Home prices in Las Vegas have dropped by more than
65%. Meaning, today pre-owned single-family homes cost only a third
of what the cost of these homes was new just a few years ago. Houses
like these are hardly lived in and are often in virtually new
condition.
These homes have approx. 1,500 - 2,000 sq.ft. and
feature 3-4 bedrooms with 2-3 bathrooms. Today, these homes cost
approx. $90,000 to $120,000 compared to the former prices of approx.
$270,000 to $400,000 a few years ago. Currently, Las Vegas
offers the lowest-priced single-family homes in the world!
Next to the extra low purchase prices of these home,
there's also the opportunity to rent out these homes for around
$1,100 to $1,400 per month. So these homes offer a pretty
interesting cash flow opportunity.
There's also the potential that the prices for
single-family homes in Las Vegas may double from the current prices
over the next approx. 5-10 years. Reason being for this speculation
is that only minimal construction of new homes took place in Las
Vegas over the past few years. Due to the massive correction
(bust) in home price over the past few years, as explained
above, home prices are currently at an extremely low level. This
offers the possibility that home price may produce large capital
gains over the next approx. 5-10 years.
Next to a very favorable tax climate in the State of
Nevada (no State income tax, etc.), often there's also the
availability of financing these homes which provides more efficient
use of existing capital.
We consider the favorable single-family home situation in Las
Vegas to be a special situation. Fact is, that this current window of
opportunity will not last. Once the home prices begin to increase then the
initial investment will be higher and therefore the potential capital gains will
be lower.
Here are just a few examples of calculations for a general
overview: (Note: All examples are based on purchases of single-family homes for a
purchase price of approx. $100,000 each. These calculations are assuming a home
price appreciation of net 50% over an approx. 7-year period. Even a 50% net
home-price appreciation will result in a much lower than average square footage
price as compared to the past 15-20 years. From current levels, home prices will
need to appreciate by at least 200% to reach the former highs of a few years
ago. Therefore, these calculation examples
are actually very conservative and are only used to illustrate the basic
potential in this regard.)
Example #1 ...
approx. 14% p.a. over a 7-year period:
Cash purchase of a single-family home for $100,000
Annual net rental income: approx. $7,800 resulting in approx. 7.8% p.a.
Net capital gain from home-price appreciation: approx. $45,000 resulting in
approx. 6.4% p.a. Total annual Return: approx. 14% p.a.
Example #2 ...
approx. 18% p.a. over a 7-year period:
Purchase via financing of two single-family homes for $100,000 each
Down payment: approx. 50% each house; Annual net rental income: approx. $7,200 resulting in approx. 7.2% p.a.
Net capital gain from home-price appreciation: approx. $76,000 resulting in
approx. 10.8% p.a. Total annual Return: approx. 18% p.a.
Example #3
... approx. 23% p.a. over a 7-year period:
Purchase via financing of three single-family homes for $100,000 each
Down payment: approx. 30% each house; Annual net rental income: approx. $7,200 resulting in approx. 7.2% p.a.
Net capital gain from home-price appreciation: approx. $117,000 resulting in
approx. 16.7% p.a. Total annual Return: approx. 23% p.a.
These homes can be purchased directly by any investor of any
nationality with some exceptions. There are also opportunities to be a passive
investor via professional local real estate groups who handle all the details
and administration of such investments. The property management can also be
conducted directly by the investor or otherwise more conveniently via the local
real estate groups who again handle all the details regarding the various
partner programs.
Note: The annual return as indicated in the above examples is
only partially available on an annual basis, namely only regarding actual net
rental income. The majority of the indicated annual return will only be
available once the properties have been sold at the end of the investment
period. It's also important to note that potential home-price appreciation is a
pure speculation and cannot be guaranteed, but in the indicated examples are
based on historical data. The expectation is that home prices will appreciate
accordingly over the next approx. 5-10 years. Potential applicable capital gains
taxes are minimal and may affect the annual rate of return depending on various
components by approx. 0.5%-2% p.a.
Due to the fact that comparatively only a few homes were
constructed in Las Vegas over the past few years (during the height of the
housing bubble up to 50,000 homes were annually built in Las Vegas while
currently only approx. 3,000 homes are annually constructed), it is our
opinion that we may enter into housing shortage in Las Vegas over the next few
years. The transaction volume in Las Vegas is already back to almost record
levels of over 59,000 transaction per year (2011).
Because of these components, home-prices may appreciate
automatically due to the economic principle of supply and demand. Rents are also
increasing and are supporting a higher price level. This is an additional
benefit which may further boost the profit potential.
Las Vegas is a fast growing town with a population of more than
approx. 2.4 million considering the population of the whole Las Vegas valley
(since 2010, Las Vegas is once again the fastest growing town in the U.S.). Up
to approx. 8,000 new inhabitants a month move to Las Vegas. This scenario
results in a steady demand for rental properties as well as in a demand to
purchase residential real estate. Las Vegas is also the most visited city in the
world as over 40 million visitors a year from all over the world come to Las
Vegas.
Via various risk management strategies, any risk of loss can be
reduced accordingly. One of the greatest advantages are the extremely low
purchase prices for single-family homes. Due to this fact, losses regarding
value are significantly reduced and/or are potentially non-existent (home
prices have hardly dropped any more over the past 12-18 months, but are showing
stabilization). Today, the price per square foot is the same or even lower
than approx. 20 years ago.
The second security function is the opportunity to rent out the
single-family homes. Rents for single-family homes are very competitive to the
rents for apartments. Often, families with children prefer to live in a house
rather than in an apartment with many limitations, especially if the rents are
virtually comparative.
This means that the risk of loss is significantly
reduced via the low purchase price and due to the potential of expected price
appreciation. In addition the purchase price is supported via the potential of
renting out the property generating a positive cash flow.
Partner programs are usually very simple arrangements and there
are various combinations available. A popular version to partner is via an index of a
local company which is involved in the buying, selling and renting out of
single-family homes. In this scenario a partner provides to the local real
estate company a variable conditional loan. Due to real estate transactions of
this local company, the index will usually change on a monthly basis.
Another version is for larger investors to establish their own
local real estate group together with a local partner in order to facilitate the
purchase, sale and the renting out of the pertaining properties. In this
arrangement, the investor and/or the group of investors does not need to be
present on location as the local partner executes all transactions. This version
of engagement also provides direct ownership of the purchased homes.
In the U.S., the residential real estate market functions
under strict oversight of government agencies to protect consumers rights and to
facilitate integrity in all residential real estate transactions. This is a very
important aspect for each investor and partner. Through extensive public online
data, transparency is a key component to the integrity of the U.S. residential
real estate market. In addition, independent third-party accounting firms
provide additional safety and transparency for each partner/investor.
Even though the inventory of single-family homes in the lower
price range has been significantly reduced over the last couple of years or so,
there are still a few thousand homes available for purchase. But as mentioned
above, the window of opportunity to get involved at the current low price will
only exist for a certain period of time. Once home prices increase, then the
cost of investment will be higher and the potential capital gains will be
reduced.
Another advantage for e.g. European home buyers and partners is
the still low cost of the U.S. dollar. It is expected that over time the U.S.
dollar will increase vs. the Euro and therefore most likely generate a potential
additional capital due to the strength in the U.S. currency vs. e.g. the Euro.
For all comments and inquiries please send
your E-mail to:
ds@scherf.com
Interested parties please
include the following information:
(1) Name
(2) Mailing Address (Street, Street Number, Zip Code, City, Country)
(3) Expected available purchase amount (minimum $100,000) or partner
amount (minimum $25,000)
The Beginning
Our interest in real estate began in Vienna (Austria) in the early 80s. A
meeting with Vienna's most prominent real estate broker Mr. Waldhof was our first encounter with the world of
real estate.
Top-notch Research
In the late 80s when the Denver (Colorado) residential real estate market
collapsed, we correctly analyzed it as a great opportunity. Home buyers as well as investors
who bought at the low back then were
able to watch their home prices increase significantly over the following years as
the mile-high city experienced a housing boom. One
aspect of our expertise is top-notch professional research to evaluate markets
correctly.
Expertise in Las
Vegas
While we've been around Las Vegas on and off since 1980, we became permanent
residents of Las Vegas in 1996. Again, numerous opportunities presented itself in Las Vegas during the mid 90s.
The price per acre just skyrocketed across the Las Vegas valley from the mid 90s
to the dawn of the new millennium. For the Las Vegas residential market it took a few years to get
going and then finally in 2002 home prices
began to increase sharply, often by approx. 150%-200% within just a few years.
The former Salt Lake
City Opportunity
After the 2002 Olympic games in Salt Lake City, the residential real estate market
in that area collapsed. In 2004, we quickly became involved in the residential
real estate market in the Salt Lake City area and again we hit a home run as home prices
nearly doubled within just a couple of years.
Bargains in Las
Vegas
In 2011, Las Vegas home prices had reached their lows and have since stabilized
and seem to indicate the formation of a new upward trend. As mentioned above, we're at
ridiculously low price levels in Las Vegas. Currently, Las Vegas is the
metropolitan area with the lowest-priced single-family homes in the world!
Interestingly, inventories are shrinking rapidly and due to our gap theory regarding the pricing
gap between pre-owned homes and new construction, it is very likely (if
historical data in such scenarios is an indicator) that we may see
potentially enormous price jumps and steady increases from current price levels.
To us, every home
buyer and home seller is much more than just another Client
As we have excellent expertise in research and in evaluating markets which is
great for the investment aspect of a home purchase, we also have an emphasis on
superior customer service. We know what it's like to be treated just like
another client, instead of having a top-notch real estate professional
understand the need,
vision, desire and excitement of a home buyer and seller. Together with our expertise and know-how we're very enthusiastic about
real estate. Only a few feelings compare to the
excitement of selling a home fast to the full satisfaction of the seller, and on
the other hand the exhilarating feeling of seeing a home buyer purchase their
dream home at a very good price and feeling
comfortable with everything about the transaction and the new property to make
it his/her very own new home.
Our attitude toward real estate is definitely
different from most other real estate agents. One of our objectives is to be
available to our clients during the whole home buying/selling process for any
questions and guidance that may arise and/or be needed. And most certainly we go
the extra mile in a sincere effort to make sure that you have the greatest
real estate experience ever. Without exception, every client receives red-carpet
treatment from us, and we've established an
excellent reputation in this regard over the past 30+ years. We value your business and the relationship we establish with you. We understand that a home purchase and/or sale is a major
decision in your life and you want to entrust your business only to the very
best real estate professionals in a local area. Throughout our life we have been personally
and directly responsible for a combined sales volume of over $350 million.
Here are a couple comments from what
people are saying about us and our services:
"If
there is a real estate agent you can and should trust it is D.Scherf for
sure !"
(Patricia B.)
"If
you're looking for property in Las Vegas, or for opportunities in the US
realestate
market, this is a great place to start. I've known Dietmar for a very
long time as the go-to guy for getting it done right."
(Michael G.)
Keller Williams Realty
Las Vegas
▪3100 S. Durango Dr. Ste. 106
▪Las Vegas
▪NV
89117
▪
USA
Each office independently owned and operated. All
information provided is deemed reliable but is
not guaranteed and should be
independently verified. Properties subject to prior sale or rental.