6 FACTORS IMPACT INVESTORS LAS VEGAS RENTAL PROPERTY CHOICE
Just about any investor on the lookout for a promising Las Vegas rental property has a number of assumed criteria in mind—often arrived at without bothering to sit down to list them. Remember, this is already a successful individual, usually with ample business experience—and always with the financial acumen to be able to make a substantial investment. For them, creating a written decision matrix isn’t necessary. Still, there’s a lot of literature on the web offering opinions on what are the most commonly agreed-upon factors for choosing a rental property. Quite a few “Top 10”s. Going over them, it turns out that some are only slight variations on a single theme, so I’ve boiled them down to a “Top Six.” The first one is barely ever mentioned. It’s this: 1. Most investors have predetermined the price range that his or her Las Vegas rental property must fall into, but that can turn out to be a false step. If the goal is to garner the maximum return, it’s possible that some humbly-priced Las Vegas rental properties can actually turn a greater annual profit—even in absolute dollars—than some higher-end homes (particularly those that suffer extended periods without suitable higher-end tenants). So Number 1 is SET YOUR INVESTMENT GOAL. Cash flow return can be a very different goal than long-term property appreciation. 2. LOCATION LOCATION LOCATION. This is the one that combines a half dozen factors, variously listed as Neighborhood, Proximity to Jobs, Amenities (parks, malls, gyms, movie theaters, public transportation hubs, etc.), Crime, Schools, and even Property Taxes. This factor might be chosen for convenience, as when a rental property investor wishes to be able to supervise the property, or for an expectation of value appreciation in a Las Vegasarea that is gaining popularity. As everyone has had heard from time immemorial, L.L.L. is always important! 3. HEALTH OF THE PROPERTY. If the underlying structure and mechanicals have been intelligently designed and well maintained, this one is of no importance. If not, a thorough inspection with top-grade recommendations and cost projections is a must. 4. VACANCY RATES. The number of rental homes listed and the number of vacancies should be considered highly important in determining a promising rental property in Las Vegas. In newly expanding communities, sometimes you can spot a man parked near an intersection, clicking away on a counter as the autos pass by. He measures traffic to see if the volume is great enough to support a gas station, or market, or mini-mall. The turnover of rental listings—how long rental properties stay vacant from week to week—can provide guidance about the same kind of information. 5. COMPETITIVE MARKET. The average rent amounts advertised for comparable properties can be the decisive factor for whether a rental home investment makes financial sense. Of course, another factor that can make a big difference is the experience level of your Las Vegas REALTOR®. That’s key factor #6—and (I hope) where I come in!
LAS VEGAS PROPERTY BUYERS MAKE LASTING DEED LOAN DECISIONS
Home buyers direct a series of major decisions when it comes down to finalizing their town property purchase. Among the most important are two with decisive ownership and financial consequences: who will be the primary borrower for the mortgage; and who will be named on the deed? The answers to these questions are the opposite of the fine print details that few of owners ever need to concern themselves about. These cast defining roles in determining the eventual ownership of the Las Vegasproperty and in assigning financial responsibility for loan repayment. Whose Name Goes On the Loan? Determining who is to be the primary borrower may not be as simple as you would think. After all, one person might have the excellent credit needed to insure the best interest rate, while the other person currently brings in a higher annual income—providing the cash flow boost that enables a sufficient mortgage. It is often necessary for both members of a couple to sign on the dotted line to get a Las Vegas property financed. A loan officer will walk buyers through the process, explaining which combination will offer the greatest loan amount at the most favorable terms. Whose Name Goes on the Deed? It’s important to keep in mind that the deed is almost completely separate from the loan. Even if only one person signs for the loan, several people can be listed on the deed. Placing a name on the deed shares ownership of the property. That can be helpful in the event of an untimely death or to avoid probate during an estate settlement, but there can also be drawbacks. Since those named on the deed share in title rights to the property, that can empower them to prevent a sale—and also leave the property vulnerable to their debts. That’s why it’s important to be clear about all outstanding obligations before adding people to a deed, lest a pre-existing debt result in a lien being filed against the property. It’s also good to remember that until the loan is paid in full, the bank or lender also has an ownership interest, which is why the bank can take possession for non-payment. Making the Decision Making the most of your Las Vegas property is a continuing planning exercise that begins with these first ownership decisions. For individuals, as well as couples, , the multiple issues that come into play have financial and tax ramifications that merit careful consideration. Before buttoning up those final decisions, I always advise clients to consult with their accountant and lawyer to get the whole story—it’s a story that begins with your first call to my office!
LAS VEGAS REAL ESTATE WATCHERS NOTE RISE IN US JUMBO LOANS
Inside Mortgage Finance is a periodical that precisely lives up to its name: Las Vegas residential real estate professionals can turn to it for the latest word on national trends in the mortgage industry. Admittedly, this usually makes for pretty dull reading for outsiders (that is, everyone else); but one story in last week’s edition was interesting enough that it was picked up by the general business press. The topic was jumbo loans. In Las Vegas real estate circles, the issuing of jumbo loans is of particular interest because of their indicator status. Jumbos are the ones with mortgage amounts exceeding the limits for government-backed loans. They’re also known as ‘nonconforming’—and like all the other non-conformists in life, they don’t quite behave like everyone else. Las Vegas jumbo loans tend to be slightly harder to qualify for than run-of-the-mill mortgages, and, as a rule, carry higher interest rates. If their share of the home loan market grows, it indicates that high-end home sales are improving. And that’s what happened in the U.S. in 2014, according to IMF. “Jumbo Lending Stronger than Overall Market, Hits Highest Share in 10 Years” was the headline in a report that pegged fourth quarter jumbo loan volume at $67,000,000,000. That’s a lot of high-end real estate! When The Wall Street Journal picked up the story, they pointed to a decrease in mortgage lending overall, but pointedly less so for jumbo loans. Bank of America reported a 3% growth in the number of first-time home buyers who took out jumbos in 2014—and applicants were a younger bunch, too: their average age decreased from 46 years to 44. Wells Fargo Home Mortgage, the largest jumbo provider, observed a similar trend: more first-timers taking out jumbo loans. If this has local real estate watchers wondering whether the popularity of jumbo loans in Las Vegas will follow the national trend (and if so, why), there was at least one straightforward explanation. HSH, the housing and mortgage data firm, reported that by the end of this January, the average interest rate for a 30-year fixed jumbo mortgage “dropped below 4% and was at a historic low of 3.92%….” With rates like those, the WSJ wrote, “Low-interest rates are spurring more older affluent Americans to consider a mortgage.” You don’t have to be in the jumbo market to seize the financial advantages this winter’s favorable real estate climate offers. Just call me!
Categories
Recent Posts
