All Forum Posts by: Robert Adams

If you have debt service it is very difficult to create positive cash flow unless putting a huge percentage down.

Michael,

Couples thoughts.

1. If you live in your primary residence for 2 of the past 5 years you can sell and realize your profits tax free. One of the largest if not THE largest tax savings offered to homeowners.

2. If you do want to hold the first home and turn it into a rental, the primary financing terms you have in place will remain. This is a great strategy to get awesome terms on an investment property that you would ordinarily not be able to get. If you were to buy an investment property out of the gate without it being a primary first your terms will be much worse. Usually requiring a min of 15% down, higher interest rates etc. The other thing is your interest rate is probably lower since you bought a year ago. Rates have gone up since then which will hurt cash flow as well.

3. In a perfect world I would recommend you doing the following.

     A. Do a no cash out refi (or recast) on your current home once you have over 20% equity. Remove the Mortgage Insurance and get the lowest rate you can as a primary.

     B. In the meantime save as much cash as you can for a down payment on your next primary.

     C. Once you hit the 2 year market on the first home (or once you have enough cash to buy your second home) purchase a second primary and move into that one.

    D. Then hold the first primary/now rental investment for 2.5 years after you move out. Now you will have 6 months to sell this home and still keep all the gains tax free (Up to $250k).

    E. As soon as you have enough equity in the second primary to do a no cash out refi (or recast) to get rid of the MI do it again. If needed you can then put some of the funds from the sale of the first one to get to 20% and then remove MI. Hopefully rates won't be too high but its hard to say because this will be a few years down the road.

As others have said no one has a crystal ball but the market in Vegas is still going very strong for now. Once you go a few years out it becomes hard to project as there are too many factors that play into it. At a bare minimum stay put until you hit the 2 year mark for the tax savings.

Hope this is helpful.

I went to high school with Brian Hartsell i have heard many good things. I have also know Phil Dwyer for many years and know he is on point.

If you need a third option we have an in house property mananager at our office i would be happy to introduce you to as well.

Either way best of luck with your properties.

@Phillip Dwyer I am hoping that many buyers that were getting frustrated with the bidding wars etc will now have the opportunity to get some deals locked up which would support your statement of increased closings following the increase in inventory. 

Great time to be an investor in Vegas...with inventory on the rise it should open up a little more opportunity as well. Ride the wave while the getting is good.

@Jay I agree, but I still like to get into the actual numbers before putting ink to paper. I just like the 50% rule as a quick estimate when comparing a high volume of properties against each other. Much less time than getting into the nitty gritty on a long list of homes that most likely won't come to fruition. 

Vegas is much less of a seasonal market than most areas of the country but we do still have slower months than others. Early spring to mid summer is the best. However late summer and fall are just fine and a close second. The worse months are late November and December, but I use the term worse months loosely as the last few years have been so busy we barely see a slow down in those months. 

With all of that being said if you listed it now you would not have a problem selling it. If you want to wait until early Spring you can gain some equity in the meantime as the market is still appreciating rapidly.

Best of luck with you sale either way.

I agree the 1% rule is not applicable in Vegas. Even if you buy an off market property with deferred maintenance and less than quality tenants...once you account for rehab and vacancies due to higher tenant turn over you will be less than 1%. That is more so for other areas of the country. 

The 50% rule Bill was referring to can be used in Vegas as a very rough rule of thumb but before purchasing any property you should get the actual fixed costs and use reasonable estimates for variables like vacancy and repairs. Once you have a property inspected you can get a much better estimate for repair costs as you will know if it has been properly maintained or if there is a lot of deferred maintenance. Typically in Vegas if it passes the 50% rule the actual figures will be even better (although this is not always the case). The 50% rule tends to be more conservative than the actual numbers. 

Not sure about events but always looking to network etc. Enjoy your stay in Vegas!

@marcus i agree with most of what you said. I would add that new builds in Vegas have been adding inventory to the market for several years now (as early as 2012 but in much higher volume 2014 to present). With that being said I agree most are not 300k and below so it's not helping the affordability issue. With costs as you mentioned increasing i dont see this issue getting better soon.