[UrsusMinor]

I have some money in a self-directed IRA that I would like to put into some residential rental properties--single family or duplex--somewhere outside California (even though everybody complains about how prices have dropped here, they are still pretty steep). Arizona and Nevada seem the most likely prospects, and Las Vegas seems to have about the steepest decline in prices anywhere.

On the other hand, some of what I hear on this forum suggests that investing in some LV neighborhoods would be like flushing my money away. I don't have a lot to invest, so although I understand there are some million-dollar properties available for half their previous value, I'm not rolling in that kind of league. (And, in my experience, upscale properties never rent for anything like what they are worth.)

I realize that rents are down along with the real estate market, but I'm in it for the longer haul. But I want to find a neighborhood that has the potential to hold steady in quality of life rather than turning into a war zone.

Do any of you LV mavens have advice for me? (Including, of course, Stay Away!)

[airics]

you didn't specify where in the valley and how much...

[UrsusMinor]

Thnaks. I have about $80 K to put in. In principle I could supplement that with another $50 K in loan, so we'd be looking at a ceiling of around $130 K.

As to where, that's one of the things I'd like advice on. I see many low-priced homes on the market, but many of them seem to be in clusters where things are headed steeply downhill. Areas like that aren't probably a good investment proposition in either the short term or the longer term. But I don't really know the residential areas of town the way folks on this forum do, nor do I have a sense of where things are headed.

[airics]

80k is not enough to play the home game in my opinion.. you won't be able to buy a home in a good area.. you might be able to get a small condo in a good area.. there are some floating around at 50-60k in which you can collect 600-800 a month in rent..

[UrsusMinor]

Excellent--exactly the sort of thing I wanted to know. There are some decent duplexes in AZ that seem to fit the price tag and other criteria without being in questionable areas.

Thanks for the advice. Vegas, like any major city, is big enough to be confusing unless you live there.

Looks like Lake Havasu City for this boy.

[airics]

i wouldn't do havasu.. remember vegas is selling more than anywhere else... save up some more.

[UrsusMinor]

Actually, the looking I'm doing in Havasu so far seems very promising.

As I see it, there are two ways to play the investment game for someone at my level:

1) Buy mid-level single-family homes and put enough money down to get it cashflow neutral. Rent it out and wait for the underlying value to increase.

2) Buy lower-value SFs or duplexes and hold them solely for cashflow, without primarily seeking property appreciation or resale.

We already have a rental house in San Diego. Its cashflow has covered its mortgage and costs, and will be paid off in 2012. The appreciation in the property value has been great--even at current housing prices, it is worth over $500 K, and we originally picked it up for $180 K. (It needed some work, and the SoCal market was in one if its slumps.)

But the rental cashflow from the property is nothing to get excited about. A duplex valued at half as much would give us the same monthly rental income. What we're looking for at this point in time isn't an investment we'd cash in at some point, but a few fairly steady income streams.

Havasu seems to have some properties that fit that bill and yet don't run the risk of falling into ghettohood. The latter risk is what worries me in LV.

[plaster3]

If you are buying a home - you are doing it with the intention to receive rental income, and not to turn it around with that kind of investment.

A $130,000 property that can give you enough in rental income to be happy would be a great investment, in my opinion. Furthermore, if you can find an investment property available near developing areas - you may be fortunate to have a developer or even the city/county buy your property without a fight.

Either way, you have to be willing to get into some bidding wars with OREO properties with only $130K to play with. Good luck!

[plaster3]

Havasu you want to avoid also - I'm in banking and trust me, you want to stay away from Havasu at least for the next couple of years. =)

[UrsusMinor]

Originally Posted by plaster3

Havasu you want to avoid also - I'm in banking and trust me, you want to stay away from Havasu at least for the next couple of years. =)

Why?

I know there's lots of foreclosures (mostly former vacation homes, I gather). And if I were a banker, I wouldn't be too happy about Lake Havasu. But as an investor, I don't see the problem. So any light you can shed would be appreciated.