Dec 08
29
Right now, there are 818 condos available in the Las Vegas Valley listed at $100,000 or less, and a few more in age-restricted communities. Of those, 537 were built 1990 or later. And of those, 244 are less than 10 years old.
For the moment, let’s drop from consideration the 108 condos that are listing for under $50,000. Those units are going to need some serious TLC, and probably won’t qualify for FHA financing. Leave those to some investor: a savvy investor can pay cash, put $10,000 or even $20,000 into the place, and flip it for roughly double thier money in 3-4 months.
That still leaves over 700 condos that can be purchased for $50,000-100,000. While some of these will need work, many are very close to move-in ready. These units are in any part of town you could possibly want to live in.
Thursday, new FHA requirements go into place. That means the smallest down-payment allowed will be 3.5%. Let’s flesh out this example with a place that costs $80,000. Like maybe this one, or that one, or maybe this other one. A 3.5% downpayment would only be $2400 cash, and you might still find a downpayment assistance program with the help of your mortgage broker (or the “First National Bank of Dad”). But let’s also say for the sake of argument that after closing costs, you still end up with roughly $80,000 of mortgage. I have mortgage brokers telling me that with a conventional loan, you can get interest rates below 5%, but an FHA loan is more like 5.5% today. Don’t blink, because those numbers will change tomorrow. Our hypothetical mortgage payment, principle and interest, is something between $429 and $454.
You can’t rent a place for that money. Anywhere.
Granted, that doesn’t include taxes and insurance and HOA dues, but you can’t find a “real” apartment in Vegas for less than $600.
And let’s not forget that there are lots of programs out there to help you buy a home, particularly for first time homebuyers. A good mortgage broker will be able to tell you about the local programs available to you: some require you to live in a particular city or county, some are only open to people in certain jobs (teachers, firefighters, etc.). There’s also the federal tax credit for first time home buyers. The feds will credit you $7500 on your taxes — yes, three times the hypothetical downpayment — but you will have to pay it back over 15 years.
It’s hard to see a downside to this: the buyer gets a home for less than it would cost to rent in most cases; the buyer gets the benefit of the home mortgage deduction on his/her taxes every year; prices will at some point start going up instead of down (these are already “can’t build it for that” prices); even if the buyer decides to upgrade to a better place in a few years, these will make great rental properties; and finally, there are all sorts of incentives to buy now rather than wait.
If you want more information, or help finding and buying one of those condos, give me a call or hit the “Contact Me!” link.
