patrick.net

Well - this is pretty much what I have predicted.

1) Housing crash
2) Foreclosures
3) all the people who lost their houses to foreclosure go and rent houses, except for the millions who cant afford to do that any more and end up as roommates or living in someone's basement - it's called negative household formation
4) all the infestors jump in with both feet because they see an apparent 'shortage' of rentals as rental house prices rise as a result of #3
5) more people lose their jobs - last UE report indicated that the number of people actually employed is the same number of people as in the late '90s (see zerohedge) - even tho the population is more than 10 percent higher. To back this stat up, gasoline consumption just dropped to the same levels as 1996-97 - DO THE MATH

YOU ARE HERE

6) more negative household formation

OR HERE

7) now all the newbie landlords watch their dreams of eternal renters go up in smoke

OR HERE

8 euro collapses
9 banks panic and dump shadow inventory
10 interest rates rise
11 stock market goes to 666 again ... and then right thru it
12 lots more UE and lots more negative household formation - see Yahoo 'Slab City' article

13 houses prices drop another 50+ percent ... and then drop some more. And then some more, And then some more.

BTW - the negative household formation was predicted by the Fourth Turning book in 1997 - the most important and prescient book I have ever read regarding what is going on right now.

There are many, many subdivisions in vegas with crappy little houses crammed onto crappy little lots. People were happy to get anything during the boom, so they didn't care that they were buying near a pig farm (that's grandfathered in and going nowhere) or that the "bad" neighborhoods are now their neighborhood.

Sure, there are some nice places, but many of them wer thrown up so quickly that they're falling apart. With ten feet between the houses, there's not enough room. I don't care what anyone says, it's not a happy place right now.

I see patients in their homes and the mantra is always that they're either fighting foreclosure, in the process of foreclosure or a mod, and don't know where they're going. Jobs are scarce, tips are wayyyyyyyyyyyyyy down and the place is problematic. Perhaps golfplan18 has a different experience, but I see the people attempting to live off of next to nothing and it's heartbreaking.

JonSilence says

I've had to reduce my asking price by almost $200 with the hope of getting a tenant and am still waiting for one as I go out of pocket to cover my mortgage and other costs for the second month in a row.

How much is the asking price of the rent?

JonSilence says

Currently there are 6,614 properties on the market for rent.

Does that mean that's the number of unrented ones available to rent?

Bellingham Bill says

Las Vegas is great. Everyone should overbuild like they did, 2002-2008.

...and could use the savings for more useful stuffs, and leechfuck landlords would be forced to find more productive uses of their capital.

“Nessuna soluzione . . . nessun problema!„

Yeah, like buying rental properties in the Puget Sound area. Having one side of the world border water tends to limit building construction. Help Bellingham Bill's dream of creating a rental paradise near him, invest in WA.

Goran_K says

Tell me this, a place like Malibu, or Newport Beach, before this last bubble started, neither of them was at rental parity. Why?

the idea is to compare the price to rent for malibu from 10 years ago to today's price to rent and see if it's inflated or deflated.
in most bubble areas it's inflated.

if P/R is twice what it was ten years ago then you can assume prices are still bubbly.

I understand that, and I think places like Malibu, Newport, Manhattan, etc will fall further, they have to.

But I always hear the argument that rental parity and median income are important factors to consider. For the prime locations, I think there are other things to consider.

I bought in the last 18 month 15 houses in the phoenix area. They are all rented out, they get rented within 2 weeks. So the important thing is location and your rent price. Investing in rentals are a GOOD investment in this current market because at the end of the day you have something physical to invest into.Your invesment will not go to nothing like a stock can.
I always see negative comments about purchasing houses, and I am sure that these negative comments are from people who got forclosed on or cant qualify for a mortgage. I encourage investors that you have to do this for the long run, 7-10 years you will be very happy with your investment.

I am not a realtor, I am an investor, and I can tell you that my cash flow is excellent, may I ask "ContStink Degroots" why are you so bitter? I may can help you to get you some financial advise if you like, clearly we must be on different pages.

Marv says

I bought in the last 18 month 15 houses in the phoenix area. They are all rented out, they get rented within 2 weeks. So the important thing is location and your rent price. Investing in rentals are a GOOD investment in this current market because at the end of the day you have something physical to invest into.Your invesment will not go to nothing like a stock can.

I always see negative comments about purchasing houses, and I am sure that these negative comments are from people who got forclosed on or cant qualify for a mortgage. I encourage investors that you have to do this for the long run, 7-10 years you will be very happy with your investment.

I just bought a house in Scottsdale (not as an investment but as a home I will be in for the next 20-30 years).

Just keep in mind that this government program to dump the foreclosures to the rental market will eventually hurt the rental market here in the valley. Regardless -- Phoenix has a pretty solid growth rate right now in terms of jobs and population. But I don't think it's enough to curb the massive # of homes that will come onto the market.

LASVEGASWINNER says

My rental houses are now spinning off positive cash flow that gives me a nice, tax-free income.

Tax free? That's a neat trick, I have to pay taxes on the income from my rentals. Putting it into a numbered account overseas are we?

ContStinks DeGroot says

Marv says

Investing in rentals are a GOOD investment in this current market

Not at current inflated asking prices they're not. Nothing cashflows at current prices.

Why would you blatantly lie about something so clear?

This is your first and only post so it's self-evident you're a lying realtor.

You lying realtors are losing..... and losing big.

Living in the empty skulls of realtors. Rent-Free.

My properties cash flow at current prices. Where are you looking at?

bob2356 says

LASVEGASWINNER says

My rental houses are now spinning off positive cash flow that gives me a nice, tax-free income.

Tax free? That's a neat trick, I have to pay taxes on the income from my rentals. Putting it into a numbered account overseas are we?

Depreciation of the house plus accelerated depreciation of equipment does the trick, plus I am" forced" for a check up visit to my properties every couple of months, meaning airfare, hotel and meals are part of deductible business expense.

Obligatory Hitler video about Las Vegas:

http://www.youtube.com/embed/Sv92n4LSAn8&feature=player_embedded

LASVEGASWINNER says

bob2356 says

LASVEGASWINNER says

My rental houses are now spinning off positive cash flow that gives me a nice, tax-free income.

Tax free? That's a neat trick, I have to pay taxes on the income from my rentals. Putting it into a numbered account overseas are we?

Depreciation of the house plus accelerated depreciation of equipment does the trick, plus I am" forced" for a check up visit to my properties every couple of months, meaning airfare, hotel and meals are part of deductible business expense.

BUYERS AGENT LAS VEGAS BANK-OWNED HOMES

What equipment for a rental property? This isn't europe where you can depreciate the chattels on a separate schedule from the building. I don't come anywhere close to offsetting the rental income with depreciation. Sounds like some pretty creative accounting to me.

I don't consider taking thousands of dollars out of the rental income for trips to vegas then deducting 25 cents on the dollar tax free income unless you were going to vegas anyway and are looking to get 25% off.

.
Not every part of your rental property is real estate. You have a host of other pieces of property that aren’t real estate, and those can be depreciated over a much shorter period of time. Plus, there is one provision of the tax law that allows you to deduct a huge portion and possibly the entire cost of some property you would normally depreciate in one year.

Look at the depreciation schedule below taken from Internal Revenue Service instructions.

Refrigerators, ranges, dishwashers, carpeting, furniture – 5 years

Land improvements (sidewalks, fences, landscaping shrubbery, septic systems, water pipes) – 15 years

Computers and peripherals – 5 years

Typewriters, adding machines, copiers – 5 years

Automobiles and trucks under 13,000 lbs. – 5 years

Office furniture (desks, chairs, file cabinets, etc.) – 7 years

Residential rental property building – 27.5 years

Non-residential rental property – 39 years

You are allowed by law to separate all of these pieces of property from the value of the building and depreciate them individually on IRS Form 4562. As we will see later, that can make or save you thousands of dollars a year on your taxes

Johnsilence brought up a topic that no one wants to talk about. Yes, the rental markets are at their saturation point. When jobs decrease, the renter pool decrease because they cant afford to rent or do not have good credit to rent.

Here are some figures you may want to look at to give you a feel of what is going on.

Below is a website of an article from 1975. Its an interesting read because history repeats itself.
http://news.google.com/newspapers?nid=1755&dat=19750907&id=nv8jAAAAIBAJ&sjid=K2cEAAAAIBAJ&pg=7165,2787945

Here is some data on the new construction of single and multifamily units. Keep this in mind, if the rental market is so great, then there should be a jump in units built.

http://www.census.gov/briefrm/esbr/www/esbr020.html

Here is some data on the vacancy rates. Im basing this data on the timeframe that you stated your rental property was vacant. According to table 9, in 2rd quarter of 2011, 3 bedroom vacancies in the West made up 18.6% of the vacancies, and in the 3rd quarter 2011, they increased to 21.1% of the vacancies.

http://www.census.gov/hhes/www/housing/hvs/prevqtrs.html

To the crowd that is saying its Johnsilence fault, I have one thing to say: We can all say you should have, could have, would have. But in the end, no one can predict the future. The bible says that gold and silver cankers and money makes wings for itself. So if anyone of you think that your living lofty, your dead wrong. Any investment vehicle can fail. Any savings can dry up. Any crop can fail due to lack of rain. Judge not, lest you be judge.

When vacancy is high, tenants immediately takes advantage of situation by moving from one fresh clean apartment to another living left unit trashed and unpaid last rent.

“An Era of Abandonment: New York City in the 1970s
and the Use of City-Owned Properties for Affordable
Housing Development.
Although it is hard to believe during today’s thriving
real estate market, New York City faced a surge in
disinvestments and housing abandonment just over
thirty years ago. Significant housing abandonment
began around 1963, and peaked in the 1970s. Between
1970 and 1978, the city’s housing inventory fell by
nearly 320,000 units.3 During those years, dramatic
increases in heating oil prices pushed the overall
operating costs of apartment buildings beyond the
possible rent revenue in certain areas of the city.4 As a
result, many building owners deferred maintenance
and services, leading to physical and financial decline
and, in some cases, the inability to pay property taxes.” Manhattan Borough President
Scott M. Stringer

I am the original poster of this topic. The home is 3br 2ba with a pool, just under 1200 sq ft, near Anasazi & Summerlin Parkway in Summerlin. Last year in Feb of 2011 the home went on the rental market at $1450 and was leased quickly via a prop mgmt company. After being vacant since Jan. 1 of 2012, I've dropped the price to $1290 and still no takers as of this writing.

LasVegasWinner: I appreciate your insights from long term experience in LV. When you say "investors are coming from all over the world", I assume you are referring to the influx of those who are buying rental properties, correct? If so, as a result, aren't we now seeing a glut of such properties on the rental market, resulting in competition for renters and price wars to get them? I'm curious: Of all the properties you own in LV, how many are handled by property management companies? What has your track record been with regard to tenants, vacanicies, etc.? I've had my property less than a year, am going on my third tenant, and third month out of pocket. Thus far, not my idea of a good investment.

A LOT of people overestimate what their properties will rent or sell for. Its like and emotional block where they can't see what is actually going on. Hence the listings that pop up at bubble prices.

Just recently on another real estate board, a recent purchaser posted about how he could rent out for more than his morgage was. I looked where he bought in LA. The area is miserably over priced. Theres basically no way he could rent out and be cash flow even unless he had put 50% down. I think he believes he could command $3500/mo because his place is nice and well located. Truth is, he gets $2500-2700 on a good day.

I commend Jonsilence for posting this. All I have to add is that due to the low cost nature of Las Vegas, you might take a shave, but it won't be a tremendous shave. I know people that lost EVERYTHING in the stock market. Losing 10-20% happens and really isn't anything to be ashamed of if you decide to sell. Obv you'd lose much less if you're able to rent it relatively soon.

JonSilence says

I've dropped the price to $1290 and still no takers as of this writing.

Clearly you are still asking for too much money. I wouldn't pay that much to live in the Baltimore-DC area, much less Vegas.

JonSilence says

After being vacant since Jan. 1 of 2012, I've dropped the price to $1290 and still no takers as of this writing.

here's a 3br for only $1k. is it nicer than this?

http://www.trulia.com/rental/3075115183-10677-Windrose-Point-Ave-Las-Vegas-NV-89144

toothfairy asks:

"here's a 3br for only $1k. is it nicer than this?"

http://www.trulia.com/rental/3075115183-10677-Windrose-Point-Ave-Las-Vegas-NV-89144

Mine has a pool and is in what appears to be a nicer neighborhood. Are those things worth an extra $250 per month? I guess the market will tell me....

After being vacant since Jan. 1 of 2012, I've dropped the price to $1290 and still no takers as of this writing.

3/2 summerlin rent for 895 to 1150. Don't be greedy or foolish.

JonSilence says

LasVegasWinner: I appreciate your insights from long term experience in LV. When you say "investors are coming from all over the world", I assume you are referring to the influx of those who are buying rental properties, correct? If so, as a result, aren't we now seeing a glut of such properties on the rental market, resulting in competition for renters and price wars to get them? I'm curious: Of all the properties you own in LV, how many are handled by property management companies? What has your track record been with regard to tenants, vacanicies, etc.? I've had my property less than a year, am going on my third tenant, and third month out of pocket. Thus far, not my idea of a good investment.

There is a glut in the small 1200-1500 sq ft 3+2, the ones that sell for $60,000 to $90,000, but are not in good areas. Location is the key, as always. Been a rental house landlord since 1994. Everything with property manager. I search for market rent, list i there and then start dropping $25 every week after first 2 weeks.. Average vacancy 45 DAYS

Hey, I live and work in Vegas. A friend of mine just rented a really nice 3/2 in Summerlin with a pool for 1,100/mo. Had plenty to choose from. Good luck!

JonSilence says

Mine has a pool and is in what appears to be a nicer neighborhood. Are those things worth an extra $250 per month? I guess the market will tell me....

Seems to me that the market already has.

If it does not sell then the price is higher then recent comp sales,if it does not rent then the rent is higher then current comp rents.

I maintain my earlier question about there being an investor real estate bubble.

While it's true that every house will sell... eventually... it's not quite as simple with rentals.

When you sell, you don't care who buys it, but when you rent, you definitely should care who you're renting to. As you're forced to lower the price, you begin to attract more of the people you don't want to rent to.

Buy a house to live in it.

Thanks to everyone here for your input & insights. Good News and BAD news: Good News--Looks like I have found a tenant for my Summerlin property at $1225 per month, down $225 from the $1450 I was getting through all of 2011. BAD NEWS: My LV property manager has been doing research and says that 21 rental properties came onto the market last year from Feb 1-14 2011, compared to the 1,440 that have come onto the market Feb 1-14 this year in 2012. That's over 65 times MORE rental properties on the market today than a year ago. She says that indicators are that we have not hit bottom and that its going to get worse...
W T F ???? :(

Renters tend to be nomadic. We have to be. Without a lease, WE could be given 30 days notice at any time. The positive to that is we can do the same.

As such, we're also less tied to a particular neighborhood. School continuity for kids is nice, but if you can't afford it, you can't afford it. Faced with moving, we have multitudes of options, and we can move far, far easier than an "owner".

If the world was filled with nothing but investor-owned properties, there would always be a lot of homes on the market to choose from. Renters only have trouble in low turnover markets, which tend to have fewer rentals.

So while I still think it's a bubble, the bigger it gets, the easier it should actually become for renters. When everybody dumps their listings on Craigslist at once, it's for sure a buyers market!

it sounds like you need some more due diligence. Call me paranoid but I dont trust what anyone tells me regarding the real estate market. I need to see things with my own eyes because It seems like everyone involved has some type of agenda.

@lasvegaswinner, You are full of it. I live here. Saw your chart on housing median prices. Guess what? Recent spike is due to AB284 restricting robo signing. It has backed up the foreclosure process. When all of those REOs hit the market later this year your chart is going to look a lot different. I expect about a 10% to 15% drop in 2012. Then after the elections I expect a recession in 2013 and 2014. Interest rates will probably go up at the same time. I have no idea how big of a drop we will see then. I do predict that everyone in Vegas will be underwater, not just the current 85%.

Jon is in a good area. The entire real estate market is in a death spiral. Cut your losses and sell sell sell!

It's sure hard to use logic with all the emotional "doom and gloom" but the FACTS are that Feb 2012 sales in Las Vegas were almost 4000 homes, putting it as one of the best Feb in Las Vegas sales history.
50% of the sales are to Investors, and they are coming form all over the world.
I must assume that a lot more people with money feel good things are going to happen in Vegas.

LASVEGASWINNER says

I must assume that a lot more people with money feel good things are going to happen...

One must be careful with this though. This exact thought process was prevalent in 2006. "Buy RE, you CAN"T lose. Everyone is doing it, so it is obviously safe!" If one gets in early enough, good things can often happen. At this stage in the game though, it just seems like a stampede of the herd. I am willing to accept that I could be wrong here, but it makes almost no sense to me to be buying up properties with the intention of renting them out when everyone has been doing the same for years, and knowing that large institutional investors will likely be flooding the market with even cheaper rentals since they will pay considerably less for properties than the little folks.

To whom will all of these properties be rented to? Increasing the supply of a rentals with a fixed supply of renters only seems like a recipe for...well, it is pretty obvious at this point.

LASVEGASWINNER says

50% of the sales are to Investors, and they are coming form all over the world.

I guess all of them must be cannibal anarchists.

Get rich quick! Halelujah Jeeeezzzzuus.

wthrfrk80 says

Get rich quick! Halelujah Jeeeezzzzuus.

I love the parable of the poor fool that didn't buy when the Nazarean market was HOT and was destined to be priced out forever. Thankfully, the Savior came and bumped the conforming loan limit back up for him, thus providing the poor fool the ability to put 3.5% down on his dream house, and give thanks by paying interest to the Almighty for the remainder of his corporeal life. So heartwarming!

Jesus loves Ninja Loans!