[CHOP79]

I'm looking to buy and hold for about five years as well. It's a tuff call but I can't imagine prices not being stabilized within 5 years. I'm looking at a place that's down 44% from its 2006 selling price. My instincts tell me with at least a five year outlook we’re close enough to take the leap. I’m just keeping a close eye on the financials. That’s going to tell the tale of the mortgage recovery IMO.

[olecapt]

Originally Posted by Ron_in_the_House

Sorry.

Here it is again.

I'm looking to purchase a house as an investment and i was wondering if that is a good time?

Market is near the bottom. Probably not there yet. When it gets there it will likely hold until the foreclosure problem has run its course. At least another year maybe two. Perhaps a small uptick in the spring but I would not count on it.

I'm looking at it as a long time investment. 5 years from now.

I would expect some growth in that time frame. I think we will get a 10 to 15% pop when we run out of foreclosures...than 3 or 4% per annum after that.

I have a few questions and i will appreciate any given advise.

1) Is it a good time to invest?

You always want to buy at the bottom. We are pretty close to that now. You can however likely wait a long time now with little probability of any large change in value.

2) How hard it is to rent a house in Vegas? and what i can ask for on a house that worth a 200K ?

Houses rent easily in Las Vegas and are likely to get easier. The new build industry is flat on its back so there is little new stock coming onto the market. 200K house will rent between 1000 and 1200 depending on where.

200K is actually pretty high for a rental. I would try to get closer to $150K. The relative rent is higher on the smaller homes.

3) What do you suggest, buying a new house or a 2 house home?

INvestors should almost never buy a new home. Builder gets a higher profit than a normal owner. Surrounding expenses on a new home for rental can run 5 to 10% of the home cost. You need landscaping, window coverings some appliances. Better a resale which has all or most of these.

Duplexes are almost non-existent in Las Vegas.

4) Has anyone heard about Centex home? what is your opinion?

Volume home builder. Standard level product.

5) What is the property tax that needs to be paid on a house that worth 200k in Vegas

Figure 1% of the sale price. Actually likely to be a little lower than that.

6) Are there any other expenses that needs to be paid by the owner beside the property tax?

HOA fees..$20 to $100 per month on this class of home.
Property Manager. They ask for 10% of the rent. Most will settle for 6%.
You need some reserves for repairs...things break and paint/carpet is needed periodically.

7) in a scale from 1 to 10 how good it is to invest in vegas opposed to other places in the USA?

It appears Vegas will bottom first. An eventual strong recovery is likely but it may not be until 2010. It is probably as well fixed as any of the other SW markets and better than CA. How you rate it against places like TX or NC is beyond this sort of analysis.

I'm not from the US, so please excuses my poor english.

I will greatly appreciate any given advise.

Thank you,

Ron

You did fine.

[desertsun41]

Originally Posted by Ron_in_the_House

Thank you for your response. It is greatly appreciated.

You ask how i can expect to make 50K in 5 years. I'm not looking to take any mortgage on the house. I will pay cash.

I Know that i need to pay property tax on the house and i'm assuming that a house in price range of 170K to 200K can be rented in a price range of 1100 to 1300$

So detecting the property tax from it still leavs you with 900$ a month if not more.
I was wondering if there are more expneses on a house in the US beside the property tax that i'm not aware of?

It seems like a good investment to me. Am i the only one that looks at this this way?
If so, more people that have cash should look better and see that this is the time to buy.

It is not bad to make a 50 K profit in a 5 year time by doing nothing. It defently better then the 0% the give you in the bank those days.

Desertsun, I am from Israel.

Please share your thoughts with me.

Ron

If you are one of the fortunate ones to have that kind of cash you didn't obtain it by being dumb. You must now how wrong it is to pay cash for any real estate. Rather OPM (other peoples money) is the way to invest.

Try this:
Lets say you want to buy a $100K house. You pay all cash for it and it goes up in value 5% next year. Its now worth $105K and you made a 5% profit on your investment. Now lets say you bought that same $100K home but only put down 10% of your own money and mortgaged the balance. That is $10K you invested. In that same year time frame using that same 5% appreciation you now made a 50% return on your investment if my math is correct.

Much better this way. You still have complete contol over the real estate either way but you made a bigger profit by not paying cash.

Paying cash for a home is a very poor financial choice. Even if you have the money.

Another way of looking at it is rather then buy that one $100K home for cash, you should instead buy ten $100K homes by leveraging.

If course investor properties usually require 20-25% down these days but I was giving easy math ideas for you. So buy 4 properties and quaddruple your return.

And dont laugh at the appreciation example. There was a time we could expect our homes to actually go up in value rather then deteriorate like an chocolate bar in the desert blazing sun.

[airics]

well said desert... use others money.. you can bail if you have to.. originally i was dead set on buying another house a month ago, now i may wait a few more months... if you saw what what happening in cleveland, it would scare the crap out of you.. my friend started looking into hud homes (they are not that bad here, and the section 8 rules are strict).. first house was 70k, bank lowered to 35k, he offered 12,500 got the house.. second house listed at 32000, offered 8500 got it.... third house listed at 40000, offered 8500 got it, forth listed at 55000 offered 30000 got it, and finally last house listed at 66000 offered 22000 and got it..
mind you, these houses were not in cleveland or east cleveland, they were in suburbs.. they all need some work ($5k-$15k each) but think about how cheap this is...
I dont think a house in Vegas will ever sell this cheap, but the thought is down right scary..
sorry to rant....

[olecapt]

Originally Posted by airics

well said desert... use others money.. you can bail if you have to.. originally i was dead set on buying another house a month ago, now i may wait a few more months... if you saw what what happening in cleveland, it would scare the crap out of you.. my friend started looking into hud homes (they are not that bad here, and the section 8 rules are strict).. first house was 70k, bank lowered to 35k, he offered 12,500 got the house.. second house listed at 32000, offered 8500 got it.... third house listed at 40000, offered 8500 got it, forth listed at 55000 offered 30000 got it, and finally last house listed at 66000 offered 22000 and got it..
mind you, these houses were not in cleveland or east cleveland, they were in suburbs.. they all need some work ($5k-$15k each) but think about how cheap this is...
I dont think a house in Vegas will ever sell this cheap, but the thought is down right scary..
sorry to rant....

Airic - It would not be the first time that the best RE investment was way down at the bottom. The trick in Cleveland is that they can be rented and for enough to return a solid profit. I would count on no appreciation for the forseeable future. But if you can buy for 35K and rent for 800 that is really good RE. That presumes of course that the taxes won't be $300 per month or some such.

Normally a market with rentals out of keeping with prices will self correct very quickly - The rents drop or the prices come up. The RE business hates really good investments. But hell if it computes that is where you put your money.

The risk is what happens in some cities when the population drops and it becomes impossible to rent or sell.

Edit. Took a look. Cleveland looks way too good...I therefore don't understand something. Big high property taxes? Common to include some utilities in the rent? Very hard to rent anything?

[airics]

taxes are high, usually around $150 per month, water is usually included in rent..., not to hard to rent.. big problem is that ohio is a renter's dream.. it is very hard to get them out if they dont pay..... also the appreciation of the property may not be huge, but these houses were sold for 60-100k within 2 years ago...

[airics]

with the section 8 here, it has changed.. for a 3 bedroom you get about 650-700 per month.. if the section 8 person tears up the house, they are booted off the program and can never get back on it.. cities i am looking at are not ghetto type either...

[desertsun41]

Originally Posted by airics

well said desert... use others money.. you can bail if you have to.. originally i was dead set on buying another house a month ago, now i may wait a few more months... if you saw what what happening in cleveland, it would scare the crap out of you.. my friend started looking into hud homes (they are not that bad here, and the section 8 rules are strict).. first house was 70k, bank lowered to 35k, he offered 12,500 got the house.. second house listed at 32000, offered 8500 got it.... third house listed at 40000, offered 8500 got it, forth listed at 55000 offered 30000 got it, and finally last house listed at 66000 offered 22000 and got it..
mind you, these houses were not in cleveland or east cleveland, they were in suburbs.. they all need some work ($5k-$15k each) but think about how cheap this is...
I dont think a house in Vegas will ever sell this cheap, but the thought is down right scary..
sorry to rant....

I never seen HUD deals like that back in NJ. We bought homes to flip. We always looked at HUDs but rarely bid on them. HUD listed the opening bid at just about red ribbon deal. They fail to deduct for the work it needed and labor to complete it. Still a lot of first timers found them to be decent buys if they were willing to do the work themselves.

I honestly never found a deal with HUD homes. I sure did like looking at them though. Its amazing how some people live. The filth and the disgusting living conditions.

[airics]

tell me about it, amazing that some of these houses could be rentals

[orca17]

The prices are still falling. The only things selling are foreclosures.

This was confirmed by a friend of mine who owns a real estate firm here. I asked her if anything was selling, and she said only distress sales and cheap condominiums. She said that it is a running joke around the office that maybe this is their year not to make any money.