All Forum Posts by: Terry Lao

@Diane G.

This post is 3 years old, and following up on the condition of SF. Downtown SF has gotten worse to the point homeless everywhere, tents, drug usage, SF city council and police doing nothing or can't do anything, shoplifting, etc. The biggest travesty or opportunity are the historic commercial buildings selling for 60-70% discount of FMV due to no tenants and work from home policies.

Is SF going to recover or can it recover? I think it can but will need new leadership/conservative no nonsense policies like arrest shoplifters. Promote business friendly policies and enforce the law.

Rents both commercial and residential going down. Would you sell your (4) rental properties or wait it out? Would you invest now in SF or still further way down?

Terry

Carlos

I bought between 2012 and 2016, which at that time was really good in hindsight. But still did not lessen the risk as there is always risk. You have to crunch the numbers and see if they make sense.

There are around 40 4plexs currently in Las Vegas, and can be viewed on any MLS website like Zillow or Redfin. Most 4plexs are in C-D areas, like east side. There are some near the strip off of Maryland and Tropicana. The price range is low 500's to 1M. You will have better chance to cash flow at the low end and raise rents to market.

The interest rate now is 7-8% for 4plexs. Calculate the loan payment, and other expenses. You could still get $500-700 net monthly.

Terry

Chii

Most 4plexs are on the east side, thus C-D property. There are some by strip behind, MGM Casino, off Maryland , and B-C property. Also, some upper northeast of Summerlin, B property. It all depends on price, condition, and location. The 4plex prices ranges from low 500's to $1M.

I think the closer you are to casino strip the better. Also, near strip is UNLV University.

Terrence

Chii

I would guess you are looking at SFR in Las Vegas, which there are over 4k listings. All or majority of SFR will cashflow negative. You are looking at the wrong type of property. You should look at 4plexs. There are only about 70, 4plexs available only MLS. So econ 101 tells you about supply vs demand, that 4plexs would be in greater demand due to less inventory.

Also, the financing of 4plexs is similar to SFR, but considered commercial once hit 5 units. The lowest 4plex in Las Vegas is around mid 550k, and highest just under 1M. If you purchase at 550k, with 25% down, you will cashflow positive around $700 or higher, depending if you bring up to market rents of 1200 for 2 bed 2 bath.

I know because I purchased 4plexs, and closely watch the 4plexs in Las Vegas.

Terrence

Kyle, you should look into a 4plex, as these types are very rare, maybe 72 available on MLS vs 4k SFR's. With 25% down, you can get about $700 positive net cashflow after all expenses including the mortgage.

Anna

I've been investor in Las Vegas since 2012. The more knowledge you have the better you are able to make an educated decision. If you are interested in the Las Vegas market, use zillow, redfin, or whatever search engine, to search the inventory for SFR, condo/townhomes, and multi's.

When you find the results? You will be amazed at the results for multi's.

Terrence

@Sean Zachary Agpaoa

Not having funds is definitely going to make things more difficult. It's always hardest to purchase your first property.

I am not aware of any multi-family being newly built in Las Vegas since 2013. The current cost per square foot to build is about $240. A typical 4plex could be 4000 sq. ft., thus 4000 x 240 =960,000, and you still have to buy the land, maybe another 200-300k. Let's say $1.25M to build a 4plex in average area. You have 4plexs in Spring Valley for $550-600k. Conclusion - no developer/investor will build at $240 per sq foot. Back in 2014, when square foot to build was $100, still no developer/investor will build. This is why you will not see any new 4plexs. Now, rehab/flip an existing 4plex, done all the time, and price sensitive. 

Las Vegas median SFR last month Oct'21 was $410k. A few days from end of November, and I'm hearing that Nov'21 will come in at $420k, up 10k for month, and up 21.7% YoY. Unbelievable gain for 2021.

For example, if you decided to wait in Jan'21, when median SFR was $345k, then now up another 75k. If you wait, then it might work against you. If you pull the trigger, it still might go against you. However, run the numbers, and that will tell you what to do.

@Bill B.

Always nice to hear from you. 

Here's some facts about 4plexs, and your observations with you plan.

Facts.

1. I just did a search of true 4plexs (2bed/1-2 bed x 4) on Redfin, there are currently about 28 available listings on MLS. SFR about 3073. Condo/townhome about 924. Low inventory across all of Las Vegas, but extreme low for 4plexs. What does econ 101 tell you?

2. Most 4plexs are older and in bad areas (east and north). In my opinion, the best area is near strip, which is also near UNLV.

3. Rents going up with inflation, even 2bed/2bath getting $900 per month, on east side.

4. For $400k, it is the lower end of 4plexs, and on the east and north Las Vegas. Are you willing to live in a bad part of Las Vegas?

5. For 2022 annual appreciation/growth, the experts are predicting, zillow 13.6% increase, goldmansachs  16% increase, fannie me 7.9% increase, core logic 1.9% increase, mortgage bankers assoc -2.5% decrease, redfin 3% increase, michael uber 10% increase. 

6. Your 400k by 2024, may or may not pan out. Why are you waiting? Rates are going up.

My last post, was LV median SFR Feb'21 at 355k. As of Jun'21 median SFR at 395k. Inventory up slightly to maybe 1.5 months, but still short of 6 months for normal buyer and seller balance. Nothing significant in forbearance that will produce large increase in inventory.

I think the trend of increasing SFR median price will continue to increase till end of 2021. The Fed said will not increase interest rates until 2022. There is inflation and pressure to increase rate to fight inflation. Fed says it is " transitory" or temporary due to supply chain constraints. But it seems more permanent and across the board. How can you print $10 trillion and not have inflation?

I expect real estate prices to keep increasing until Feds increase interest rates. About 1% rate increase equals 10% reduction in price.