All Forum Posts by: John M.

I owned three properties here in Vegas up until a few months ago when I decided to sell two, specifically because of this issue....basically I decided I am comfortable owning one property here, but not three.

It seems crazy to me that I am even having to consider something like this because I love living here and I was perfectly happy with my properties, but the reality is this is a rapidly evolving situation and we have never seen anything like this before, and there's really no way to predict an outcome or even a timeline since it seems to change almost daily.  And there's so many variables aside from just the water itself, like politics in multiple states, multiple potential failure points (Lake Mead/Hoover Dam, Lake Powell/Glen Canyon, etc), water rights of multiple competing stakeholders with often conflicting agendas (upper basin vs lower basin, farmers vs commercial non-farm users vs residential users, etc.) then there's the Department of the Interior which has ultimate authority over the Colorado River.  Any agreements or solution other than cutting usage which doesn't seem to be happening fast enough by all stakeholders, would take years if not decades to get approved, funded, permitted, constructed, etc (i.e. desalination, piping water in from elsewhere, etc), and there's no solution even on the table other than wishful thinking.  So thinking that "they" (the government? scientists?  Elon Musk?? investors?? the casino cartel?? who??????) are surely, certainly, working on something in the background that us common folk aren't enlightened to that will magically make a solution appear out of thin air and make all of our problems go away - is probably not a good idea.  So at this point I think most people are just crossing their fingers and hoping that this winter and next we somehow have enough snowpack in the upper basin watershed that it buys everyone some time.  So far this winter has been wet/snowy up north so that's great and more is coming but we've seen these "one-hit wonder" winters every few years where the following winter we're back to bone dry and the drought continues, worse than before.

Anyway as I said I am still ok owning one property here so I am not going anywhere, but diversifying is never a bad thing especially when there's something this uncertain hanging over all of our heads for which really there's no playbook or historical precedence to use as a guide.  My 2 cents...

LA, OC, San Diego, Phoenix and other nearby cities are also dependent on Colorado river water so it's not like Las Vegas is the only city that would be impacted. 

That said, desalination is increasingly being used to augment other water sources such as aquifers and snowpack in wetter years and is already being done in parts of California.....so it's not like the region is going to dry up and become uninhabitable anytime soon.  However, with less total water available it cannot be taken for granted, at least until a few wet winters are able to replenish snowpack and take some of the pressure off.

A couple years old but article below in desal:

https://www.wired.com/story/de...

I think the situation is concerning but I also think we will adapt and manage.  We have no other choice.

Well the problem with STR is that you can only do that in the condotels or possibly in Henderson, otherwise they aren't legal in Clark County. But if you think the over the longer term the rents are going up faster than HOA assessments (which I do), then eventually they will be higher than the mortgage + HOA. The biggest portion of the payment will stay fixed (the mortgage), so your variable costs shouldn't grow faster than rents, of which the entire payment is variable and at the whims of your landlord. That's what I am banking on anyways, and why it's always better to be a landlord than a tenant if you can.

I do agree as a rental it may not make much sense right now since you can rent a unit for about the same payment as if you buy with 20% down. So there's no cash flow with the HOA assessments. That said if I look a few years out, I don't know about you guys but I think LV rents still have a lot of room for growth so over the longer term I think they will cash flow because I think rents will increase at a faster rate than the HOA which in theory should not increase more than the rate of inflation if the HOA board is doing their job from a financial perspective. Rents on the other hand are more subject to supply and demand and I don't see that changing any time soon.

Anyway like I said in my previous post since I plan to live in the unit myself for awhile so just that in itself is better than renting for the same amount of money... at least I am building equity for myself and not my landlord, lol.

Good perspective, I would definitely look at each building on a case by case basis since they are not all created equal and some of them I think are absolutely terrible "investments" like the condotels (If you can even call them that) and they would be hard to live in full time.  The Condotels I would definitely avoid, and anything right on the strip I think is too hard to get in/out of. 

Based on my research I personally think Juhl, Allure and One LV are the buildings that have potential, since their locations are a little easier to get in/out and their HOA fees include enough of things you would need to pay anyway no matter where you live (trash, water, landscaping/gardner, gas, sewer, gym, possibly cable and internet). The SFR I was living in I was paying over $300 a month just for water, lawn service and cable and internet alone, and you still have to be prepared for large expenses (i.e. new HVAC, roof, plumbing, etc). Those expenses don't just disappear because you don't have HOA assessments and I think some people just don't sit down and actually look at what they truly spend for all that other stuff.

I think the reason I am more open minded to this right now is that since I do plan to actually live in the unit myself for awhile (who knows how long), and from a lifestyle perspective I love having an amazing gym right on the property, a resort pool, the views, and not having the hassle of that other stuff like dealing with flaky contractors, getting estimates on repairs/maintenance, etc. My time is valuable to me and I don't want to waste it on bulls**t.

I also think like you, and I prefer being in a HOA for all the reasons you mention. Obviously one needs to read the HOA docs, financials/budget and reserves to understand where the HOA assessments are going, but a well managed HOA can help maintain community standards which is good for property values and to the benefit of all homeowners.

I actually forgot to mention that I was looking at highrises back in 2017 (like One and Palms Place) and right around that time the prices got a big bump up, which many attribute to the announcement of the Raiders move to LV. I decided at that time to avoid them because I thought they appreciated too much too fast. I think investors got caught up in the Raiders hype buying them up thinking they were going to STR their units, not realizing that STR zoning is different between Clark County, City of LV, and City of Henderson. (Clark County doesn't allow STR).

I think in 2017-2018 the highrises were selling at a premium, where I am thinking now they are selling at a discount. I really think that Covid social distancing scared people away from them for the past year, and since they had already run up in price into 2019, sales just kind of stalled. But now that things are opening back up and Covid will be behind us, and SFR's are now looking like not such a good deal after running up so high, that high rises could start seeing some new interest. That's my thinking anyway.

I always liked Grant Cardone's philosophy and have lived by it for the last few years.  For me it makes more sense to rent where I live and rent out what I own, because I like the mobility/flexibility to move when I want, whether because of a job change (or job loss), maybe I don't like where I live, don't like the neighbors, etc.  I just sleep better at night, and it helped a lot when Covid happened and I didn't know if I was going to lose my job and my w2 income.

I am actually going to be buying a place soon that I will be living in, but that's only because the rental market is so tight that I likely am not going to be able to find what I want or the price I want, and what I am buying is a pretty low payment because I am not over leveraging myself with debt.  If I lose my job the day after escrow closes I can easily pay the mortgage or move out and rent it for positive cash flow, plus I have rental income from my other rentals.  So it's really a pretty low risk scenario, and may not even be permanent if I turn it into a rental and go back to renting myself.

Grant's ideas work for me since I don't like to be permanently anchored to anything or saddled with debt and big mortgage payments on an asset that produces no income, so I think it's solid advice for some people.

So I am in the process of finding/buying a highrise condo in LV. I have always stayed away from highrises because I thought they were bad investments (limited appreciation, high hoa fees, and selling one can take months if not a year or more). But, I will eventually moving to LV and working remote full time, and since I am single I decided I would rather be in a highrise 247 then be in the suburbs in a SFR by myself. I like the social aspect of a highrise and the amenities and views would make WFH a whole lot better.

One positive about the negatives I just listed above that I have noticed the past 2-3 months of looking, is that with how crazy the real estate market is right now, the high rises do not seem to be participating.  Based on my research although sales are picking up, they are not getting bid up and are still sitting on the market for awhile and selling below list.  So it's easy to get a deal.  I think part of it is the remaining stigma associated with Covid and being around people, which eventually will fade.  So, I was wondering if this might actually be a really good time to buy one as an actual investment?

To my knowledge there are no new residential highrises planned in LV, and I am not even sure if the costs between land and construction to build now would even make it viable. So, it seems what's already been built will be it for now and possibly a very long time. So you have a fast growing city with huge demand for housing, limited inventory, and although highrises have a smaller pool of potential buyers than SFR's, people still need housing and if you can live or rent in a luxury building with all the amenities and security for possibly the same or even less price than an SFR or Townhouse (HOA fees included), why not? Most of the residential highrises in LV were built within the last 12-15 years so they are newer, modern and have amazing amenities and still selling way below their peak, so it seem like based on price per sq ft right now they are a good value and selling at a discount vs the SFR/Townhouse market which are now above their previous peak.

As I said I am planning on living and mine and not rent it out so as long as I am happy there I don't care too much what the market does.  But, it would be nice if I could make some money too.

Compared with other large metro areas which seem overbuilt or at least have a lot of supply vs demand (i.e. Miami, Chicago), Vegas seems like it could be a very good market for potential high rise appreciation in the future because there just aren't that many here.

Any opinions on this topic?  Would be curious to see what others think.

@Jeremy Lee

Was reading with interest your home buying adventure.... wow that is insane.  Just curious are you renting right now?

I am renting right now in Irvine and was toying with the idea of buying a place.  But even though I have a good income and could probably spend up to $800k by myself, I don't have enough liquidity for a 20% down payment and I don't want to go into a lot of debt.   And after reading how crazy the market is right now, I am thinking I just don't want to get caught up in FOMO madness, and the better choice is to just do nothing and keep banking my paycheck.

What you said here:

"I think over time, more and more people (particularly middle class) will get priced out of living in CA in general and the ones left will be the ultra wealthy, upper middle class and the poor/homeless"

This is a pretty sad commentary considering I was born and raised in LA and lived most of my life in SoCal and your above description sounds like a third world country, not the California dream :(.  But this seems to be happening all over the place and you can't deny it's happening.

I would love to do another deal, but real estate in general all over the US seems kind of toppy to me... so not sure how I feel about it.