Las Vegas Real Estate Market - The Good The Bad and The Ugly
For years the Last Vegas real estate market offered some of the most desired properties in the country. Everyone was ready to gamble in Sin City in hope of striking it rich. Today, Clark County Nevada has nearly turned into a ghost town with thousands of foreclosure properties sitting vacant.
There are signs the Las Vegas real estate market is heading toward recovery. In June, the Las Vegas Review-Journal reported foreclosure filings declined by 12.9 percent in May. Additionally, banks canceled 1,931 sales which was a 36.7 percent decrease from April. The report wasn't clear on whether canceled sales were the result of loan modifications, short sales, or deed in lieu of foreclosure.
Most of the major banks have been under scrutiny for improper foreclosure after it came to light they didn't hold legal ownership based on faulty paperwork. An investigation by the Federal Reserve led to 17 lenders being required to make financial restitution to homeowners whose homes were wrongfully repossessed.
The ironic thing about the Las Vegas housing market is there is currently a housing shortage. The Las Vegas Review-Journal reports, "73 percent of Vegas homeowners are underwater on their mortgage and thousands more are not making a payment, yet there are no homes available."
This is because it takes nearly a year for banks to foreclose on Vegas homeowners. There are so many foreclosure houses that the courts are clogged with cases. It has presented a legal nightmare this city was not prepared to handle.
Real estate investors are playing a key role in keeping the Vegas market from collapsing. Nearly 70-percent of the homes sold in Vegas are bought by investors. A lot of the properties are bank owned homes that have sat vacant for two or more years.
Of the homes bought by investors, over half were purchased with cash. As an investor in this market, my recommendation is to buy houses with cash whenever possible. It grants additional bargaining power and expedites closing.
One consideration of investing in Vegas properties is the number of foreclosed homeowners that require a place to live. It can be advantageous to seek out residential homes, town homes, and condos in areas where people want to settle down.
Consider offering 'owner will carry' financing through lease purchase option agreements or seller carry back mortgages. Foreclosed homeowners aren't going to qualify for financing for a few years, but many are eager to enter into options that allow them to restore credit and work toward home ownership.
Another investment opportunity is rental homes. A lot of foreclosed homeowners are emotionally scarred from the experience and have no desire to ever own a home again. Renting to people that have previously owned a house can be beneficial because they are used to conducting general maintenance and usually aren't as needy as non-homeowners.
Of course, it's imperative to engage in due diligence to minimize risks of letting in bad tenants. It's best to hire a lawyer to execute legal contracts whether offering rental or rent-to-own properties.
Real estate investing always has been and always will be a gamble. Investing in Vegas properties might be the biggest gamble of all. Investors who are willing to toss the dice could come up a winner, but should only invest as much as they can afford to lose.
We invite you to peruse our Las Vegas real estate market article library. We cover topics of the pros and cons of buying Vegas properties, buying bank owned foreclosures, HUD housing grants, and tips for buying Fannie Mae Homepath properties.
Published on July 19, 2011 at 03:09 AM