Buy a home in Las Vegas?
December 28th, 2011 at 2:24:31 PM
permalink
Several years ago (2005?) the Wizard mentioned he lived in Peccole Ranch. Is this still a nice place to live? I've been casually watching home values for the last few years and I'm ready to buy now. I will try to rent the home for the next 6 years, then live in it with my wife and retire. I'm considering Summerlin, Henderson (any others I should consider?). How concerned should I be about crime? I remember the Wizard saying his home was broken into a few years ago. I currently live in the Midwest. Would love any suggestions or advice. Thank you.
"I am a man devoured by the passion for gambling." --Dostoevsky, 1871
December 28th, 2011 at 2:38:49 PM
permalink
Peccole Ranch is a nice and well-located area. Yes, my home there was robbed several years ago, but they didn't get much. Property crime is high all over Vegas and I think Peccole Ranch is average for a semi-affluent area in Vegas.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
December 28th, 2011 at 3:03:24 PM
permalink
Beware of a history of a defaulted mortgage ... some of those foreclosure sales are in legal limbo due to fraudulent lack of notice and those properties are in a sort of legal limbo right now.
December 28th, 2011 at 4:01:47 PM
permalink
I'm actively looking for a home in Vegas too. I have a real estate agent and Zillow to guide me. I've found some good stuff and some trashed houses. It's amazing how spiteful some people can be, houses destroyed on the inside. Walls wrecked, copper stripped, rugs cut up, mold from faucets left on and overflowing. It's important to inspect! For example, I was interested in 3457 Red Rock Lane, it has some nice outdoor photos but I didn't see any indoor photos so I sent in my agent. He said the place is a disaster on the inside, will need $150,000 in repairs.
I've crossed that one off my list.
I've crossed that one off my list.
Someday, joor goin' to see the name of Googie Gomez in lights and joor goin' to say to joorself, "Was that her?" and then joor goin' to answer to joorself, "That was her!" But you know somethin' mister? I was always her yuss nobody knows it! - Googie Gomez
December 28th, 2011 at 6:40:37 PM
permalink
Quote: MakingBookSeveral years ago (2005?) the Wizard mentioned he lived in Peccole Ranch. Is this still a nice place to live? I've been casually watching home values for the last few years and I'm ready to buy now. I will try to rent the home for the next 6 years, then live in it with my wife and retire.
In your casual watching what made you determine that bottom has been reached? I assume that is why you want to purchase the property as a rental property for six years then retire there.
Just in general, you hear many stories about people that bought a house or land in a plan for retirement, than something major happens and they regret the decision. You could end up fighting with unruly tenants for years who damage your house, just of ind in 5 years that the house price has dropped even lower. You could also find that life changes have made you no longer want to move to Vegas. Are you sure you don't want to bank your money until you retire and then buy the house you want when you are ready to move in?
December 28th, 2011 at 7:07:43 PM
permalink
Home ownership before WWII was impractical, houses
didn't appreciate in value enough. We're back to that
again. You're better off renting.
didn't appreciate in value enough. We're back to that
again. You're better off renting.
"It's not called gambling if the math is on your side."
December 28th, 2011 at 7:25:03 PM
permalink
I, of course, could be wrong, but I think we're near the bottom. In my opinion you would lose more by renting, waiting for the bottom to be confirmed, than you will by buying now and possibly losing a little before things pick up again. You can see from Paco's graph prices in 89117 have dropped about 15% in the last three years, which is not that bad. You would pay more than 15% of the value of a house renting it for three years.
There is no shortage of such trashed houses in Vegas. One I looked at didn't even discount the price for hundreds of thousands in damages.
There is no shortage of such trashed houses in Vegas. One I looked at didn't even discount the price for hundreds of thousands in damages.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
December 28th, 2011 at 8:05:08 PM
permalink
Quote: WizardI, of course, could be wrong, but I think we're near the bottom.
If you bought a house in 1910 and sold it in
1940, you generally got your money back plus
whatever inflation was. You made nothing on
your investment. Many think thats what we're
going back to, a house will not go up enough
fast enough to make it a good investment.
In the 30's and 40's people like Bob Hope and
Bing Crosby invested heavily in So/Cal real
estate because they saw what was coming. In
the 50's and 60's they made huge profits on
their property, when the housing boom swung
into high gear. I moved to Calif in '76 and the
craziness was just starting there, people were
buying a house and selling it 2 years later for
twice what they paid. We'll never see that again.
"It's not called gambling if the math is on your side."
December 28th, 2011 at 8:14:56 PM
permalink
Quote: WizardIn my opinion you would lose more by renting, waiting for the bottom to be confirmed, than you will by buying now and possibly losing a little before things pick up again.
There are two different questions. One is would it be wise to move to Vegas and rent for three years waiting for the absolute bottom. I would agree that probably is not a good idea.
But the OP was talking about purchasing a house in Vegas, and living the in the Midwest for 6 years while renting the house as an absentee landlord. He would then move to Vegas to take over the rental as his retirement home. That only seems like a good decision if you think house prices will zoom out of control in the next few years.
December 28th, 2011 at 8:55:22 PM
permalink
Quote: pacomartinThat only seems like a good decision if you think house prices will zoom out of control in the next few years.
For that to happen, Vegas will have to boom again. And
for that to happen, most of the casinos that are in other states
will have to close. Not only are they not closing, more are
opening all the time. When has a boom ever happened
twice in the same place?
"It's not called gambling if the math is on your side."
December 28th, 2011 at 9:19:08 PM
permalink
EvenBob, you're forgetting something. Before World War ll our currency was on a gold standard so prices remained comparably steady by today's standards. This is no longer true as money is now printed out of thin air. This causes large bubbles/fluctuation in asset pricing, including real property values.
In my opinion it is a great time to buy. A real estate investor can actually make profit on rental property. A few years ago this wasn't the case and was a clear indicator that prices were over-inflated. The problem now is getting a loan for a future rental and finding a decent property manager.
In my opinion it is a great time to buy. A real estate investor can actually make profit on rental property. A few years ago this wasn't the case and was a clear indicator that prices were over-inflated. The problem now is getting a loan for a future rental and finding a decent property manager.
100% risk of ruin
December 28th, 2011 at 9:59:54 PM
permalink
Quote: RogerKintBefore World War ll our currency was on a gold standard
Real estate prices are driven by one thing and one
thing only: Supply and demand. No demand, so
no supply is needed. Detroit has a housing glut
because there's no demand. Vegas has the same
problem, but to a lesser degree. If demand in Vegas
never goes up, housing prices will remain depressed.
"It's not called gambling if the math is on your side."
December 28th, 2011 at 10:02:26 PM
permalink
You can demand a house all you want but if the average american doesn't have the means to purchase it then price isn't affected. Purchase power impacts price more than anything. When credit is eased again people will spread out of their parent's and friend's basements and buy. Then we'll go through all this again.
Buying a house to rent until retirement is a modest plan as long as the problem of finding a good property manager is solved. In my own personal experience dealing with property managers out of your (the owner) area is a problem due to the fact that the property manager doesn't feel as accountable.
If it were me I would go the RV route and use the cash I saved to blow on craps and womens.
Buying a house to rent until retirement is a modest plan as long as the problem of finding a good property manager is solved. In my own personal experience dealing with property managers out of your (the owner) area is a problem due to the fact that the property manager doesn't feel as accountable.
If it were me I would go the RV route and use the cash I saved to blow on craps and womens.
100% risk of ruin
December 28th, 2011 at 10:56:18 PM
permalink
Quote: RogerKintBuying a house to rent until retirement is a modest plan as long as the problem of finding a good property manager is solved. In my own personal experience dealing with property managers out of your (the owner) area is a problem due to the fact that the property manager doesn't feel as accountable.
Exactly. I see some foreclosures going for half the price that the owner paid sometimes in the last 5 years. But some of these properties can still command a good rent. Some savvy investors with access to cash are buying up these properties and turning them into rentals.
That said, I still wouldn't live in the midwest for 6 years and think it makes sense to own a rental property in Vegas. You may be better off buying a distressed property in your home town, managing it for 6 years, and then sell your personal residence move to Vegas and keep the other house as investment income. At least for six years you will have personal control and when you move, you should know someone in your home town that will be a decent property manager.
December 28th, 2011 at 11:49:10 PM
permalink
Remote property management is difficult. Six years from now you would be remote property managers if you move to Las Vegas. The people you know "back home" drift away, the real estate firms know you are an out of state owner and treat you as one.
I think it would be better to buy in Vegas at these prices ... just make sure you get value. Don't buy a lawsuit over the title and don't buy a house with wrecked innards. I understand much of Vegas has HOA rules regarding exterior upkeep and the worst thing you want to face is being an out of state owner with some jerk going around your property measuring the height of your grass or imposing a fine because your tenants did not take in their garbage cans promptly.
RV? If the lifestyle is for you... fine. Many RVs get put up for sale at the six month mark. Yet some of those upscale Class A parks are selling lots for far more than houses cost.
I think it would be better to buy in Vegas at these prices ... just make sure you get value. Don't buy a lawsuit over the title and don't buy a house with wrecked innards. I understand much of Vegas has HOA rules regarding exterior upkeep and the worst thing you want to face is being an out of state owner with some jerk going around your property measuring the height of your grass or imposing a fine because your tenants did not take in their garbage cans promptly.
RV? If the lifestyle is for you... fine. Many RVs get put up for sale at the six month mark. Yet some of those upscale Class A parks are selling lots for far more than houses cost.
December 29th, 2011 at 2:14:57 AM
permalink
one thing to never dismiss about investing in a home: the leverage you typically get can not be duplicated with any other investment. For the short term that makes it more risky, but for the 30+ year investor it is virtually risk free in most areas of the country [not sure about Vegas!]
PS: pundits are saying that renting makes plenty of sense these days. There is some sort of argument to be made. One thing, it is difficult to compare real estate to other investments; there are a lot of expenses involved: taxes, maintenance, and insurance costs for sure.
PS: pundits are saying that renting makes plenty of sense these days. There is some sort of argument to be made. One thing, it is difficult to compare real estate to other investments; there are a lot of expenses involved: taxes, maintenance, and insurance costs for sure.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
December 29th, 2011 at 4:12:31 AM
permalink
Quote: odiousgambitFor the short term that makes it more risky, but for the 30+ year investor it is virtually risk free in most areas of the country
What you mean is that historically it has been virtually risk free. What about the Japanese Asset Price Bubble which ended just over 20 years ago? To qualify home-owners they invented first the 60 year, and then the 120 year mortgage. Most of those homeowners are still underwater and will be for decades more. In many cases the next generation will be underwater as well.
I suppose everyone can say "we don't live in historic times" at any point in history, but I'll say it anyway. "We don't live in historic times!" We've only had this level of debt for a few years in WWII as the government outlays were four times their revenue. Now we have that same kind of debt with only two comparatively minor wars. What if we have to fight a real war, something comparable to the conflicts of the past. Who will take our paper money then?
December 29th, 2011 at 4:16:35 AM
permalink
Rent to me I'm starting to get tired of my small apartment.
December 29th, 2011 at 7:19:23 AM
permalink
Indeed the long distance landlord is a huge concern. What if I paid someone to clean the place each month. Not a huge expense, and they could be check out the property and report back to me each month?
Also, I have a friend that would rent from me from Sept - April. What would happen to an empty house in Summerlin from May - August. Would it get trashed?
Also, I have a friend that would rent from me from Sept - April. What would happen to an empty house in Summerlin from May - August. Would it get trashed?
"I am a man devoured by the passion for gambling." --Dostoevsky, 1871
December 29th, 2011 at 8:05:11 AM
permalink
Quote: pacomartinBut the OP was talking about purchasing a house in Vegas, and living the in the Midwest for 6 years while renting the house as an absentee landlord. He would then move to Vegas to take over the rental as his retirement home. That only seems like a good decision if you think house prices will zoom out of control in the next few years.
I don't think you need to assume that. Even if prices maintain current levels it will be like getting the renters to pay the mortgage for six years. I'm going to go against you and Bob and approve the idea.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
December 29th, 2011 at 9:27:40 AM
permalink
Yes, I too would think it a good idea but only caution to look at LV properties very cautiously and bear in mind physical condition as well clarity of legal title. Vulture funds are buying in Vegas and some flipping by the Vulture funds is taking place.
December 29th, 2011 at 9:51:21 AM
permalink
The housing boom in this country was built on the
backs of people involved in the manufacturing
industries. I don't see manufacturing ever recovering
to what it was, or even a shadow of what it was.
We're going to find a bottom in the housing crisis and we'll
stay there, perhaps forever. Home ownership will become
a luxury once again, not a necessity. Landlords will rule,
as they have for thousands of years.
backs of people involved in the manufacturing
industries. I don't see manufacturing ever recovering
to what it was, or even a shadow of what it was.
We're going to find a bottom in the housing crisis and we'll
stay there, perhaps forever. Home ownership will become
a luxury once again, not a necessity. Landlords will rule,
as they have for thousands of years.
"It's not called gambling if the math is on your side."
December 29th, 2011 at 11:38:40 AM
permalink
What is the thought on condos like the Platnium for both rental and vacation use? They are selling as low as 99K and have rental agencies on site, with higher fees of course.
December 29th, 2011 at 3:17:46 PM
permalink
Alot of those condos have outrageous monthly fees and this notion of buying one to rent out as hotel rooms is great but the rental agencies have a bias towards renting only the higher up units and modest units will simply never see any rental income.
January 4th, 2012 at 1:09:58 AM
permalink
Quote: WizardI don't think you need to assume that. Even if prices maintain current levels it will be like getting the renters to pay the mortgage for six years. I'm going to go against you and Bob and approve the idea.
And what is the advantage of getting renters to pay the mortgage for six years? Is it the reduction of principal by a less than 10%? The house could drop in value by 20% in six years. The renters could easily do damage to cause that much loss in six years.
If you buy a house in an unstable market to rent, then the bank will want a very big downpayment. If you wait six years and purchase on your own to live in, they won't care.
January 4th, 2012 at 2:06:50 AM
permalink
Yes, any of those things could happen. The house may also go up in value 20% in six years. I never said it wasn't a gamble.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
January 4th, 2012 at 2:12:56 AM
permalink
In many areas of the country it appears that Single Family Homes are the hardest hit and require the highest down payments with the strictest guidelines while those who buy apartment houses can do so with five percent down, less stringent rules and often better price appreciation that that enjoyed by Single Family Homes.Quote: WizardYes, any of those things could happen. The house may also go up in value 20% in six years. I never said it wasn't a gamble.
In some specialty real estate commentary, the best investments are Residential Air Parks, Single Room Occupancy buildings and Garden Apartment Buildings.
January 4th, 2012 at 8:21:25 AM
permalink
Quote: FleaStiffIn many areas of the country it appears that Single Family Homes are the hardest hit and require the highest down payments with the strictest guidelines while those who buy apartment houses can do so with five percent down, less stringent rules and often better price appreciation that that enjoyed by Single Family Homes.
Yup. The banks are being very tight. Before they will make a loan they will have it appraised, and their appraisals are coming in very low. For example, when I tried to refinance my home it came in at about 80% of its fair value, judging by recent comparable sales in the neighborhood. Not only that, but they want to see the owner put down more.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
January 4th, 2012 at 8:33:14 AM
permalink
Quote: Wizardmy home it came in at about 80% of its fair value, judging by recent comparable sales in the neighborhood.
In general, how do homeowner's feel about Zestimates.
Quote: Zillow.comThe Zestimate (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The Zestimate is pulled from data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account.
January 4th, 2012 at 9:33:01 AM
permalink
Zillow?
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
January 4th, 2012 at 9:33:06 AM
permalink
Quote: pacomartinIn general, how do homeowner's feel about Zestimates.
Speaking only for this homeowner, they're terrible. Overnight my house suddenly fell in value by 25%, I suppose because they suddenly lumped my home into a larger region with cheaper homes. If you go by the recent selling price per square foot in my neighborhood I can show they are about 30% too low.
Ask any real estate agent about it and you're likely to set them off on a rant about how bad they are.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
January 4th, 2012 at 11:25:36 AM
permalink
Zillow is very regional in its accuracy. Some
places they're spot on, others places they're
way off. The more volitile the area, like Vegas,
the less dependable they are.
places they're spot on, others places they're
way off. The more volitile the area, like Vegas,
the less dependable they are.
"It's not called gambling if the math is on your side."
January 4th, 2012 at 11:48:33 AM
permalink
Quote: WizardSpeaking only for this homeowner, they're terrible. Overnight my house suddenly fell in value by 25%, I suppose because they suddenly lumped my home into a larger region with cheaper homes.
I've noticed that homes.com and zillow.com have widely varying estimates as to value. And one is not consistently higher than the other one. For one house homes.com will be 25% higher, and for another zillow.com will be 10% to 25% higher. They should be forced to reveal their formula. At least it would be easier to challenge their estimating methodology.
You have to wonder about changing 25% in one month. No real estate market changes that fast without a hurricane or a typhoon.
January 4th, 2012 at 2:39:24 PM
permalink
What Zillow is good for is flagging homes for sale near the target property. I think they are typically flagged with a little red house symbol. Obviously every house is different, but it is helpful.
You can also pull up houses up and down the street on Zillow and find out when the house last sold and for what price. If you can find a recent one (I thought they used to flag recent sales with yellow houses, but not seeing that today), that can give you a good indication of value as well.
Again, not all houses are the same......if you are really serious, get with a professional real estate agent, they have databases with recent sales data that are much easier to use.
You can also pull up houses up and down the street on Zillow and find out when the house last sold and for what price. If you can find a recent one (I thought they used to flag recent sales with yellow houses, but not seeing that today), that can give you a good indication of value as well.
Again, not all houses are the same......if you are really serious, get with a professional real estate agent, they have databases with recent sales data that are much easier to use.
January 4th, 2012 at 3:04:16 PM
permalink
Quote: pacomartinIn general, how do homeowner's feel about Zestimates.
Zillow is fine for shopping, but a lender will use one of the serious professional services. When I processed mortgages even then you got a "confidence level" and if it was too low you had do do a drive by (FHA 1003 IIRC.)
All animals are equal, but some are more equal than others
January 4th, 2012 at 6:32:56 PM
permalink
Quote: AZDuffmanZillow is fine for shopping, but a lender will use one of the serious professional services. When I processed mortgages even then you got a "confidence level" and if it was too low you had do do a drive by (FHA 1003 IIRC.)
But the problem is that you want to reach the casual shopper to get them to look at the property. The serious appraisal that a lender wants comes much later in the game. Bit of Zillow devalues your home 20% in one month, and devalues the house next door by 1% the same month, it's like being slandered. When you are slandered publicly, you might be able to convince a few people who take the time to listen that the charges are unfounded, but sometimes you care about the general impression. A lot of people won't go to an open house of a property that is not priced within 10% of the Zillow estimate.
I don't think doing these kind of estimates should be illegal, but I do think that they should be required to share their formula. At least you could refute them knowledgeably. There is no market where real estate drops 20%-25% in one month unless there is a natural disaster or some horrific news story. And it would effect all the homes in a neighborhood, not just one.
May 23rd, 2012 at 12:53:18 PM
permalink
Bloomberg News says its far from over, the housing
debacle. Foreclosures have been down because
the Obama administration mostly stopped them
with investigations and fines, and now thats all
done and forclosures will start in ernest again.
There are people who haven't made a payment in
well over a year and Bloomberg feels home values
could easily drop another 20% in major cities
where unemployment is the highest, like Vegas.
Gary Shilling, Bloomberg:
"Because of excess inventories we estimate that there are two million inventories, both visible and shadow inventories, over and above normal working levels, and that's a lot. Back in the, oh, normal times, we built about a million-and-a-half houses a year so. Two-and-a-half million is a tremendous overhang, and excess inventories are the mortal enemy of prices. What may happen here is that now that the robo-signing flap is settled and the servicers, the big banks settled for $25 billion with the various state attorneys general and the federal government, they've been holding off on foreclosures because they had enough bad PR. Now they've settled that. I think they're gonna go back to foreclosures. I'm looking for another 20% decline."
debacle. Foreclosures have been down because
the Obama administration mostly stopped them
with investigations and fines, and now thats all
done and forclosures will start in ernest again.
There are people who haven't made a payment in
well over a year and Bloomberg feels home values
could easily drop another 20% in major cities
where unemployment is the highest, like Vegas.
Gary Shilling, Bloomberg:
"Because of excess inventories we estimate that there are two million inventories, both visible and shadow inventories, over and above normal working levels, and that's a lot. Back in the, oh, normal times, we built about a million-and-a-half houses a year so. Two-and-a-half million is a tremendous overhang, and excess inventories are the mortal enemy of prices. What may happen here is that now that the robo-signing flap is settled and the servicers, the big banks settled for $25 billion with the various state attorneys general and the federal government, they've been holding off on foreclosures because they had enough bad PR. Now they've settled that. I think they're gonna go back to foreclosures. I'm looking for another 20% decline."
"It's not called gambling if the math is on your side."
May 23rd, 2012 at 1:43:33 PM
permalink
Seems to make sense, but if you look at the Vegas reports, cash in flowing into RE and properties days on market is really dropping. Still most of it is investors compared to families, but time will tell.
