending for investment properties would deter that from happening. I would rather be competing with other families as opposed to a landlord.

I guess its a wait and see, like everything else these days.

[olecapt]

Originally Posted by ruready1st

Very interesting information. I am looking to buy a home to live in and feel the NW is the best bang for my buck. I travel there next week to scout out prospective neighborhoods and schools. A realtor told me that in the last few weeks the supply of nice foreclosures has dwindled. Its become a bidding war on the foreclosures in decent condition.

Its interesting to see that I will be competing with investors for property in the NW. I'm hoping it doesn't turn the NW into a transient area with all the rentals. I thought that the restrictions the banks were putting on lending for investment properties would deter that from happening. I would rather be competing with other families as opposed to a landlord.

I guess its a wait and see, like everything else these days.

The NW is large and varied. Pay attention. Neighborhoods that may be ideal for an investor may not be good for an Owner Occupant.

Try and go a little up scale. Investors buy on PSF price. Go up 10 or 15 and you get a lttle smaller place and a better neighborhood for the owner occupant.

Go a little older. Before 2003 neighborhoods don't have much of a problem. There are a few so you can still pick off a REPO...but they are 5 or 10 per cent of a neighborhood...not 60%.

You can work it. Just pay attention and look with wide open eyes at the area.

[ruready1st]

So what pSF do investors shoot for? Or more importantly where should I be in order to be above?

[jwt8070]

Originally Posted by ruready1st

Very interesting information. I am looking to buy a home to live in and feel the NW is the best bang for my buck. I travel there next week to scout out prospective neighborhoods and schools. A realtor told me that in the last few weeks the supply of nice foreclosures has dwindled. Its become a bidding war on the foreclosures in decent condition.

Realtors are known to say such things to their clients. Do not fall for them. Banks have delibrately priced the foreclosed homes below their market values to create bidding wars. This has been going on for at least over a year as far as I am aware of. Because a foreclosed home often receive multiple bids, it does not necessarilly mean that there is a shortage of decent foreclosed homes on the market.

While in Vegas I read in the local newspaper that in March banks sold more foreclosed homes than the ones they had taken possession of during the month and this is the first time it has happened since Jan 2007. Some realtors may point to it as the proof that the number of foreclosures has "dwindled". But if one uses some common sense, he should see that, out the 24 of 25 months since Jan 2007, there were more foreclosed homes being put on market than ones being sold. So the number of REO properties has been steadily increasing until now, which explains the steady decline of home prices in Vegas. The recent dip in the REO properties may have something to do with the fact that banks temporarilly stopped processing foreclosures since the end of last year. The same newspaper article pointed out that a 2nd wave of foreclosures may be on its way since banks have resumed processing foreclosures in April.

There will be no shortage of REO properties in the near future. Many if not most of the short sales today will be REO sooner or later and there are many more home owners with upside down mortgage are still thinking if they should simply walk or try a short sale first.

The bottomline is that there will be plenty of excellent REO deals out there for everyone, home owners or investors alike. If I were you, I would be concentrating on looking for a home that meets my criterion and not worry too much about the competition.

Happy shopping!

[olecapt]

Well there is a thing going on that may change things...

As of this AM the available inventory of REOs iis down to 3500. It was 6500 on Jan 1 and 4800 on April 1. At the moment it is dropping at over 350 per week. That would indicate that we will get below a month of inventory in mid May. Note that it will turn out that not all REOs in inventory are saleable. Over a thousand have been in the inventory since 2008. All that aside price of REOs has continued downward. The overall median in April will be about $143.3K and REOs at $129K ($73psf).

I too hear there is a big slug of REOs on the way...A brokerage wheel said there are 20,000 in the pipeline. But there are none obviously on the horizon for May and I doubt it for June. We should see REOs hitting the tax records well before they hit the MLS...and they are not there.

So we may mostly run out of REOs and then get hit with a big slug.

What will happen? Have not the faintest idea.

Interesting times.

[ruready1st]

We have to move July 24 to Vegas. So should we do a short term rental and try to time it better so that the supply is better?

Since we will be carrying 2 homes, bank only approved us for $190k and a better supply certainly would make that a better $ amount to work with.

[olecapt]

While the overall drop in prices continues unabated...it looks like a median of $142,000 and an average of $167,000 that is about $80 psf....it is not continuing everywhere. 89134 appears to have stabilized and is likely slowly increasing. The average of $365,500 is the highest in 6 months. The median is less enthusiastic but is still the highest for this year at $265,000.

What then is happening? Seems clear that we may have the two tiered pricing exaggerating itself. 89134 is now running at a $50 psf higher price than say 89131. That is a 60% advanatage to Summerlin.

If I have time over the weekend I will try and run a dozen of the obvious neighborhoods. Should be interesting.

[ruready1st]

You rock!

I would greatly appreciate a heads up as to what has changed in a week. It would be interesting to see the choices now as compared to before.
Looking at homes in the area of the following Elementary schools: Kitty Ward, Thompson, May, Allen, and Deskin.

Thanks, oh, I'll DM you.

[gulfer]

WOW..20K more units coming online. I would think they would be comparitively prices with what is out there now. Add that and the tax payer is fed up with bailouts of financials, there may not be as money available from the Government. Will this prolong the gradual decline in prices, or is it getting to a point where prices are more or less stabilizing??
This has to be going on country wide as unemployment still remains over 600K new claims per month and things just seem to have slowed all over.