All Forum Posts by: Dan Mumm

Hi Manoj, welcome to the forum. Here are my thoughts

1. What’s your bold/weird/sensible prediction for the Las Vegas RE market? I’m interested to know any latest developments in the area and how it might look in 2020 and beyond.

>> As previously pointed out, pricing has increased year of year every year since 2012. We saw a slowdown in the rate of increase in 2018 and 2019, but inventory levels still remain very low compared to national averages (2-3 months vs 6 average). Most people expect Las Vegas to outperform most other major metropolitan markets in the USA in the long term. Short term of course is volatile and difficult to predict, especially with an election year coming up. My guess would be for the market to remain relatively flat.

2. Any good RE agents and local team that you can refer?

>> I'd love to apply for the job. I'm one of the top agents in town and am very investor-friendly. As an investor myself, I understand the nuances and specifics of the game. I'm also connected with a few wholesalers in town which can be a rich source of deals. Since I am doing a lot of business (~100 transactions per year personally) I also have a good volume of pocket listings and probate sales which are not on the market yet.

3. I’m looking at 4plexes in LV mainly for cash flow reasons. Is there any other strategy that would work out better in this market? I understand everyone’s case is different but I’d like to hear your story! :)

>> Fourplexes here are almost exclusively in C/D (high crime) areas with poor tenant profiles, high turnover, high vacancy cost, and high eviction/late payment probability. Unless you are a seasoned investor who is familiar with this investment vehicle, I would highly recommend avoiding. Vegas is difficult to invest in currently due to the rent/price ratio so I understand why you would gravitate towards this to get decent cashflow, but going to a lower quality asset to salvage cashflow isn't the best idea for a new investor. You are better off spending the time/resources to find a somewhat decent cashflowing deal in at least a decent area. See point #2.

4. Finally, what are some zip codes you’d completely stay out of in this area? And are there any ‘good’ zips for 4plexes here?

>> It's illegal for me to answer this question as a licensed agent, but you will likely want to look at a crime map which I'm happy to furnish for you. A face-to-face meeting could be beneficial to review all of these questions in further detail. 

Many thanks in advance!

@Bill B., you completely misunderstood my point. I was making an argument for a general "rule of thumb" of rent to price ratios FOR COMPARING PROPERTIES WITHIN THE SAME MARKET. 

I thought it was fairly obvious you wouldn't use the same rent to price ratio to shop properties in different cities. **This doesn't mean rent-to-price ratios are useless though**, which was the OP's sentiment. Most people who are making a purchasing decision on an investment property, especially the newer ones, have decided on the market before they have decided on a property.

I'm not recommending 1% or 1/2 of 1%, obviously it is market dependent. For Vegas, I find .005 to .006 to be useful.

I slightly disagree with @Eric Fernwood. I think rent to price ratio is a good "first pass" litmus test to compare similar properties in the same market. 

If you are comparing properties in the same market, then the property taxes, state taxes, insurance, etc will likely be very similar.

For Vegas, .005 to .006 (rent to sales price ratio) is a good first pass to see if there is any possible deal to be had. Usually comes out to a 2-3% cash on cash with 20-25% down. Anything less than 1/2 of 1% is a definite pass.

Hi Gerald, if you want to stop in the office while you are here I'll be happy to give you more specific guidance and direction. I am a buy and hold investor with multiple properties here and also a full time active Realtor. Let me know. 

Welcome to the forums @Mahmoud Khairallah. For what it's worth, I am working with a developer currently to bring A-class multifamily product (2-4 units) to the Vegas market since there is a sore lacking of it here. Message me if you are interested in this, it will work perfectly for house hacking. 

In the meantime, you could try splitting an SFR, but it will be the equivalent of having a roommate with only one kitchen. It will give you more babysitting experience than property management experience, in my opinion. Also, is your goal to become a property manager or successful buy-and-hold investor? Those are different skillsets. I own multiple properties and am a licensed agent but have never managed any of them. I would focus more on accumulating enough capital or finding creative financing to get your first deal rolling without house hacking. Unless you are willing to tolerate a much less than desirable area :)

I agree with most of the sentiment behind Ran's posts. 

Hi Armel, happy to help with a solid recommendation. Will message you. What do you need an attorney for? Most transactions don't warrant one here.

I'm a local Realtor and investor in Vegas myself.

Personally, I hate AirBNB as an investment vehicle...

Every method can work if you do it right, I get it, it just isn't my thing. AirBNB attracts the get rich quick'ers and isn't a long term sustainable strategy for building a lot of wealth. It's active income unless you pay someone to manage it, and then the returns get significantly reduced. Plus, you can't do it in ANY home with an HOA (vast majority of 1990+ homes here).

Even if it's managed for you, having 160+ different groups of people going in and out of your house - mostly younger demographic more apt to have parties and do drugs, etc - is bound to create some headaches.

If you're a young 20 something looking for a side hustle and have the time to manage it, go for it. If you have another source of income that you are working on building and want to generate passive income, not the best idea.

I know TONS of people excited about AirBNB who have never purchased a property. I know some who are excited who have owned one less than 6 mo - 1yr. I don't know anyone who's excited about it who have held them for 3 years+.

@Bill B. - love your posts and completely agree. A lot of recency bias and media sensationalism. The "hype" of a massive correction is probably having a bigger effect on the market than anything else.

Successful investors are able to make progress in any market condition. You can't sit on the sidelines and wait until the once-in-a-lifetime 20-40% drop. 

"Waiting" is never really a good strategy. You need to be active in all cycles to be relevant in down cycles and to have a pulse on what's going on. If you're not active in the market, by the time you know there is good opportunity it will be too late.

Hi Don, sorry to hear about those experiences. I haven’t heard both sides of the story, but from what you wrote it appears the PMs were not the most professional or engaged. If you want a referral of one I use for my own properties, I’m happy to provide. May be a good idea to interview 2-3 before deciding this time. I have never had issues like this. 

I'm also looking for a good investor meet up that is not a pitchfest... let me know if you  come across anything good.