Investing in Las Vegas real estate used to be a gambler's paradise because buying houses almost alwaysÂ promised a good return on investment. Sadly, the recession severely impacted the area which is now ranked at the top of cities with the highest rates of foreclosure.
Those who invested during the construction boom are now left owing more than properties are worth. Many are forced to accept lower rental income or reduced purchase offers to offset financial losses.
While the news is rather gloomy for those who purchased investment properties prior to the recession, the forecast is quite sunny for those considering investing in residential properties located within Southern, Nevada.
Industry expert, RealtyTrac, reports the average sale price of Las Vegas foreclosure houses is $123,500. By comparison, in 2005 these same properties were selling at around $300,000. No one predicted Vegas real estate would depreciate by more than 40-percent over the course of 5 years.
While realty statistics appear gloomy, Las Vegas has become a hot market for real estate investors. DataQuick Information Systems of San Diego reports investors purchased nearly half of residential properties sold in Vegas during December 2010. The report also states more than 50-percent of those purchases were made with cash.
Investors who buy houses with cash can save up toÂ 20-percent off the asking price. DataQuick reports median prices of Las Vegas homes purchased with cash during the last partÂ of 2010 was $89,250 compared to $100,000 just a year ago.
Buying houses with cash gives investors additional benefits. The primary advantage is investors do not have a mortgage payment to meet each month. Secondly, cash offers provide negotiation leverage. Banks love cash offers because it reduces closing time and eliminates the need to undergo the financing process.
Due to the high number of foreclosures, Las Vegas is actually a very good market forÂ investors. When looking for properties it can be to the benefit of the investor to look at bank owned properties, ones thatÂ have been listed for more than 6 months.
Bank owned properties are houses that have been repossessed by banks due to foreclosure.Â Once they repossess houses they are responsible for safeguarding them until they are sold. Therefore, they want to sell distressed properties as quickly as possible.
Investors can further capitalize savings by investing in foreclosure houses that qualify for HUDs Neighborhood Stabilization Program. The government provides NSP grants to investors that buy houses in communities with high rates of foreclosure.
A housing market report provided by HUD states Nevada receives nearly $70 million in NSP grant funds. Qualified applicants can obtain up to 20-percent of the purchase price in grant money. Better yet, investors can receive up to 5 NSP grants for qualified properties.
NSP grants are only offered for bank owned properties. This is a non-issue as thousands of bank foreclosures are listed for sale in Las Vegas. However, investors should submit applications as quickly as possible before allocated funds are exhausted.
Prior to investing in Las Vegas real estate it is imperative to become familiar with the area and types of properties for sale. It can be beneficial to work with a realtor to obtain comparable sales reports and advise of areas with high levels of anticipated growth.
Last, but not least, consider investing in short sale and bank owned properties; especially those that qualify for NSP grants. Investors who purchase Las Vegas real estate should be prepared to hold properties for at least 5 years to generate a good return on investment.