The savvy investor in Las Vegas residential properties always buys with a plan in place as to the use of a chosen property, which of course is limited to four choices: primary residence, vacation property, rental or resale.
Additionally, although real estate values in general are affected by national conditions, local conditions have the most profound effect on specific markets. Market values will strongly influence the decisions an investor makes as to the future of his/her investment.
If the residence was purchased at considerably below the prevailing fair market value, and market prices are stable, then the property might be offered for sale for a quick profit. If market rates are falling, the property might be put to better use as a rental, either permanently, or sold when conditions become more favorable.
As to the kinds of properties investors prefer or generally avoid, mainstream investors approach either new or resale condo properties with extreme caution.
The main reason for this reluctance is that in addition to condo prices being much more subject to market volatility than single-family homes, investors are not anxious to own properties that can incur expenses and encounter problems that are entirely beyond the investor’s control, such as condo association financial shortfalls, mismanagement problems, maintenance fees and special assessments.
If you have purchased a second home, decisions need to be made as to what should be done with the property. If your second home has been used for vacation purposes, you may want to keep it for the enjoyment ownership of the property may bring.
If you need the money, you may, dependent upon prevailing market prices, sell or rent it. If selling prices are down, you may want to rent until the time is right to sell. Or you may prefer to rent, in consideration of the fact that rental of the property will result in some cash flow, but rarely will generate enough income to pay down the mortgage – if you have one – to any meaningful degree.
Depending on where the second home is located, renting the property may not generate the cash flow you expect. If the property is in a remote area, for example, rentals will be sporadic, usually short-term, for a week or month.
Vacation homes are bought for enjoyment purposes, and, for the most part, are not about making money. So, it’s not always wise to buy a vacation home as an investment. Although, choice beach and mountain locations can dramatically increase in value if the area has become popular with vacationers.
It’s also important to understand that if the property is used only sporadically, the expense of owning and maintaining a vacation home will prove much more costly than the occasional vacation stay at a resort.
Tony Sena is a Las Vegas Real Estate Broker/Salesperson and Designated Property Manager with North American Realty of Nevada. He currently oversees a team of 10 real estate agents and manages the Property Management Division. He can be reached at 702.376.0088.