All Forum Posts by: Bill B.

@Jeffrey Leung 

Las Vegas isn’t landlord friendly to you? It MIGHT not be the most friendly but I put it in the top 10%. 5 day pay or quit and then the constables if they aren’t gone. In almost 20 years with 12 properties I’ve had to post two pay or quits. One paid, one vanished so maybe someone will say they’ve had horrible experiences but I doubt it would be government caused. What made you think it wasn’t landlord friendly? In many ways It is slowly following horrible California examples, but it’s resisted most of its real estate ideas. 

Las Vegas is way more expensive than 5-10 years ago but if you live in California you’re choices are vegas, Phoenix or far far away.

@terry Lao

sorry terry, figured you’d be able to sell them for at least $100k per unit. 5% 30 year loan on $95k is $510/mo. Could you seller finance them for $100k with $5k down? (If they are paying over $550/mo rent they could afford utilities.) you could play with interest and sales price to make purchase less than current rent. 

I did my bulk refinancing right. I have 2 x 4% 30 year loans, some 3.75% 30 years and a couple 3% 15 year loans. 

Are the utilities higher because it’s a 4plex? My water is $30, sewer is $20, garbage is $15. (2400sf single story with a pool but just two adults in it.)

$150 per unit seems like a lot of HOA. Do you charge your tenants for any of those utilities or just charge higher rent and advertise that it's all inclusive?

Have you looked in to/is it possible to take one of your fourplexes and separate it in to four condos and sell the units separately?

I get what you’re saying about the commercial loans. I ran in to the same thing when I was offered a commercial portfolio loan wrapping 10 mortgages in to 1. They just glossed over how it was 30 amortization but callable every five years.

I kept asking about what if there isn’t any affordable financing when they called it due? What if I had paid off 80%. They’d just take all the properties. 

I didn’t see a way in to those 12-50 unit multis that didn’t put all my money at risk when the loan was called except doing a 1031 with enough paid off sfr to pay for it in full. I have heard lately about Fannie and Freddy Mac small balance loans. Supposedly non-recourse, fixed rate, 10+ year loans. 

@Terry Lao

Hey Terry,

On the way to lunch today I noticed a couple different blocks and blocks of small multis on Decatur. Then I remembered to talking about joining the HoA for your fourplex. Is that the kind of fourplex you own? One of 10-50 identical ones in a group? If so, how is it different than owning a traditional stand alone fourplex? (What does the Hoa cost and what do they do for you? Any additional differences.) to be honest I never looked at that kind of fourplex only stand alone. 

Thanks

-B

@Robert Adams

@Account Closed

Thanks for the info terry. I’d love to see some of your properties and even areas/buildings you’d consider next time you’re in town. Keep me in mind if you find something a little larger you’re interested in. 

Ps. Clark county was second fastest growing county behind maricopa (Phoenix)

@terry Lao @jennifermatsumoto

1 in 1999 and 1 in 2001. Both of which almost tripled 6-8 years then dropped to about 90% of purchase price.

1 in 2009, 1 in 2010, 4 in 2011, 1 in 2012, 1 in 2013, 2 in 2015 and my primary in 2014. All of these have done nothing but appreciate. The 2009-2013 properties all doubled or more by 2015. The 2015's and primary are up maybe 30%. But none of these were bought with any skill or direct marketing or any magic. I made tons of offers on "dirty, empty, abused" MLS listings. Usually only about 10% less than listing price. I regret to this day the 4 I didn't buy at list price that have of course more than doubled in a few years. But I knew I had just bought "the same house" for $5000 less in better shape. So I lost $100's of thousand to save $5's of thousands.

You’ll have to ask Terry if I’m correct that there are no small multis,in good neighborhoods that are less than 30 years old, but I haven’t seen them. There was a super sweet multi at Durango and 215 (north side) that sat empty for 5 years after being built but I could never find anyone to talk to about it. But it looked closer to 20 units than 4. They are also building 3 massive multis by the Centenial library up north. 

There is empty land but it’s $140k for a 1/2 acre lot. Before you for utilities and if you happen to be the last empty parcel on the street you’ve just invited the curbing, sidewalks, sewers to be built and assessed to you and your neighbors, welcome to the area. Almost all the land for developers is being sold by the BLM. So it’s farther and farther out and more and more expensive. They’re really pushing the south west valley since that used to be barren wasteland. If the cheapest thing they can build, (excluding 3 story 1400sf disasters), is costing them $300k and selling for almost $400k with zero upgrades, landscaping, appliances, etc, I just don’t see it as an impact. They sold 3400 new homes last year and they were excited. That’s one month’s worth of sales. 

If you lived in the Midwest I’d say you have better returns there don’t buy in Vegas, but you have bad weather and little appreciation. Living in California I really don’t see you have many if any better options than Vegas. You could talk about Phoenix or anywhere else in Arizona but I consider them vegas without the shows, the restaurants, the gambling, the tourists, the excitement, and they tack on state income tax. You can probably fly to vegas for $50? Drive for the fun of it? Write off the trips. 

In conclusion: yes, you shoulda bought 5 years ago, but that’s true of just about every market in America. 

I’d have so much depreciation recapture and capital gains it would be a real gut punch. That’s when I’d hope to have a partner for a 20-50 unit building. (Selling all would be millions). The alternative view is Vegas prices have only dropped more than 5% once in it’s history. A 10% drop doesn’t scare me, even 20% would only take 2-4 years to recover. And if I’m just using the cash flow it doesn’t really matter what they’re worth. If I can’t get more cash flow for dollars invested I don’t think you could “scare” me in to selling to avoid price drop. 

Is there anyone on the planet that thinks vegas properties will be worth less in 20 years than they are now? Remember, prices have to drop by more than your ROE per year just to make your extra work worth nothing.   (Before selling costs and taxes) if you’re off by as a little as 2 years they better drop way more than 20%. What if they keep going up when do you buy back in? Oh yeah, and your new loans if you can get them are going to be higher interest rates. 

If you ask me today I’d say 80% chance I hold them until I die, only exchanging as depreciation runs out. 15% chance I exchange in to the afore mentioned multi, likely not in Las Vegas unless there are properties I don’t know about here. 5% I do something stoopid/crazy that I can’t even think of now. 

Last note as I was about to hit post. I was suddenly hit with the thought as Nevada slowly becomes California. (People run from California to Vegas then slowly change Nevada in to what they ran away from for some reason.) if the government here started coming after long term small landlords the way they are just piling on short term (Airbnb and vrbo) people that could push me out fo vegas market. Did you see the lady being hit with $65,000 in fines? She applied for a license, they denied her on a technicality, told her to re-apply. And then told her sorry, someone else within 600 feet is already doing it so you can’t. Ps here’s your fine. How about the $20 million lawsuit the Hoa lost that has $2 million in insurance. Will the homeowners have to come up with the other $18 million? Would my umbrella liability policy protect me for my portion if ti happened to me? Sorry if there’s are too many topics in one post. Feel free to read and ignore. :-)

@Terry Lao

I bought every SFR with 25% down with the requirement that they cash flow from day one after Managment of 8%.

Rent is about $180k $10,000 net income. Cash flow about $7700. but the “Win” is when it shows up as pretty darn close to a taxable loss after depreciation and  “general expenses” phones, internet, newspaper, electronics. Things I MIGHT have even if I didn’t have rentals. My wife still has 2-3 years left at the hospital as an RN. I quit “working” 10 years ago at 40 as I never made as much her anyway. 

Numbers above don’t include cash flow negative but income positive Minnesota lake front future retirement home with $440/mo hoa and 15 year loan. Far and away my most expensive property. (It adds a lot of depreciation expense.)

@Terry Lao

@jennifer Matsumoto 

Jennifer, @Terry Lao hit it on the head. You probably will make as much or better money on fourplexes it's just a lot more work. I've bougth almost exlcusively 2-10 year old SFR, in b+ neighborhoods without flat roofs, with garages. The fourplexes here are pretty much the opposite of that.

Apartment rent here can run $900-$1100 easy here so when you offer someone a garage, a private yard, their own laundry and a couple thousand sf for a few hundred more they jump at it. In 11 years I once had a week long vacancy between tenants but the previous Tennants stayed 8 years and I replaced all flooring, appliances and paint. 

I like the idea of Fourplexes in MN or most of the Midwest even with the bad weather as my comparison. They are brick and in good neighborhoods. They looked the same 20 years old when bought  and 20 years later when sold. 

I love the Las Vegas market and would like to get in to multi, but it will probably have to be in the Midwest even if I hate the weather. They have more fourplexes in “suburbs”. If you want to do a fourplexes in Vegas connect with Terry I get the impression he’s doing it well here which is really saying something. 

I’ve never seen a Woden cover, but anything that stops the sun’s UV rays from hitting the plaster solves the problem. A function the water usually performs.