Are investors buying, selling, or holding real estate in Las Vegas? Episode #286

Todd: Hello. Welcome to Todd Miller TV. Joined here today with Oana. So one of the projects we’ve been working on is calling back all of our investors that have bought over the last couple of years and finding out one of three things.

One, are you acquiring more properties? Two, are you holding your portfolio or three are you thinking about liquidating and taking the profit that you’ve made over the last three years?

So let’s talk about people that have bought let’s say in ’09 and ’10 and maybe even in ’11 and what their option and the potential reason they might want to go ahead and sell that property.

Oana: Well first of all you buy an investment property with a goal in mind.

Todd: OK.

Oana: So has that investment property met that goal? Generally the goal is a combination of both cash flow and appreciation.

Todd: All right.

Oana: Here in Las Vegas we’ve seen some appreciation over the last couple of years. A lot of it is because the prices were so low to begin with and then of course secondarily because there is a shortage of inventory in the marketplace. So homes are selling for more money.

Because we don’t have a crystal ball, it’s important to know, hey, if I’ve made 20 percent on my investment or whatever your investment goal was, is it time to go ahead and take that money and do something else with it or simply sit on the sidelines for a while.

Everybody has a different investment goal so it’s important that at the very onset when you purchase a property, you’re very clear as to what that goal is so that you know when you’ve met that goal. When you’ve met that goal, then go ahead and execute your exit strategy.

Todd: OK. So it’s pretty clear that anyone who bought in ’09, ’10 or ’11 has made money because especially if you bought lower end cheaper houses. They’ve all appreciated.

Oana: Right

Todd: Now given that, prices are increasing which investors realize this, that there’s this upward pressure on prices right now, that they can’t get a good return from their bank account.

Oana: Right.

Todd: Right. The stock market has tanked since the election basically. So do you think there’s a lot of incentive for people to pull that money out or do you think a lot of them are just saying, “Hey, I’m just going to sit with this because it seems to be like the winning strategy right now”?

Oana: It depends again on what other opportunities you have. For example, if you’ve purchased the property and you did quite a bit of rehab work, you’ve rented it out and now you have a healthy return on your investment between the rental income and the appreciation, it may make sense to go ahead and sell that property, take that money. Maybe split it into two properties and go ahead and go do it again.

Todd: OK.

Oana: So that may make sense. So every property is different. Everybody’s situation is different but especially this time of year, it’s always a good time to go ahead and look at your investments, see how they’re performing, see if they’re meeting your goals and your needs and then decide how to move forward with them.

There’s some new tax laws coming out and so there may be an advantage to still selling this year. There is still time to do that. They’re thinking about changing the capital gains tax. They’re thinking about changing a lot of that. So that may be a reason to sell.

I’ve heard it said that the reason that George Lucas sold was because of the new tax structure that’s going to be in place next year so that’s why he sold this year. In his case, probably it means something to the tune of $400 million in tax difference.

Todd: Right.

Oana: Most investors’ case doesn’t mean that kind of money but any money that you can keep in your pocket and put to work clearly is something to really try to protect and to work with. I personally would rather work with my money than have the government work with it.

Todd: Right. No, I agree completely. OK. So the one strategy we’ve seen investors take – because what we’re finding is about 10 percent are selling. About 40 to 50 percent are holding but we see a small portion who is actually trying to get cash out of properties.

Oana: Right.

Todd: They’re trying to do revised HELOCs, whatever they can, and use that cash to go either completely buy another property or use it as a down payment on the conventional loan on another property.

Oana: Right. So that’s a good reason to sell a property that maybe has had a lot of appreciation. Maybe there wasn’t as much room for appreciation going forward because it has already had so much.

Todd: OK.

Oana: To go ahead and sell that property and take that money and put it back to work.

Todd: Cool. Good. All right. So I just wanted to get Oana’s opinion on that for investor strategies, especially investors who bought the last couple of years here in Las Vegas. So that’s my update for today and hope to see you on another video. Thanks.