Philip Gusterson

Philip Gusterson
Contributor since: 2012
I agree Mitch. It's ideal to have at least three properties to spread the risks that come with landlording, which can be prohibitive.
There are seductive reasons for minting this coin. It would not have any connection to the debt. It would not be part of the money supply and not backed by bonds (it would just be in a vault I assume). It would not impact the economic system, thus can't cause inflation.
But these reasons are well countered in this article. I hope it does not get minted.
Thank you for taking the time to mention this. I am familiar with Ordinance 5977, the City of Las Vegas’s Short Term Rental Permit Application, and codes and ordinances outside the City of Las Vegas, and it’s important that potential buyers are too.
"Although the housing subsidy is an interesting theory, I am not sure that it really points the way to any particular form of investment securities where the private investor can benefit from increased spending that is diverted from housing." Agreed, but with 75,000 delinquent Nevada loans there is a sense that it is helping prop up Las Vegas retailers.
It would be interesting to track discretionary spending on cars against the rate of mortgage delinquencies.
I addressed that in detail here: Unfortunately a wave of conservative buyers who are coming in off the back of price increases are in fact taking on more risk that those who bought when foreclosures were in full force.
Yes, the 55+ communities in Las Vegas did not have the same level of distressed product as some parts of the market as there were more cash buyers and there is always a steady demand. With that said some of the developments like Ardiente and Solera at Stallion Mountain have not sold out, more than five years after start.
"The market is confusing a listing shortage with a housing shortage." Great point. Home builders will have to keep an eye on the pace at which the manipulated market works through its imbalances. The last thing we need is an over-supply keeping prices down at the very point when genuine market-led appreciation is possible.
"Isn't it hard for novice landlords to find good tenants?" I would say so, and recommend using a competent property manager. I would not use an agency to find a tenant only, and then self-manage, because under this scenario the agency is not aligned and may just deliver a warm body rather than make the extra effort to screen for a quality tenant.
You will have a lot of vacancies if you rely on credit scores as a screening in Las Vegas, as renting to post-foreclosure families is common. The more important test is how long someone has been in their current job and what the level of income is. You need some flexibility here too account for the cash income of those in the restaurant and entertainment industries. The best protection you can have from vacancy risk is multiple properties.
As for your friend's place being trashed I see this in low-income units which cost $100-$2,000 per post-tenant turn, and in foreclosures, but I have never seen it in a rented single family home. I have seen it in the Strip condos which can attract tenants who want to party. You can never eliminate the risk of this happening, and the best you can do is screen, take a decent deposit, and have good tenant relations during occupancy.
That incentive wouldn't work with many of the tenants who rent the Strip high rises!
With over half of all properties being bought by cash buyers during the last two years there is indeed an increased supply of rental properties. That is countered by the fact that foreclosures have created an increased supply of renters who need time to rehabilitate their credit before buying again.
It should be noted that Las Vegas led the nation with 36,987 evictions in 2011, and the weak economic environment, combined with the increased supply, has increased the days on market for rental properties, and put downwards pressure on achievable rental rates.
But when all is said and done if you buy properties in areas with good demographics, and are strategic about the tactics used to secure, and qualify tenants, then Las Vegas real estate is an opportunity to get a double digit rental yield, and that is before considering the capital appreciation that Markos predicts.
Quite a few investors are on the sidelines in Las Vegas because we have seen 15-30% capital appreciation this year, and there are concerns that it is a mini-bubble about to be deflated by an increase in foreclosures.
"80 million baby boomers try to sell houses to 65 million Gen Xer’s who earn half as much money" That's a tide that is tough to swim against. Your comments reminded me of Japan's bubble creating the need for multi-generational mortgages.
There are multiple funds buying single family homes nationwide. They have taken the view that this can be a new class of institutional real estate with a REIT exit. They are doing everything from individual purchases at trustee sales through to bulk buying:
Thank you Robert. Like you I run a real estate agency here in Las Vegas. After working in Moscow and Tokyo I wasn't expecting Las Vegas to be the most interesting market, but it is!
Yes, securing rental income makes sense, especially where you can buy below the cost of construction and can secure a double digit unleveraged yield.
Based on my experiences in Las Vegas I agree that the potential pressures on a low-income multi-family property are significant.
In today’s moribund Las Vegas economy the tenants renting at the low end of the market ($400-$600 p/m) have been some of the hardest hit, and are often just one missed paycheck away from not being able to pay the rent. The delinquency rate in this asset class is very high.
There is incredible pressure on rental rates and this has created move-in specials as low as $199 deposit and one month free rent in some areas. Beyond the fact that this depresses achievable rents it also creates a situation that some tenants take advantage of – they move from property to property every couple of months, continually taking advantage of move-in specials and initial free rent deals.
Many of these properties have high consistently high occupancy rates, but that masks the fact that every month they have 10% of tenants leave and in that same month find new tenants to absorb this vacancy.
These properties typically have a lot of deferred maintenance, and the costs associated with AC units, water heaters and plumbing is far higher than with better quality properties.
Tenants in low income housing often generate expenses that are less common in higher quality problems, such as bed bug infestations, and misuse of garbage disposal units causing blockages.