HOUSE FLIPPING CAN PROFIT EVEN IF IT TAKES LONGER
ABC’s Nightline recently aired an interesting segment about house flipping, which included a magic number that’s probably never been seen before. Las Vegas house flippers would have been glued to their TVs if they’d stayed up late enough to catch Nightline because if authentically magical, it’s a good number to know. The segment was part of a series called “Realty Check.” This one was about new strategies in the “ever-competitive world of flipping.” The show started with some background about how expensive house flipping can be if it’s done in a hurry and on the cheap. Just slapping a coat of paint on the walls can result in an investment that languishes on the market, often until the asking price is reduced to an unprofitable level. The narrator stated that in the past, house flipping was often approached with the idea that the sooner a renovation could be completed, the better: “Get in, get out, move on.” We were shown how TV series like Flip It to Win It, Flipping Vegas, Rehab Addict, and Flip or Flop turned rehab projects into races against the clock: exciting drama for TV, maybe, but not necessarily a profitable real estate investment strategy in today’s market. Nightline interviewed one new house flipping Phenom with 28 successful house flips to her credit. She says, “I call reality TV unrealistic.” She considers that the goal should be to produce a quality result—a house that’s “the best in the neighborhood.” That may take months rather than weeks, particularly if you want to avoid blowing your budget. Time, plus meticulous attention to detail, good taste—and a magic number. It’s the magic number that has to interest anyone contemplating some Las Vegas house flipping of their own. It comes from an expert: RealtyTrac’s VP Daren Blomquist, who posited that the data reveal that “the more you put into a property, the more return you get.” Even if it takes half a year. But the amount you should budget only “Up until this magic number which is 23%.” The magic number? It’s 23%. The goal is to make the final product the best in the neighborhood so that a buyer coming into the neighborhood sees it as “their first choice.” That’s a pretty tall order around here. Las Vegas has some fairly steep competition for best in the neighborhood. And six months between buying a property and being able to put it back on the market could seem like an awfully leisurely use of investment capital. Without judging whether it’s truly magic or not, there is that 23% number. What was never explained was whether the magic number was meant to be 23% of the asking price, 23% of the purchased price, 23% of purchase plus rehab costs…Or 23% of something else. Still—it’s nice to know there is a magic number. If you have been thinking of undertaking some house flipping in Las Vegas, or even readying your property for the market as-is (23% of $0 is $0); the New Year should be a great time to get going. Give me a call!
WHY A LAS VEGAS SHORT SALE CAN TAKE A LONG TIME
The term “short sale” has been misleading people for decades. Despite the name, it’s a term applied to transactions that often involve a lengthier-than-usual sale process. A Las Vegas “short sale” is named for the financial aspect of a sale rather than the length of time it requires. It’s anything but a shortcut. The ‘short’ in ‘short sale’ describes a sale at a price that comes up short—is less than the full amount owed on a Las Vegas home loan. As you’d guess, whether a bank (or any mortgage holder) accepts such a sale is a decision that is up to the lender. Why would a bank choose to move ahead with a short sale instead of holding out for the full amount? After all, if a borrower is unable to pay, it’s hardly the bank’s fault. You might think that it is always in the bank’s interest to hold out for full repayment and to take possession of a mortgaged property whenever that doesn’t happen…but in reality that’s often not true. In the real world, the bank will lose money in either a short sale or a foreclosure—but the latter is often more expensive, since it requires the bank to do the expensive work of repossessing and selling the property. To a distressed homeowner, a short sale is an opportunity to close accounts on better terms. Instead of weathering a foreclosure, which would result in a major strike on his or her credit record, if the bank will agree, it becomes a joint resolution between the debtor and bank—and that doesn’t just sound more amicable. But getting the lender’s approval is where the delay issue usually crops up. The steps needed for the mortgagee and the bank agree to sell the home at the lower price vary. They can involve submitting a buyer’s discounted offer, or the borrower was convincing the bank that a short sale is warranted—usually after following procedures spelled by the bank. The bank can (and usually will) reject a short sale proposal or offer if it feels more money can be gained by foreclosing. And it can take a while… It may sound like a happy solution for homeowners with financial problems, but among other drawbacks (for instance, there can be tax issues), the “a while” it takes to close a Las Vegas short sale can be between five and seven months! For patient (or even better, very patient) buyers and sellers, a successful Las Vegas short sale can yield the best of a bad situation and an unmatched bargain. There are endless variations for how any given short sale can proceed, so having an experienced REALTOR® in your corner is always a good idea…and calling me is the way to start!
DOUBLING YOUR LAS VEGAS REAL ESTATE AGENTS EFFECTIVENESS
One of the most effective ways to maximize your chances of achieving the best residential real estate deal possible lies in your ability to partner effectively with your choice of Las Vegas, real estate agent. Your agent is your local guide through the complexities of Las Vegas’s market—your assistant, tutor, and trusted right arm in the enterprise of buying and selling a residence. It’s your Las Vegas agent’s job to make the team an effective one—but for all parts to truly work as a unit, some basic elements should be in place…and clearly understood by everyone: For prospective buyers, when your real estate agent fully understands your search criteria, the end product is a more focused search that yields the intended results most efficiently. It will conserve an under-appreciated asset (your patience)—and free your schedule by eliminating properties that aren’t right for you. Shopping for a home can lead to a bewildering jumble of options. Simply searching online for properties or driving around likely neighborhood choices looking for “For Sale” signs is an inefficient and time-consuming stratagem. What’s more, tapping into a Las Vegas agent’s comprehensive understanding of the market—past and present—makes you much more likely to unearth the best value/price offerings as they become available. For those who are selling a Las Vegas home, an experienced agent wades through less-than-serious inquisitors, keeping you from getting bogged down with fruitless showings or unreasonable offers. A move into an unfamiliar area comes with a certain level of risk. A trusted agent equips you with the insights you would otherwise be missing. It can mean the difference between landing your dream property and buying into a subpar situation—one you might regret for years to come. You only need imagine buying a home during the warmer months only to be blind-sided when access becomes iffy during the rainy season. An agent will have a more complete understanding of the benefits and disadvantages of all of Las Vegas’s neighborhoods—as well as the ability to help you make an informed choice, irrespective of when you are available or ready to buy. Establishing a candid relationship with your Las Vegas real estate agent will not only afford you a buying or selling experience that’s as untroubled as possible, it will also provide you with a resident’s comprehensive knowledge of all the local factors long-time residents take for granted. Buying or selling, I hope you will consider giving me a call for a no-obligation chat about the current market!
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