Todd’s Las Vegas real estate investment video.
Hello. Welcome to Todd Miller TV. It’s the beginning of January 2013. If you’ve watched my videos, you probably realized that I don’t wear a tie very often. This was a Christmas gift from my Sherwin Escanuela, who is one of the agents here. So thanks Sherwin for the tie.
So I get ask the question a lot about flipping houses and flipping multi-units and then investors. And there seems to be this disconnect between the two. So there are two people. One is strictly a flipper. They’re dealing with arbitrage or they’re dealing with trying to make a quick buck. And then you have an investor who is a long-term purchaser who is going to buy rent for a long period of time but there seems to be this disconnect in the middle.
So what I’m going to do is give you a Las Vegas real estate investment strategy for how to be in the middle and sort of play both sides of the game and how to make money doing it. So you probably – if you flipped properties in Vegas in the past, you probably realized this is getting much harder to do because we have less inventory, less stuff going to trustee sale. It’s harder to find things and prices are getting bid up. OK? The Las Vegas real estate investment market is hot!
But maybe you don’t want to buy stuff with cash and hang on to it forever. So there is something you can do that sort of takes advantages of both of those and I’m going to go through how to do that. OK. So the first thing you need to do is you need to go find the empty multi-unit place. Multi-unit meaning triplex or fourplex or even and eight-plex or something like that. OK? But you want it to be empty. Best scenario, OK? Multi units are popular for Las Vegas real estate investment.
Number two is you want something that needs work. Meaning you don’t want something somebody else just fixed up. You need something that looks really bad, functionally as fine, it just needs paint and carpet everywhere and maybe some new kitchens and things like that. OK.
So the first thing you’re going to do is you could do three steps that are going to add value. OK. Number one is you’re going to fix it up. You’re going to go through all the units and you’re going to do paint, you’re going to do carpet, and you’re going to do cosmetic repairs to make the unit as nice as possible.
Now, this is going to add to value to your Las Vegas real estate investment two ways. One is it’s going to add overall value to it. Two is this is going to make the tenants really want to rent and they’re willing to pay more in rent which is something that a lot of investors would invest and realized that the nicer a place is the more – the faster it rents and the more money it gets, OK?
The next thing you want to do is you want to get the whole thing rented out and hopefully you get at least one year leases on the property. So we’ll just take the example of fourplex and we’ll say that – we’ll start with an example of you get it for 150 but it could be worth 200 grand if it was like really nice and really fixed up. So you put 20,000 to 30,000 to it and it’s now worth 200,000. You’ve added value but it’s worth more than the value you’ve added which is one of the keys that you want to do.
Now, the other thing is it’s empty. By renting it out, you make it worth more money and this is why. Let’s say that it’s a $200,000 fourplex. Well, a $200,000 investment property should get you $2,000 per month in income. OK? But if it’s empty, it’s not getting anything in income so that’s why you picked it up for less. So, you want to rent out the units at least to the absolute minimum for 500 but let’s just say we can get 700 per unit. So we had $700 per unit coming in for four units. That’s $2800.
So, now to an investor, that $200,000 purchase to get $2800 a month is a really good investment because if you buy $200,000 houses, you’re not going to get $1400 a month from each home. So now, you’ve got this really good Las Vegas real estate investment deal. OK?
So you add value to your Las Vegas real estate investment in the repair. You add value in the rent out. And then the third thing I put was hold for six plus months. This is why. First of all, by holding a property, you do two things to it. One is you prove that you have income over a given period of time. You can say, “It’s been rented out. I have consistent tenants.” You can show copies of the leases saying they’re going to be here at least six more months. That new person buying it is comfortable that they’re walking in to something that they could just – that’s turn-key for them. They can take it over and start collecting the rents with their money. OK?
The other reason you want to hold it is because if you do a flip, you’re probably going to pay income taxes like you would on regular income. But by holding in the property for a period of time, it can be a long-term capital gain. And by a long-term capital gain, you could potentially get tax at a better rate. I recommend you talk to your tax guy or gal about how that would work.
And then the last thing here is evaluate. So once you’ve done these steps, you now get to evaluate when you make that sale, to who you make the sale so that you make it on terms that are good for you. This is going to put you in great position to add value here, add value here, add value here and then you decide when you get to sell and for how much and to who. There’s really no downside to this Las Vegas real estate investment strategy. The only potential downside is you end up with it a little longer than you wanted.
But in the Las Vegas market, there’s definitely opportunity for real estate investing maybe not for flipping like there was in the past but if you don’t want to be a long-term investor, this is something that works and you’d be surprised that once you do repair and rent out how much value you’ve added to a property. And if that’s your goal is to add value to something and sell it for a profit then this is a good Las Vegas real estate investment strategy.
If you want to follow my videos, there are two ways to do it. One is to follow me on Twitter@LasVegasTodd. The other is just go on to ToddMillerTV.com, put your email address in the subscribe thing and then every time I do a video, you’ll get an email. That’s the best way to just keep track of these videos of other Las Vegas real estate investment videos.
Anyway, this is basically for investors. It’s a very good way for you if you can’t flip but you have maybe a little bit longer timeframe to make money. Anyway, that’s my update for today and hope to see you on another video. Thanks.
This video is part of the Las Vegas real estate investment series.