We talk with many people looking to buy real estate investment properties in Las Vegas and surrounding areas. Some of them know what they’re doing… and some of them are still learning more about the real estate investment process.
But, since our entire business is finding great real estate deals… and often passing those deals onto real estate investors like you at huge discounts… I thought it would be a great idea to share with you some resources on how to effectively evaluate a Las Vegas area real estate investment deal. This works in any market… Las Vegas, surrounding areas, Nevada, and any other states across the country.
When you really boil it down… evaluating a Las Vegas area real estate deal is a pretty simple process. If you’re looking to buy Las Vegas area real estate as an investment, wholesale properties, hold them for rent… whatever, one of the most important parts is buying it right (i.e. – not overpaying).
So let’s dive in.
How To Evaluate A Las Vegas Real Estate Investment Deal – (for single family homes)
There are just a few main elements when you’re evaluating a real estate investment deal.
- Cost of repairs needed to get the house or property into good condition
- The after repair market value of the house or property (what it’s worth and can sell for today once it’s fixed up)
- If you’re going to buy and hold for a rental… you need to know what you can rent it out for and what your “debt service” (mortgage payment) will be. Knowing this makes sure you’re buying so the property cash-flows each month
There are other things you can (and should) look at too… but those 3 are the main important things to look at first when investing in Las Vegas real estate.
Cost of Repairs
One of the things you should do when you are looking at a Las Vegas home or property is find out how much it’ll cost you to fix it up to a point where it’s in great shape. In other words, the cost of repairs. This could be a new roof if it needs it, carpet, paint, a new kitchen, yard, maybe even more.
To find a good estimate of the cost of repairs, the best advice we have is to get to know a contractor or two in the Las Vegas area and have them walk through the properties with you the first few times… have them quote out the repair cost… and build that into your offer.
After Repair Market Value
This is simple, but many real estate investors get stuck on this part. This is essentially what you could sell your Las Vegas area house for today… after you have repaired it and make sure it is in great condition. This is found by finding out what other similar Las Vegas area houses in the same area are actually selling for. NOTE: Don’t look at the “Listing” price… look at what houses similar to yours have actually sold for in the past 3 months. This helps you determine how much you could actually sell that house for if you had to… right now. You never want to over pay to a point where you can’t sell it for a profit in the next 3 months.
How do you find this? There are services out there that can help you with this… but oftentimes the best way to find out the true value of a Las Vegas area house is to talk to a local realtor that you know… or an appraiser. Heck, if you don’t know one… call up a few today… tell them you have a Las Vegas area house that you’re potentially going to sell in the near future… and ask them what they think it should sell for.
Buy And Hold For Rental
So, you’re going to buy an investment home and hold for rental? Great! You don’t need to worry about what it’ll sell for right away. What you need to know is if it’ll pencil out on a month to month basis. You know… cash flow.
So, talk to a mortgage broker (or a private lender) and find out what the monthly mortgage payment will be for that specific home or property.
Then find out what you can rent your Las Vegas area home out for on a monthly basis.
Then, you work backwards… and find out at what purchase price your mortgage payment will be low enough so you can make the monthly cash flow you need to make on the house. Be sure to figure in other expenses too like property taxes, maintenance expenses, property management fees, and keeping money in reserves for future repairs.
So, your offer price here should be:
Monthly Mortgage – Monthly Rents – Operating Expenses – Taxes / Insurance – Monthly Cash Flow = Offer
Simple enough right?
The cool thing is, the more you’re bringing into the deal in cash… the lower your mortgage is.
Making An Offer
We’ve been talking about how to look at the numbers and analyze a real estate investment deal.
From there, just make an offer. Many times the Vegas area houses we let you know about will already be so deeply discounted that we get multiple offers… often above our asking price.
So, if you really want a house or property in the Las Vegas area… find out what is the bare max you could buy the home for… and offer that. Otherwise you may lose the investment deal because someone else is likely making an offer too.
With that said, the golden rule in real estate is to never overpay for a Las Vegas house or property. That’s why our own deal analyzing criteria is so darn strict… and why our house buyers (like you) get such great deals.
I hope this little tutorial has helped you sharpen up your real estate deal analyzing skills… and we really look forward to working with you in the near future.
If you have any questions at all… don’t hesitate to contact us anytime for anything.
Happy investing!