By Tanya Chu
Las Vegas has been a very popular destination for bargain house-hunting. But is it really a city of bargains? A friend of mine went down there just this past week (first week of August 09) and said that though prices are still relatively cheap, the bidding war has begun and are driving up prices. People are paying $10K or more than listed price because of multiple offers!
When he went down to Vegas, many locals suggested to buy houses versus condos. Apparently, in Vegas, single dwellings are regarded as more valuable and favourable, considering the same 2BR 2BA house is just a few thousand dollars more in asking price than a small condo. Furthermore, houses are also easier to rent out than condos because again, the difference in rent is not much.
Getting Financing in VegasDown south, financing is difficult but not impossible. If you're interested in owning a condo, the bank would not finance you simply because there are some buildings where other units are being foreclosed and strata and property management fees are not being paid. The risks for the banks are higher, therefore, they are no interested in helping you with your finance.
However, if you want to purchase a single dwelling, the banks are willing to lend you 50% of the value of the house, provided your credit is stellar (680 or above). So this is definitely something to consider.
Second Wave of ForeclosuresThe word is, there will be another wave of foreclosures soon to hit the market place. Obama had put in a "mortgage helper plan" asking the banks to not foreclose on people. However, this ruling has now been lifted and the banks are beginning foreclosure proceedings. We can expect that by late fall or winter, there will be more deals and inventory available to the patient investors!
Another gem to look for in the next few months would be high-end homes (aka. mansions). A few years ago, the banks were lending >$450 000 to people who wanted to purchase high-end homes, such as ones in areas like Summerlin or Rhodes Ranch, but now, the terms for these mortgages are coming up and all of these houses are no longer worth that price! Many have dropped at least 50% in value. In the States, home owners can walk from their mortgages and face no consequences, something Canadians don't have the luxury of doing. In fact, there are even some people who had refinanced back when the value was high, took the money out of their house, and now, are walking away with that cash. They take this money to invest in the houses now, under other family members' names. It's no wonder that the States is in the mess that it is in!
Where to LookGreat places to start looking in Vegas are in these numbered areas: 404 - where the houses are in great shape, but are a little expensive403 & 402 - where there are many foreclosures503 - again, expensive - but deals are available if you look hard enough.
Try to stay away from the Strip, as there are many prostitution and drugees there.Stay away from the east side as well. The trend seems to be, the further you are from the Strip, the better off you will be.
Make sure the neighbourhood you invest in has people living there! Either have someone drive by the area, or do it yourself, and make sure there're families and (nice) cars there. The last thing you want to do is to buy a place that is in the middle of a ghost town, where nobody would even want to rent there. Don't be fooled by nice houses because they can be in those neighbourhoods too!
Other Things to Keep In MindI think it's wise to fly down and check out the properties yourself before you make your purchase. For us Vancouverites, flights are not very expensive. Search Allegiant Air and you can find some great deals.
It is imperative that you spend the money on a good inspector who will do a thorough check with you on the property. Often, with foreclosures, there could be cement poured into the sink, and you wouldn't know.
Even though it's great to have the assistance of a realtor, if you can, it is always better to deal directly with the home owners or the bank representatives. Remember that realtors are there to make money too and even though their commission technically doesn't come out of your pockets, they have the incentive to keep the prices high. So why not talk to the home owners or bank reps yourself to negotiate on a better deal? This is definitely worth trying!
Make sure your house cashflows positively after all expenses are paid. Those who are considering benefiting from Appreciation, you'll have a few more years to wait before that happens. So don't be "hurting" while you wait for the market to turn around.
Lastly, be aware that most of the good deals are offered by the banks (though not always) and they may need some tender, love, and care before you can rent it out. So make sure you add your closing costs, reno costs, and any necessary repairs that needs to be done onto that "final" price when you analyze if your purchase is worth while!
