MARCH MUCH MORE THAN JUST A MONTH FOR LAS VEGAS REAL ESTATE
This March has been such a busy one on the Las Vegas real estate calendar that I thought it would be a good idea to double-check everything just to be certain I wasn’t overlooking any important happenings. It wasn’t just that the first day of spring on the 20th is the traditional start of what’s regularly the busiest time of year for Las Vegas real estate activity. This is a reliable phenomenon, further reinforced by the 61 million results you get when you Google “Spring Real Estate Selling Season.” To be accurate, the National Association of REALTORS® fudges a little by calling spring and summer the hottest seasons for real estate activity—but it turns out they are pointing to the fact that many sales initiated in spring close during the summer (which is when people prefer to move). March also has a red-letter day on the 23rd, which is when Freddie Mac, the mortgage reinsurer, is set to kick off their ‘Home Possible’ program. It’s a lowering of their down payment requirements, so mortgage lenders will have more leeway with borrowers. That should provide a further boost for Las Vegas real estate activity, which has been laboring for years under tough lending requirements that discouraged some otherwise well-qualified home buyers. Then there was also St. Patrick’s Day (although that has a less-than-convincing effect on Las Vegas real estate activity). There is March Madness, in which basketball plays havoc with more than just television schedules. You could say that it plays hob with appointment times for many Las Vegas home showings since the last five minutes of most of the games take at least half an hour. Just in case the calendar has even more events that might affect Las Vegas real estate, we thought we’d better check to be certain we haven’t overlooked any upcoming happenings. We found out we could relax. True, this March is Optimism Month, which is certainly thematically in tune with the positive spring real estate outlook (speaking of ‘in tune,’ March is also Music in Our Schools Month and Play the Recorder Month). It’s International Ideas Month, which, for anyone who’s been following the headlines, is certainly arriving in the nick of time. For those who are, internationally speaking, prone to sticking to their old ideas, March is also International Listening Awareness Month. It’s Mirth Month as well as Humorists are Artists Month. It’s also Noodle Month (does this have a connection with Mirth Month?), Peanut Month, and National Nutrition Month. In addition to minding nutrition, this is a month for safety: it’s National Collision Awareness Month, as well as National Cheerleading Safety Month. It turns out, there is another couple of dozen other Months that are taking place right now, but most have little to do with buying and selling homes. What seems better connected to Las Vegas real estate is the fact that this is also Umbrella Month, although it’s too early to know the precipitation total for the whole month. It hasn’t prevented many showings or open houses, for sure. In any case, if you are thinking of taking advantage of the Spring Selling Season, it’s also a terrific monthto give me a call!
FIRST DAY OF SPRING BRINGS FLOWERS MORTGAGE TURNAROUND
The first day of spring! The vernal equinox! This year, March 20 is the red-letter day on Las Vegas ’s real estate calendar. It’s the nominal kickoff to the traditionally rambunctious spring selling season—historically, the go-go time of year. It’s when more homes come on the market, more prospective buyers come out to see them, and more sales are launched than in any other season. But this year, what happens three days later might well turn out to be nearly as noteworthy. The 23rd may not mark an annual event, but it could become a second red-letter day for Las Vegas home buyers and sellers in 2015. If all goes according to plan, it’s the day when Freddie Mac joins Fannie Mae in easing the down payment requirements mortgage lenders observe. This is part of a development that surfaced last fall when sharp-eyed Las Vegas residents first noticed some trial balloon announcements from the mortgage lending industry. The sources were insiders who leaked details of an agreement being hammered out between Fannie Mae, Freddie Mac, and the lenders they underwrite. Fannie buys mortgage loans from the large commercial lenders, Freddie, smaller houses. Both of the mortgage behemoths are regulated by the Federal Housing Finance Agency. FHFA is the government overseer that lost most of its trusting good humor after it had to bail out Freddie and Fannie during the subprime mortgage fiasco (actually, it was we taxpayers who got the bill). But last falls’ news leak indicated a reversal was in the wind. Borrowers with weaker credit might soon find it easier to land a mortgage, because Fannie and Freddie would resume making such loans less risky for lenders. That would be welcome news for Las Vegas home buyers and sellers alike. Tight Las Vegas mortgage lending rules had been part of the national reaction to the subprime mortgage mess, but the result had been predictable: a throttling back of the number of loans banks were willing to grant. Fewer mortgage loans meant that some sales simply wouldn’t take place. In some cases, it was downright irritating. That’s why, for some Las Vegas mortgage applicants, March 23rd could mark the resumption of renewed home owning possibilities. It’s the kickoff date for a program Freddie Mac calls “Home Possible”—and it means that Fannie will be joined in offering “flexible credit terms and low down payment options”…options that can include down payments as low as 3%. Freddie’s website calls the result “more flexibility for maximum financing.” With the kickoff of the spring selling season, Freddie’s “Home Possible” couldn’t have come at a better time (some humor-minded real estate professionals had begun to think of Freddie’s previous programs as “Home Impossible”). Even just the expected publicity should encourage some formerly gun-shy prospective Las Vegasmortgage applicants to resume their quest for a home to call their own. If you could be one of them—or a homeowner preparing to list for the spring season—I hope you will give me a call. Your timing couldn’t be better!
LAS VEGAS INVESTOR CHOICE FLIPPING OR BUY AND HOLD
When you own the Las Vegas home your family lives in, you are by definition a real estate investor: it comes with the turf. Your investment is essentially a passive one. Until the day you decide to sell and move on, any improvement in its value is secondary to how well it serves to shelter your family. How you think about your investment—and how you proceed to manage it—is altogether different when you buy a Las Vegas home purely as a financial venture. For one thing, you face an immediate strategic decision: will you be flipping for a quick short-term profit, or aim for the long term through a buy-and-hold strategy? You have to weigh some pros and cons in order to make the right decision. Flipping Pro: Capital is Freed A flipping strategy minimizes the amount of time your investment capital is committed, freeing it for other uses. Should you identify another potentially lucrative investment, you will be able to take advantage of it. Con: Unexpected Challenges While flipping for short-term profit has definite ‘hands-on’ appeal, first-time investors can be surprised by unexpected complications. Properties that appear to be undervalued (and ripe for a quick flip!) may require costly fixes. Overspending on renovations quickly eats into profits, but underspending can lead to a lengthier holding time. Experienced Las Vegas flipping veterans have learned to successfully gauge a property’s true turnaround value. Additional Consideration: Taxes Las Vegas flipping has tax implications that impact the bottom line. Profits from a property owned more than a year are taxed at the ordinary income tax rate while a property held for less than a year may be taxed at the capital gains rate. Local and state tariffs need to be considered as well—this is where input from a qualified professional is important. Buy-and-Hold Pro: Passive Investment If the management is outsourced to a professional property manager, the buy-and-hold strategy will require less personal attention than flipping does. Preparing a property for a flip often involves considerable time commitment and adept contractor schedule-juggling. Con: Management Costs The passive investment advantage holds true if outside management is contemplated— with commensurate expense. If you enjoy the challenge of successfully managing a property, this negative doesn’t apply. Pro: Fewer Properties Need To Be Identified Ultimately, successfully executing a flipping strategy means scrutinizing a huge number of properties over the course of time. In contrast, a buy-and-hold strategy necessitates finding only a few great bargains. Pursued intelligently, both buy-and-hold and quick flip strategies have proved profitable for many investors. Both call for finding solid value in Las Vegas properties—which is where giving me a call comes in!
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