If You Can’t Sell Your Las Vegas Home, Rent it

If You Can’t Sell Your Las Vegas Home, Rent it

Shelter Realty has been contacted over the last month by several Las Vegas homeowners about listing their property for rent. The message has been very similar, my home is not selling and now I just want to rent it.

The Las Vegas Real Estate Market is changing and homes are not selling as quickly as they were a year ago.  Las Vegas home prices are up over the same period from last year but homes sales are down.  With the increased real estate inventory, homes are not selling and subsequently are sitting on the market vacant for a longer period of time.  To make matters worse, we are entering the holiday season when homes sales traditionally slow down.

If you are a Las Vegas seller and your property has been on the market for sale for over 90 days, I would recommend looking into placing your home on the market for rent.  Shelter Realty manages over 600 residential properties and are vacancy rates are below 5%.  By placing a renter in your property, you can minimize out of pocket mortgage costs while you wait for the sales market to shift.

For more information about our Las Vegas property management services, give us a call at 702.376.7379 or complete the form to the right to see if renting your home makes financial sense.

Beginning August 16 2014. those who want to utilize a “conventional loan” to purchase a new home after previously selling a home on a short sale will face a longer eligibility period.  At present, buyers who sold their previous home as a short sale can purchase again after two years if they are putting down 20%. After August 16 the waiting period moves to four years when using conventional financing.

Fortunately, buyers can still purchase with FHA financing after 3 years.  This is the current guideline for FHA and no changes on the three years appear forthcoming.

Buyers who are looking to purchase quicker than three years after a short sale may have some options open to them utilizing credit repair companies but be careful who you use and try to only work with a company who has a track record. They must show you a successful track record and if they aren’t successful, offers you some reimbursement in the event they can’t deliver.

For more answers regarding short sales including your particular situation please contact Shelter Realty Inc., at 702-376- 7379 or by emailing info @ shelterrealty. com

I attended a broker event yesterday at Palms Place, the Condo-Hotel development next door to the Palms Casino. They are currently releasing about 220 units of which 180 are studio suites and 40 are 1 bedroom suites. The studios are 615 square feet and start at $195,000 and the one bedroom units are 1220 square feet and begin at $325,000. Pricing will vary depending on view and height location of the unit. There is also a 3,900 square foot hundred penthouse for 1.8 million.

The services and amenities offered by Palms Place were impressive. I won’t list everything here but a sample list includes:

* Spa Services
* Limo and Car Services
* VIP Check-in lounge
* Personal Training
* Car Care
* Discounts at the majority of Palms Casino amenities
* Complimentary access to Palms nightlife and daylife venues
* Rental Pool Program for owners to rent out their unit
* Concierge Services
* Kerry Simon’s restaurant SIMON

The Palms property consists of three towers. The first if the casino/hotel, then there is the Fantasy Tower which was the former Playboy Tower and finally, Palms Place. Between all three towers there are numerous choices to play, relax and live a true Vegas lifestyle.

One of the things I love about the Palms is that you can have every amenity and choice of a Las Vegas Strip property but don’t have the traffic and congestion issues of being on the Strip. The location is less than five minutes from the Strip and there is convenient access to Interstate 15.

Paul Rowe is an agent with Shelter Realty and has extensive experience with Las Vegas high-rise living options. He may be reached by calling Shelter Realty at 702 376 7379 or by emailing “info @ shelterrealty.com”. You are also welcomed to fill out a contact form on this webpage as well.

Experian and Transunion May Begin to Include Rental History as a Part of Credit Scores

One of the challenges many first time home buyers often face when trying to purchase a home is a lack of established credit lines. Multiple credit lines such as credit cards, lines of credit, department cards, furniture store credit help build a person’s credit score when not overused and paid on time. Sometimes, people don’t have many trade lines of credit when first starting out or recovering from a financial crisis like a bankruptcy. In a bankruptcy the debt might be gone but also gone are the lines of credit the person had.

In an article published in the Columbus Dispatch “Credit Scores Might Soon Reflect Rental Payments,” Credit bureaus Experian and Transunion have begun incorporating some rental histories into credit scores.

A renter would have to pay through an authorized rent processing company contracted to work with the credit bureau. I recently spoke to a local Las Vegas mortgage broker, Leslie McGarry with CMG Financial. She said another alternative is to work with a good mortgage broker that can document your rental history and either have your rental history verified through another data collection agency and then added to your credit file as “supplemental info” or they can have the data added and request a rapid re-score with the credit bureau and obtain an updated credit score. This can be done in as quickly as one week.

Buyers should not assume they do not have the credit necessary when considering a home purchase. The best thing to do is find a real estate agent and consult an experienced loan officer. Not only are people’s credit sometimes better than they thought, but often the credit can be built and improved into the level of a qualified buyer.

Immediate opening for full time Las Vegas Residential Property Manager/Field Coordinator.

This is a field position consisting of move-ins, move-outs, make readies and inspections. You must have reliable transportation and drivers license.

You must possess a Real Estate License and Property Manager Permit.  If you do not possess a real estate license and permit, please do not submit your resume!

We are looking for a self-motivated team player with superior customer service skills, able to multi-task, well organized and does not require constant supervision.

Requirements:

• Minimum 4 years residential property management experience
• Ability to tactfully address, negotiate and resolve issues with owners, tenants, and vendors
• Good communication skills (verbal and written)
• Competent computer skills
• Attention to detail

Compensation:

• $16 – $18 an hour depending on experience
• Mileage

Benefits:

• Medical/Dental/Vision

If you are interested in this position, please email your resume to info(@)shelterrealty.com.

Shelter Realty, Inc. is an Equal Opportunity Employer.

National home values have risen and your investment properties probably gained values too. The Internal Revenue Code Section 1031 gives investors the ability to defer capital gain tax when you exchange business-use or investment property for another business-use or investment property.

There are many ways of exchange. For example, sell a vacation rental home in Hawaii and buy three investment properties in Las Vegas to generate more stable and higher income, sell an old apartment building which always needs repairs and buy a Triple Net Leased commercial property, sell a farm land in California and buy a hotel-condo in Florida. It can be exchanged for personal properties too.

Flipped properties don’t qualify, but if a property listed for rent for a few months without finding a tenant then changed it for sale, can qualify, as well as vacant land which didn’t generate any income. (Per Certified Exchange Specialist, Carmine at First American Exchange)

There are two deadlines for successful 1031 Exchange;

1. Replacement properties must be identified within 45 day.
2. The exchange must be completed by the earlier of 180 days from the date of the first relinquished property closing.

For fully deferred exchange, replacement properties must be greater or equal value of the relinquished properties, and all proceeds from the sale of the relinquished properties must be reinvested.

It’s important to select a Qualified Intermediary with financial backing of $1,000,000 Fidelity Bond and $250,000 Errors & Omissions Bond. Nevada is one of nine states which enacted the QI law.

I receive calls from Yelp at least once or twice a month to sign up for their ad program for Business Owners but I have yet to sign up and for very good reason. As many property managers know, managing rental properties is a thankless job. It’s very rare you receive phone calls from landlords or tenants stating how happy they are with your services. It’s usually a tenant calling to notify you of some type of repair that is necessary or a repair that wasn’t completed to their satisfaction.  Many tenants believe property managers are at their beck and call and if a repair isn’t handled quickly enough or to their satisfaction, they won’t hesitate to place a negative review of your company on Yelp or threaten to place a negative review.

Am I worried about the negative reviews we have received? Not at all, as I know almost all the negative reviews are inaccurate.

Shelter Realty currently manages over 600 rental properties and have rented to thousands of tenants over the years and only have a few negative comments. There are just some tenants that no matter what you do, you will never make them happy.

The problem I have with Yelp reviews is that almost all our positive reviews aren’t displayed. You have to click on the link that states “other reviews that are not currently recommended” to view all our positive reviews from landlords who have shared their experience with Shelter Realty as their property manager. I asked the representative from Yelp why these positive reviews don’t display and the only answer I received is that it has to do with the algorithm. So my response to Yelp is:

Why would I pay to use your ad program and have my target clients (landlords) only see negative comments from tenants but none of  the positive reviews from my landlords?

I will continue to ask my clients who have advised us of their happiness with our services to take the time and share on Yelp but I would not recommend to any colleagues to pay for Yelp’s ad program until they fix their algorithm issues.

There has been a lot of public discussion whether the new Homeowners Bill of Rights (Nevada Law SB 321) will open up short sale transactions that are not considered “arms-length transactions”. The term “arm’s length” means that a sale does not occur between principals who are close relatives, those with existing business relationships, straw-buyers etc. The theory is that the buyer and seller do not have other incentives influencing the transaction. An example would be sellers in a Las Vegas short sale selling to their parents in order to buy the home at a later time. Under this scenario, the parents would be incentive to get the lowest price for the children to buy back later. It is easy to see how a bank taking a loss on the mortgage would see that as not in the bank’s best interest.

The banks who hold the mortgages on upside down properties generally have the principals in a sale (buyer and seller) sign agreements stipulating the sale is an arm’s length transaction between essentially unrelated parties. Once these agreements are signed, the principals are bound by the terms and subject to breaking federal bank fraud laws if they are found to have violated the terms of the arm’s length transaction agreement. One of the most eagerly monitored items was the expectation that SB 321 was going to prohibit banks from imposing arm’s length transactions in Nevada. The following statute in the bill addresses this issue:

Sec. 16.5.

1. No provision of the laws of this State may be construed to require a sale in lieu of a foreclosure sale to be an arm’s length transaction or to prohibit a sale in lieu of a foreclosure sale that is not an arm’s length transaction.

What is missing is there is no language barring arm’s length transactions. I am not an attorney and I am not offering a legal opinion. This is simply my opinion as a real estate professional after consulting with attorneys as well as reading the bill myself. It appears the State is communicating legislative intent that a “sale in lieu of foreclosure” (short sale) that is not an arm’s length transaction is essentially welcome.

This falls considerably short saying banks cannot require the “arm’s length agreements” in Nevada.

There have been plenty of local attorneys and real estate agents putting out a narrative that under SB 321 banks cannot require an arm’s length transaction agreement to be signed. While not really true,  this tactic gets their phones ringing from potential clients, and that is always the goal when trying to get new business.

My consultation with attorneys indicated that the State of Nevada does not prohibit short sales which are not arm’s length transaction. The bottom line is that nothing has changed; signing an arm’s length transaction agreement while trying to do a short sale remains voluntary between all parties. The seller isn’t required to sign and the bank doesn’t have to require one, though they usually do. If the bank agrees to the sale without a signed “arm’s length”, and a seller has provided honest personal and financial documentation, there is nothing illegal about doing a short sale that is not an arm’s length transaction.

Here is the rub, if you want to attempt to do a Las Vegas short sale that is not an arm’s length transaction you’ll have to be up front about what you want to do and try to get your short sale approved without ever signing an arm’s length transaction agreement.  If I have a seller inquiring about what their options are, they should consult an attorney and if they need an attorney recommendation, I can recommend attorneys I have worked with in the past they can consult for free.

Disclaimer: This article is not meant to construed as legal advice and all sellers considering a short sale should consult with an attorney and seek professional tax advice as well.

Shelter Realty, per our lease agreements, requires all tenants to purchase renter’s insurance.  Many tenant’s inquire as to why we require them to purchase rental insurance.  Laurie Yakubik with Farmer’s Insurance has provided the following information about the importance of having renter’s insurance.

HOW RENTERS INSURANCE HELPS COVER YOUR VALUABLES

Imagine a moment you’ve just returned home from a long day at work to find there’s been a fire. Everything you owned has been destroyed: your flat-screen TV, computer, furniture, books, game consoles, CDs, jewelry, collectibles and clothing. Where will you stay until your home is renovated? Who will pay to replace all your belongings? Not your landlord.

A Farmers renters policy can be the answer. It provides coverage to help you to replace your lost or damage items. If you suffer a covered loss, we’ll reimburse you for your lost or damaged items. And if the loss makes your home uninhabitable, we’ll also pay for the additional living costs for hotel, meals and related expenses.

Renters policies are very affordable, generally ranging from $12-$20 each month. For less then a dollar a day, you can have valuable insurance coverage!

BENEFITS

• Personal property coverage
• Personal liability coverage
• Additional living expenses

OPTIONAL COVERAGES

• Personal articles floater
• Jewelry, furs, fine arts

For more information on renters insurance, feel free to give Laurie Yakubik a call at 702-456-8119 or visit her website at http://www.farmersagent.com/lyakubik

As of this writing, the Greater Las Vegas Association of Realtors Multiple Listing Service (MLS) showed a total of 8,793 active Single Family Homes, Town Homes and Condominiums available with no offers. Here is the breakdown:

1. 649 foreclosure listings which comprise 7.3% of all listings
2. 1,338 short sales which comprises 15.2% of the market
3. 1,987 distressed sales (short sale + foreclosures) which equates to 22.5% of the market
4. 6,806 listings are traditional sales which make the up 77.5% of the market

The University of Nevada-Las Vegas’ Lied Institute for Real Estate (pronounced “LEED”) reported in its Housing Market 2013, 2^nd Quarter (displayed above) there were an estimated 72,737 vacant properties in the Las Vegas area. This is a vacancy rate of 9.4%. It is clear from the numbers of listed homes as compared to the overall vacancy rate in the Las Vegas real estate market that there is still a sizable shadow inventory that exists.

Another interesting component of the overall health of the market is new home sales. According to Lied’s Oct 2013 Market Conditions Report, new homes sales were down 77% from last year at this time. You may be wondering what new home sales would have to do with the amount of foreclosures. The relevancy is that still 41% of homes with mortgages are under water (UNLV LIED INSTITUTE FOR REAL ESTATE STUDIES, REPORT ON NEVADA HOUSING, OCT 2013, PAGE 16). The prospect that prices have peaked means that those yet hoping to get bailed out by rising prices are unlikely to see that scenario pan out, leading to more distressed sales.

If this data correctly suggests that prices will stall or decline once again; then the action buyers and sellers should take is pretty clear. If you were thinking of selling now is a great time to lock up your equity. If you’re looking to buy, you’ll need to look at this market very honestly when deciding whether or not to enter.

The Las Vegas real estate market has seen a run up of about 32% across the board over the past year according to several sources such as Zillow.com and Greater Las Vegas Association of Realtors released for the month of August 2013.

During the past three months there have been some fundamentals in the market that causing concern to a growing number of persons attuned to the Las Vegas Real Estate Market.

• Las Vegas’ unemployment rate remains high. According to the Bureau of Labor Statistics the unemployment rate in Las Vegas declined from 9.7% to 9.6%. That figure of one tenth of one percent equates to about 1000 persons. Unfortunately 5,000 workers left the job market and are no longer considered part of the equation so although the rate dipped the actual number of persons without work actually increased. Las Vegas trails only Detroit in the highest unemployment rate of major metropolitan areas.

• Interest rates currently held down by Quantitative Easing (the Federal Reserve pumping money into the economy by purchasing bonds and other assets). Currently, the Fed buys 85 Billion dollars a month or over a trillion per year. Printing that much money will eventually stop and interest rates are then expected to rise. Remember, to the average home buyer getting a loan, a rise in interest rates erodes their purchasing power. This point goes to affordability. Since payments go up when rates go up, the amount a borrower can then qualify for goes down. In essence, the Affordability Rate goes down.

• The Wild Card, Investors – During 2010 through early 2013 as much as 50% of the purchases were made in cash, which most likely indicates investors and not long term homeowners. Las Vegas Realtors during 2012 were bombarded by institutional buyers such as hedge funds seeking to purchase homes directly off the Las Vegas MLS. The pitch was that these buyers were looking for a 5-10 year hold period for the assets they purchased and were mostly interested in attractive rents. Even Wall Street didn’t expect to see 30-60% gains in values in less than a year as some neighborhoods subsequently appreciated. It cannot be understated that as quickly as these investors came in, they could pull up stakes and leave by selling their assets. These owners are not here for the long term, they came simply to make money. If values were to go down, these investors would have to head for the door to protect their gains. Once that happened the market could become flooded with inventory.

• Inventory is up and closings are down. One thing appears fairly certain from my view, there is no upward pressure on Las Vegas real estate prices any further. The only question seems to be whether they will stabilize at current levels or begin to decline again. Sellers if considering selling their home may well be choosing a great time to sell.

I spoke with one of our property management clients today and he inquired about selling his Las Vegas home but he wanted to know if he had to wait till the tenant vacated the property before he could sell.  This was the second time I was asked this question in the last two weeks.  Any Nevada landlord has the right to sell their investment property whether the property is occupied by a tenant or not and the tenant is required to give the landlord reasonable access to show the property.

Usually, our tenants agree to cooperate with showings when they are notified the landlord has decided to sell the property but they do have numerous questions such as:

1. Do I have to move? No, you have a valid lease and the lease will transfer with the sale of the property.
2. Do I have to let people in to see the home?  Yes, our lease requires you to allow reasonable access to the property for showings to prospective buyers.
3. Am I required to have a lock box on the property? No, we understand that you don’t want strangers walking through your home when you aren’t present so all showings will be scheduled with you.
4. Can I buy the home?  Yes, as long as the owner accepts your purchase offer.

Occasionally we will get that tenant that states they don’t care if the owner wants to sell and they have the right to quiet enjoyment so they will not allow anyone access to the property.  At that point we will explain that their lease explicitly states they have to give the landlord reasonable access to show the property to prospective buyers.  Lastly, we will point out that NRS 118a.330 states the following:

A tenant shall not unreasonably withhold consent for the landlord peaceably to enter into the dwelling unit to exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workers, contractors or other persons with a bona fide interest in inspecting the premises.

If the tenant still refuses to give access to the property, we will post a 24 hour notice to enter the property during normal business hours.  Luckily, we have never had to post a 24 hour notice to show a property to a prospective buyer as most of our tenants understand the owner has the right to sell their property and cooperate.

If you have any questions about selling your Las Vegas investment property or are in need of a property manager, give me a call at 702.376.7379.