Signs You Should Not Ignore When Purchasing a High Rise Condo in Las Vegas
Whether the market is strong and fairly certain or weak and risky, it is always wise to consider any investment in real estate very carefully before committing to it. While at one time it may have been safe to take a somewhat calculated risk on the real estate market remaining stable that is certainly no longer the case. Real estate investing is not for the reckless or weak of heart.
That being said it is equally reckless to fail to make your money to work for you, but just because a particular strategy worked in the past, it does not mean it is guaranteed to be as effective in the future.
Each real estate investment should be analyzed independently and judged on its own merits. The only thing that any investor can be sure of is that the market can change very quickly and without warning. By following some tried and true steps, you have a better chance of making a worthwhile investment. While the following tips cannot guarantee that you don’t make a poor real estate investment decision, taking this information into consideration greatly reduces the chances of you throwing your money away on a poor investment choice.
The five core points of real estate investing
Any good real estate investment needs to have at least 4 of the five core points well covered to be deemed a good risk. All real estate investments come with some degree of risk, so if the one you are considering can’t pass at least 4 of the following, it is wise to avoid it and look for something else to put your money into.
1. Price –
There is a saying in the world of sales that the profit is made in the buy and not the sell. This same principle applies to real estate buying and selling also. What this essentially means is that investment should be able to be purchased at a price low enough that even if the market goes sour, your investment is still viable. Buying in an inflated market is a recipe for disaster in most cases, so it is wise to avoid placing your investment dollars into ‘hot’ neighborhoods.
2. Experienced Developers –
When something looks too good to be true, the chances are that it is. There are always going to be people who offer something that looks great on paper, but when you delve deeper into the realities, there is nothing to back up their claims. The same is true of real estate developers. It is wise to only put your investment dollars into something that is being developed by someone with a great track record of quality work and has already established a positive presence in that neighborhood.
3. Logistics –
You may have the best developer available, and the price is good, but the logistics just don’t lend themselves well to making the investment worthwhile. Consider all the logistical aspects of the developments, such as amenities, layout, design, and of course the size of the project. You should feel confident that when the project is completed, you will be making a valuable addition to the community and something you can be proud of.
4. Location, Location, Location –
One of the most important aspects of investing in condos, both new and established, is their ability to be resold or rented. Las Vegas highrise condos sell on the market like hotcakes. Putting your money into a neighborhood that favors condo living will increase your likelihood of having a lucrative investment, and the amenities that the neighborhood offers will greatly impact how attractive condos will be to potential buyers and renters.
5. Crunching the Numbers –
You are investing to make money, whether it be from rental income or the sale of the condos, or a mixture of both. To that end, it is essential that you can be assured that the area you are investing in has a high resale rate and that the condos will attract long-term renters easily.
Avoiding the Common Mistakes of Condo Buying
While all of the above points are critical, your due diligence does not stop there if you want to make a sound real estate investment. If you are looking to make a great investment rather than a mediocre one it is wise to learn from the mistakes of others and avoid these common traps.
1. Buying into the Developer Hype –
Developers need to have excellent marketing skills to ensure that their developments sell. They’ll consistently put up ads all over stating “high rise condos for sale in Las Vegas, NV” and other quotes until it’s stuck in your mind. It’s not that they will tell you anything that you want to hear to make a sale but if you are susceptible to their hype you may find yourself paying more for your investment property than you should. Don’t be fooled by the hype. Make sure that the developer’s claims can be substantiated before committing to purchasing.
2. Trying to Sell before the Property Registers (on Assignment) –
Unless you are assured of mortgage finance upon project register, it is wise to avoid investing in new construction. With condo assignments flooding the market and many selling below the price they originally were purchased for, new construction investment is only going to become riskier, with each project completion increasing the already abundant supply.
3. Not Having a Clear Plan –
While there is money to be made in residential real estate investing entering into it without a clear plan is foolhardy and may be a recipe for disaster.
Some questions you should be able to answer before committing to purchase are as follows:
* Do you want to be a passive or hands-on investor?
* Are you going to manage the property yourself or hire a property manager/management company?
* If looking to purchase with the intention of selling at a higher price, have you taken into account capital gains taxes? Do you understand the ramifications of making a capital gain?
* Is residential real estate investing the best option for you or would commercial real estate be better?
4. Capital vs. Income –
Your risk tolerance will largely dictate your approach to real estate investing. This ties in closely with your investment plan as touched on in the point above. Are you looking to invest for the long term and make your money from rental income or are you hoping to make a quicker profit from selling when / if the market improves? These are questions that warrant serious consideration and should be decided as part of your investment plan.
5. Going Overboard on Upgrades –
This is a common mistake that investors make. It is common for investors to believe that making upgrades that align more with their personal tastes will make the properties more desirable when in fact the opposite can be true. Not everyone wants the latest trend in bathroom fixtures, particularly if it means that the upgrades have now put the property beyond their financial reach. Make sure that the property values in that area warrant the upgrades. Developers are used to investors, particularly those new to it, wanting to over upgrade and will advise against it. Going against their advice may come at a cost you cannot afford.