The term of “flipping” generally applies to buyers who purchase a property or properties, and then immediately put the properties up for sale, looking for a fast turnaround and quick profit.

Some scenarios involve “finders,” people who work with investors. Their purpose is to find and investigate properties for sale that meet an investor’s criteria, similar to a broker or Realtor, but unlicensed, and in many states illegal.

Since “finders” are basically engaged in the business of bringing buyer and seller together, they are, in fact, acting as unlicensed brokers. Furthermore, investors, knowingly working with “finders” may be skirting the law as well.

In fact, most are untrained and do not have the skills or resources needed to properly evaluate the fair market value or profit potential of a given property, as would a licensed Las Vegas Real Estate Agent or broker.

Although no knowledgeable investor would associate or work with “finders” some naïve investors think that through these finders they can buy and immediately sell real estate (or “flip”) for a fast and easy profit. Nothing could be further from the truth!

Buying properties and immediately selling for a quick profit requires exceptional negotiating skills, and an in-depth market knowledge gained through long experience. In fact, it is a market strategy that only the most skilled and astute of real estate investors can consistently profit from.

The real estate crunch of the past few years has unfortunately created a false impression among naïve dreamers that anyone at any time can become an overnight real estate millionaire.

There has also been a proliferation of so-called real estate “Gurus” who write books and conduct expensive seminars, that propose to show how anyone can gain financial freedom through real estate, buy property with no money down, etc.  A few may offer good advice, but others are just money making schemes for the authors and seminar holders.

Additionally, many fraudulent real estate practices have been  associated with flipping, as get rich quick schemers have evolved practices designed to skirt the law, such as using false appraisals to alter the real fair market value of a property, kickbacks, falsified loan documentation, quick claim deed manipulation, and more.

In a market of zero price appreciation, legitimate flipping, for the most part, can make money only on rare occasions, and only if handled by the most skilled of investors. As housing prices begin to rise, flipping becomes a bit more advantageous.

It pays to remember that even when the market is good, and flippers can make a profit, consideration has to be given to the fact that the property may take a more than anticipated time to sell, and if so, did the buyer pay cash or will there be mortgage payments to consider until the property is sold?

If the property is a rehab, what about the costs involved in repair?

Approach any real estate deal with caution, and remember, if a deal looks too good to be true, beware!

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702.376.0088.

If you are a new player in the Las Vegas Real Estate Investment game, one of the first steps you should take as part of an investment strategy – that you have hopefully planned out meticulously – is to find a good real estate agent to partner with you.

Find an agent who is in sync with your strategies (some agents prefer not to work with investors,) and has the experience and expertise to help you achieve your goals. You need an agent who can help you find and qualify the good deals, handle much of the details, and one who has worked with investors before.

Although word of mouth is one of the best ways to find a qualified agent with a solid track record of success and great references, Las Vegas Real Estate Investment Clubs are another source.

When discussing your plans with an agent you are considering partnering with and who is interested in working with you as well, be sure to explain exactly what kinds of properties you will interested in buying. Assure the agent that you will both make money from this partnership, and that you are a high-energy, aggressive and eager investor.

Another thing to keep in mind, is that if your buying strategies involve sending out a flood of low-ball offers in order to consistently close deals, some agents would rather not work with you.

That is why it is so important for the agent or agents you are interviewing to understand what your investment strategies and goals really are. You have to be as forthright and honest with them as you expect them to be with you.

Now, what about buyers? Certainly, your strategy for investing in Las Vegas Real Estate has included contingencies for dealing with willing buyers who are handicapped with marginal credit.

Many of your buyers may be able to acquire a mortgage on their own, but buyers with a passable, but not very impressive FICO score, probably would not qualify with most lenders.

This is where another very important member of your investment team, your mortgage broker, steps in. If you are closing on properties monthly, you are going to attract brokers willing to work with you. Find a broker who has the expertise and lender contacts to obtain mortgages for people with marginal credit.

Don’t expect miracles, however. A buyer must meet certain, even minimal standards of acceptance, but if those criteria are not met, obtaining a mortgage will not be possible.

If you are a quick-turnover investor, you will need a broker who can close deals quickly, and will be available when needed. Assure the broker, as you did your real estate agent, that you want everyone on your team to make money. Consistently closing deals will be all the assurance they need.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702.376.0088.

Buying a home versus renting is a big decision that takes careful consideration.

While there are several biased sources that can make arguments for or against owning a home, we’ve found that most home buyers base their ultimate decision on emotion.

Yes, there are some tax advantages of owning real estate, as well as the potential to earn equity or pay a mortgage note off after several years.

However, let’s address some of the more obvious topics of discussion first.

Benefits Of Renting:

Lower Acquisition Cost –

Unless you’re able to qualify for a mortgage loan with zero down and have your closing costs paid for by the seller, a typical investment to purchase a home is around 3.5% – 7% of the purchase price for down payment and closing costs on an FHA mortgage, and an average of 13% – 23% for a home secured by conventional financing.

Compared to the cost of about 1-3 month’s rent payment, it’s obvious that renting a home makes financial sense in the short-term.

Lower Qualifying Standards –

While the FHA and other Government Insured mortgage programs have flexible credit / qualifying guidelines than most traditional home loan programs, there is certainly a lot less paperwork and personal invasive probing required by most landlords and property management companies.

Generally proof of employment / income and a decent credit history (or a good explanation) is needed to rent a home.

Freedom To Move –

It’s easy to find a home through a reputable property management company, move in that weekend and then leave a year later when the rental contract expires.  Not being tied down by a long-term mortgage liability is ideal for people new to a community, in a career that keeps them on the go or for parents with children that prefer a certain school district.

Plus, if you’re planning on moving in the next 3-5 years, then it may become cost-prohibitive due to the amount of equity you’ll have to gain in the short-run just to cover the cost of paying an agent, buyer closing costs, transfer taxes…. so that you can at least break even at closing.

Less Maintenance and Cost –

If something breaks, a simple call to the property management company will generally solve the issue in 48 hours or less.  Plus, renters don’t have to carry expensive homeowners insurance, pay property taxes or worry about interest rates adjusting.

Benefits of Owning:

Pets Are Allowed –

Well, according to the rules and regulations of your county or neighborhood HOA, you can pretty much have as many domestic and exotic pets without having to pay extra deposits.

It may seem like a funny benefit to mention first, but the millions of dog and cat lovers would definitely rank this towards the top of their list.

Pink and Purple Walls –

Yep, you can paint the inside of your house any color you choose.  And depending on whether or not there is an HOA in place, you could probably do the same thing on the home’s exterior.  Landscaping, flooring, built-in shelving… it’s your property to renovate and grow in.

Peace-of-Mind and Security –

The only way you would be forced to move is if the bank forecloses on your property due to a default in mortgage payments.

So basically, you don’t have to worry about a landlord’s financial ability to make mortgage payments on time. Plus, you can stay in your own property as long as you wish.

Tax Benefits –

The US government has created certain tax incentives making it possible for many homeowners to exceed the standard yearly deduction.

*Disclosure – Check with your CPA or Tax Attorney to verify your own unique filing scenario*

The following three components of your home mortgage may be tax deductible:

a) Interest on your home mortgage
b) Property Taxes
c) Origination / Discount Points

Stability –

Remaining in one neighborhood for several years lets you and your family establish lasting friendships, as well as offers your children the benefit of educational continuity.

Appreciation of Property –

Historically, even with other periods of declining value, home prices have exceeded consumer inflation. From 1972 through 2005, home prices increased on average 6.5%, according to the National Association of Realtors®.

Forced Saving –

The monthly payment helps in repayment of the principal amount. Also when you sell you can generally take up to $250,000 ($500,000 for married couple) as gain without owing any federal income tax.

*Disclosure – Check with your CPA or Tax Attorney to verify your own unique filing scenario*

Increased Net Worth

Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

While the available tax advantages and potential for earned equity are generally highlighted by most industry professionals as the top reasons to own real estate, it’s important to remember that markets go through cycles.

However, owning real estate that appreciates more than the rate of inflation may help contribute towards your overall investment portfolio, provided your maintenance and mortgage costs are kept low.

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Related Articles – Home Buying Process:

• Home Buying Process
• First-Time Home Buyer Credit Checklist
• Assembling Your Home Buying Team – Knowing The Players
• Seven Things Your Agent Should Know About Your Mortgage Approval
• Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction
• Where Does My Earnest Money Go?
• HOA Hurdles to be Aware of When Looking at New Properties
• What You Need To Know About The Home Inspection Process

Most people are surprised to learn what appraisers actually look at when determining the value of a real estate property. A common misconception homeowners generally have is that the value of their home is determined after the appraiser has completed their physical property inspection. However, the appraiser actually already has a good idea of the property’s value by the time they have scheduled an appointment to stop by the property. The good news is that you don’t have to worry so much about pushing back an appointment a few days just to “clean things up” in order to help influence the value of your property. While a clean house will certainly make it easier for the appraiser to notice improvements, the only time you should be concerned about “clutter” is if it is damaging to the dwelling.

The Key Components Addressed In An Appraisal

1. The Site: Location, view, topography, lot size, utilities, zoning, external factors, highest and best use, landscaping features.
2. Design: Quality of construction, finish work, fixed appliances and any defining features.
3. Condition: Age, deterioration, renovations, upgrades, added features.
4. Health & Safety: Structural integrity, code compliance.
5. Size: Above grade and below grade improvements.
6. Neighborhood: Is the property conforming to the neighborhood?
7. Functional Utility: Is the property functional as built – style and use?
8. Parking: Garages, Carports, Shops, etc..
9. Other: Curb appeal, lot size, & conforming to the neighborhood are obvious to the appraiser when they drive down into the neighborhood pull up in front of your home.

Keep in mind that when an appraiser enters your home, they are going to look at the overall design, condition, finish work, upgrades, any defining features, functional utility, square footage, number of rooms and health and safety items. Be sure to have all carbon monoxide and smoke detectors in working condition. Since the appraisal provides half the weight in any credit decision involving the security of real estate, the appraisal should be done by a qualified, licensed appraiser whom is familiar with your neighborhood, and the type of home you are buying, selling or refinancing.

If you’re interested in what specifically appraisers are looking for, here is a copy of the blank 1040 URAR form that is used by every appraiser in the country.

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Related Appraisal Articles:

• Mortgage 101 – Appraisal Basics
• Five Myths About Home Values
• Understanding The Difference Between An Appraisal vs Neighborhood Comp
• How Do Mortgage Companies Value A Property That Hasn’t Been Built Yet?

Common sense will tell you that the nicer your home looks, the better your chances of selling at or close to the asking price. However, don’t go overboard and practically remodel the entire house before listing the property. Not only will a project of this scope cost you plenty, but you probably won’t recoup even half of your fix-up expenses.

Cosmetic upgrading and repair however should always be secondary to plumbing, heating/cooling and electrical repair. Roofing and structural repairs are an absolute must as well.

Certain upgrades and repairs designed to improve the property’s “eye appeal” include:

• A fresh coat of paint, inside and out, is a most effective way of making the home look newer and more inviting. Neutral colors such as beige or off-white seem to work best.
• If the interior of the home has wallpaper in some or all of the rooms, particularly if it has a worn look, strip it off and paint. Replacing the wallpaper with another design of your choice may not appeal to a prospective buyer, and could actually negatively influence a buyer’s decision.
• If any of the rooms are carpeted, and the carpeting shows signs of wear or discoloration, replace it. Use neutral colors, and medium shades, not too light or too dark. Carpeting and painting are cost effective ways of sprucing up the home’s environment, and can help increase the price tag by much more than the cost of material and installation.
• If the floors are hardwood, refinish if necessary.
• Replace chipped or cracked tiles. It is equally important to repair or replace grouting. If the grouting is in good shape, be sure it has been scrubbed clean.
• If you have Formica counter tops that are showing signs of wear, replace them with a do-it-yourself  kit, available at hardware stores, or if you are not inclined to tackle the job, which can be somewhat tricky, hire a competent handy man.
• The appearance of the kitchen can be a huge influence on the overall impression of the home, and is the most important part of the house to revitalize, if needed.

Although kitchen remodeling can most often return 100% of investment, it can cost a ton of money. However many kitchens can look their best by a simple resurfacing of the cabinets, if needed, and perhaps the installation of a new sink and fixtures.

• Replace or refurbish exterior siding.
• Examine and repair/replace window and door caulking.
• Replace doorknobs and locks if worn looking.
• Repair, refurbish or replace the front door if necessary.
• Fix or paint fences and backyard walls.
• Replace any old, outdated kitchen and laundry room appliances

Include a home warranty package as a “throw-in” if the home is ten years old or more. It’s a nice gesture to offer a prospective buyer a “piece of mind” package, and will go a long way toward establishing amicable negotiations.

If you have any other questions about getting your Las Vegas Home ready to sell, feel fee to give us a call at 702.376.0088.