Please help! – INVESTING IN LAS VEGAS CONDOS?

Hi Levitt_Two,

You state that you are new to property investment ?? A couple of tips from my perspective…

1. Be VERY careful investing in the LV market…..there are some very bad area’s and without knowing exactly where your talking about…the price point you mention may give you some indications. Some area’s are riddled with crime and huge unemployment rates. Nevada has the highest foreclosure rates and is nearly double the next worst state Arizona. It also has the worst unemployment rates in the US. Combine this with the worst rental vacancy rates and your asking for some troubles as an investor.

2. Your looking at condo’s which means HOA fee’s. Do your research and you will find many HOA’s are going broke and the other owners aren’t paying HOA fee’s. Try getting any maintenance with a HOA that is broke and can only fund costs from higher HOA contributions from the remaining owners.

3. Your very unlikely to get any finance involved with a purchase price of $15K or even $60K. You might have some luck getting finance through a hard money lender but rates will be above 15% and on short loan terms.

4. If you do happen to be fortunate enough to get a tenant after waiting weeks (and in the meantime your air conditioning unit is stolen for the copper wiring), you face a problem with rising HOA fee’s and loan repayments from a hard money lender. All up it can turn what you thought was going to be a postive cashflow experiance into a nightmare that keeps sucking your money

I don’t want you to think I am negative or against US investment as I have invested in the US and plan to buy more. I applaud you for wanting to invest and give it a go but I’d hate to see you lose money on your first IP. Do some more research and look beyond the price point and promised gross/net return. Look at the basics such as unemployment rates, crime rates, past growth rates, where the population is moving etc. There are plenty of bargains in the US but also plenty of “dud” deals that nobody should touch.

Good luck on your endevours

Speedy Gonzales is spot on.  For a Condo, I doubt you would get finance from anyone just now and a foreign person would find it particularly difficult.  Most find that they need to raise capital on equity from home to pay cash in the US.  With the economy in the state it is, many Condo owners are walking from their mortgages leaving the Home Owners Association (HOA) with reduced fees (similar to our Body Corporate fees) so there is no money for upkeep, gardening, insurance etc.  Many others are placing tenants into their Condo's and some of these tenants are really pulling down the status of the place leading to the creation of a nasty piece of real estate.  A duplex, quadplex or single family home is a far better option in my opinion.  I know someone who has recently bought in Vegas and will ask if he has a Realtor that could help you.

speedy gonzales had some really good points. I have bought a condo in Las Vegas actually, and have researched the market there quite a bit. Be very careful with the North Las Vegas – where most of the cheaper properties are found, since that's sometimes almost a ghetto.

On the other hand, if you buy a nice condo and the HOA won't be close to a bankrutpcy, you don't have to be having that many troubles. I found a tenant after 2 months and it's now rented over a year, and I do get a positive cash flow each month.

On the other hand, it's impossible to get the financing for a condo from banks and in general it will be very hard to get even a seller's financing in this area.

That's also why I decided to buy the latest property in totally different market – in Kansas. ;o) Even though it might sound quite funny, the rental yields are more than double when compared to Las Vegas and the vacancy rates, unemployment etc. is all better there.
I have written an article about these markets and my experiences on my blog, if you would want to hear more stories..