Craziness in Las Vegas market or just me??

Question

In the past month I have visited, analyzed and submitted multiple offers for rehab properties in the Las Vegas area. Some of the properties have sold, and for much more that what would seem reasonable. Being eager to get my first flip, I'm only planing on making $15-18K profit. I would like to share a few of them and get some feedback or advice from more experienced investors.

This property is in North Las Vegas in an area I would rate as a C+ area, consisting of mostly older homes built in the 60's and early 70's with nice size lots, for Las Vegas area, around 6,000 sq/ft.  These are the numbers I came up with for this property. The house was listed for $99,900, but in need of repairs and updating and had a pigeon infestation in the roof. The tile flooring did not match throughout the house, the grout lines were not even, and some areas around the edge of the time had almost 2" of grout instead of cutting a piece of tile for the edge. I learned that this property sold in December 2016 for $ 48,000 and was listed back for sale, with no work done at all in January 2017 for $ 99,900.

List price $ 99,900

ARV - $110,000

Rehab - $12,000

Closing costs + interest $10,000.

Offer - $ 70,000

Sold Jan 31st (13 days on market)  $ 94,000

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The next property, only a few neighborhoods away, was built in 1959 and was obvious it had never been updated at all.  Still has the wood paneling, yellow and brown carpet, original kitchen cabinets and wood countertops, original windows, currently no heating system.  This property mostly just needed a facelift but looked pretty bad.

List Price $87,500

ARV - $105,000

Rehab - $ 20,000

Closing cost + interest $9,500

Offer $ 60,000

Sold Jan 31st (Within 30 days on market) $ 85,000

Jay Hinrichs · Answer

we bought 2 sub 150 flips in the last 10 days that had nice margins.. it can be done.  none were off market..

Robert Rayford · Answer

I agree with @Lee S., Such a thin margin is really cutting it close for a first time flipper. The $150k and under market is on fire right now in Vegas. It seems that every flipper entering the market  wants to start out at the lowest point to help minimize their risk. With the rents going up at the current rate the buy and hold investors are reducing the inventory. I see a dramatic change and shift in the low end market since this time last year. There are homes on the market that would not sell for half of what they are selling for now, last year. I played it smart last year and bought as many properties as I could, boarded them up and started rehabbing as the neighborhoods increased in value.

Lee S. · Answer

I'm  assuming both these are listed on the MLS.  The first one sounds like a wholetail deal, investor bought it for 50% as is value and immediately listed it for 100% as is value.  The reason most intelligent investors buy off market is because it allows you to buy at a discount.  When buying from the MLS you're not just competing with investors, you're competing with buyers who want to rehab to live in and they don't care about profit.

I've only offered on one MLS property so far and was out bid by exactly this type of buyer by 80k.  Whatever, next.

Offer your number and move on.  I may put in an offer on another currently listed house.  I've rehabbed a similar house so I know my costs.  My offer would be 55% of list.   Will I get it?  99% unlikely.  I'm a Realtor so I'll save myself the time of writing the offer and make a verbal offer to the listing agent. I'm going to let the owner suffer for a while with their high price (already been listed 4 months) because nobody will buy it at it's current price.

Last piece of advice, I would not recommend being eager to do a first flip wth a thin profit margin.  That thin profit margin could easily turn into a substantial loss.  Let the experience guys do the thin deals, they know the numbers and realities better.

Jesse Tsai · Answer

@Jason E.

I think your ARV on the first property ( Siler) is a bit low.  A model match comp sold for $120k with a 2k concession.  Nonetheless, the buyer did pay a price that would likely be unprofitable if they sold today for 120k repaired.

On Emmons, I think the buyer got a descent deal, and I would have purchased it around that price range.I think the buyer based their purchase price on an ARV of around $135k

There are a couple of comps that support that price, including 1713 Arther, 3201 Tonopah, and 2617 Reynolds.In addition, that neighborhood has an absorption rate of about 40 days for properties that size.

Phillip Dwyer · Answer

@Diane G. In your analysis, how many sold in the past 30, 60, 90 days?  The number of listings by itself does not tell the whole story.  You need to compare it against the absorption rate to find out how much supply is really there.

Robert Rayford · Answer

@Diane G.. What @Jay Hinrichs and I are referring to is properties that can bought at discount which can be rehabbed, and resold for a satisfactory ROI. Just running a spread on the MLS you are not weeding out the newly rehabbed, extremely distressed (tear downs), over priced and so on. Must compared apple to apples.  @Jason E.  has stated above he is interested in flipping properties in Vegas. Although there are some properties listed on the MLS that will produce a return for a flipper, most are listed to high and to deteriorated to turn a decent return.

Diane G. · Answer

Just ran MLS... in the range of $50K to $189K, there are 890 listings on MLS.... I am NOT seeing how that can be a "tight" market with so many sellers.....What did I miss?

Jay Hinrichs · Answer

@Jason E.   my point is you have to dig in... I have had maybe 5 socalled wholesalers tell me they are going to send me deals. NEVER ONCE GOT AN EMAIL of  deal .. or even a NON deal.

so my point is in that market you really have to dig your heels in and find them on your own

I am not saying your looking for a handout.. just commenting that the deals are tough and no one is going to just lay it in your lap

Craziness in Las Vegas market or just me??

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