Hey everyone, I was hoping on a little advise. I am starting out investing and have a long way to go. I recently acquired a house in las vegas for 68k short sale w 20 percent down. The payment is 375 and it rents for 950/month before expences. I have been told by an agent here to sell it and that I can get around 115k.
What should I do. Keep it for a healthy cash flow possibly forever.
Sell it and use the cash to finance 2-3 slightly cheaper houses-right now I can get pick up houses right around the 1 percent rule- which produces similar cash flow.
Laugh all the way to the bank and invest in creative financing education so I can learn to buy below market in any market- if so whos good in las vegas?
Get that new camaro ive been eyeballing?
Sell with a lease option- how much can I expect to get for it?
The home is leased for a year, I have a good income from a job and good credit. Very little in bills
Thanks guys and any help is appreciated
Sounds like a good cash flow property. Why sell? If you need the money see if there is a way to pull out some cash. Can you get a home equity on this property?
No doubt. Great cashflow. Im inexperienced but I think this is a great buy and hold property. The thing is-I could sell it and buy 3 cheaper properties with similar cashflow. Yes, I believe I could get a heloc or hel for (a guess) 20k and pick up one property with that money, all with being cashflow positive. The only reason really is to speed things up a lil, and maybe pick up some experience along the way.
Oh. I forgot to mention. Inventory in vegas is around one month and im being told this will sell well above any appraisal - cash only buyers. Though I would think this is a tempory thing.
At first glance it sounds like this property is a cash cow, but not really. I bet you are making around $150 - $200 per month cash in your pocket. Here is why: $950 monthly income less 5% vacancy (even with a year lease you need this for month 13), less 40% expenses (taxes, insurance, repairs, capital reserves), less $375 mortgage payment = $150 +/-. This is applying the 50% rule used by investors.
Okay so here is the thing. If you can cash out on this property, use the capital gains and invest in 3 other properties that will produce at least $100 profit per month then your income just doubled. Additionally, now you will have 3 properties benefiting from value appreciation.
Before you run off and sell, make sure that (1) replacement investments are available and (2) you can get bank financing for the three purchases.
Getting loans is no problem. Replacement properties are a maybe-why would a cash investor pay over appraisal if he could just go to the bank and pick up a house. I will have to look into it further. Your numbers look pretty close, maybe a lil conservative in my again, inexperienced opinion. It brings up a good point. Wheres the cashflow. I got what i think is a great deal on this place and only pull 200/month. So, replacemnt properties… I would have the cash needed to purchase and rehab homes if I sold. Id have the cash to buy out someones equity for a lease option purchase…
Welcome to the neighborhood! Prices here are rising quickly and with the amount of time it takes to close a short sale in vegas if you sold now to you’d be priced out in 4 months. Prices will continue to artificially rise in this market for the next couple months and then the banks and the state legislature will keep it at a certain level. Right now you have cash buyers grabbing everything and if you aren’t coming to the table with cash you are going to lose all the great deals.
Depending on how long you’ve had the property I’d do a heloc and try to get another property thru short sale. Prices will probably settle around 120-130 depending on your neighborhood.
Thanks. Its good to hear from someone in vegas. I understand your meaning as- keep this property because im not gonna find another deal like this again. It seems you dont expect a price drop at all even if ab 284 gets amended, just a slow trickle of properties from the banks. I will start writng offers for short sales now. Should I be looking at hud homes? Im willing to move to the hud home if necessary.
Our properties have appreciated almost 10% over the last year. One of the realtors I talked to at the last rei meeting said properties he lists now, are getting multiple offers over the list price and the are more apt to take cash offers.
Ok. Another ? If im flowing 200/month and get a 20k heloc I just lost all of my cashflow. Long term it still seems worth it easily but its not exactly getting me closer to retirement. Again thanks for all the help and I will be joining an rei club shortly. Also just for clarification you said prices will settle around 120-130. Is that approximate based on the info you have on the property or do you mean per square foot.
True. But if you are able to use the 20k as down payment on two other properties cashflowing $200/mo then you are growing your equity base and cashflow.
Also just for clarification you said prices will settle around 120-130. Is that approximate based on the info you have on the property or do you mean per square foot.
Retail prices for the valley will settle around the $120,000-$130,000 excluding summerlin and mountains edge.
Ok. Ive got an app in for a heloc. It should just depend on what they think its worth. I was looking at prosper and invcoaching. They both work with my schedule well as they meet on tuesday. Are you familiar with these?
I haven’t seen any upcoming meetings posted on either invcoaching or prosper in awhile. I known that outback and lvreic are active. They meet on Saturdays.
First, congrats on the property…as far as retirement remember this is a marathon, not a sprint…keep doing this for several years and you will be well on your way to a great retirement…it took me 8 years to finally be able to have enough income to replace my job and I am loving every minute of having the extra time to do what I want…with this being said my opinion is that you should sell and leverage out your money to buy 3 more properties…the cashflow may be the same but you will also enjoy better tax advantages of owning 2-3 properties rather than one, which is putting cash in your pocket. I would repeat this process as many times as you can to get several properties and only take on as much debt as you are comfortable with…I think Ashon brings up good points and I don’t think you will go wrong with whatever you decide to do…just depends on what you want to do in the future and how fast you want to get there. Good Luck!
Sounds good to me. My plan is def. Buy and hold, selling just seems like too good an opportunity to pass up. I am also having trouble with the equity loan. Ive researched it and found out some places that at least used to do helocs in my situation. I own 3 and the heloc is on a an investment property. I have some emails out to agents to try and find out what exactly I can expect to get. Also, saturday is not possible for an reiclub for me. I will continue to look. Thanks again for all the help and motovation.