The Vegas real estate market has come a long way in the last couple of years. Inventory is way down, prices are stable, there are signs that short sales may actually get approved, and some experts expect prices to go up roughly 5% by February of next year. This situation creates both a potential opportunity and a potential problem.

Some years back, I started defining “Investing” as “spending money with the reasonable expectation of receiving more money back.” Real estate is something that people have invested in for centuries. Sometimes it has been a spectacular investment, and at times it has been a poor investment, but most of the time real estate has been a good investment.

There are 3 basic ways people can make money investing in real estate:

1. Buy property with the intent of selling it at a higher price at a later date, such as buying acreage near the edge of town in anticipation of future development
2. Buy property and improve the property to increase its value, such as painting, fixing problems, adding rooms, or modernizing existing areas
3. Rent out property that is owned or purchased by the investor

Most investors do a combination of these. For example, a developer can buy a property, build a shopping center, and rent out the stores to businesses. An investor can buy a house in desperate need of repair, renovate it, and either sell or rent it to a family. Real estate investment is necessary to a healthy economy because not every family and business can (or wants to) own real estate.

However, it is not a profession for the faint of heart. Many things can go wrong with a real estate investment: prices can drop; tenants can fail to pay the rent; roofs can develop leaks and water pipes can break; disasters can happen; laws can be passed that effect what you can and can’t do with your property or your tenants. Diligent investors can make a lot of money, sure, but it’s not foolproof.

Lately, I have heard ads on the radio for two different “make money investing in real estate” seminars. As much as we need investors, I am wary of this. I don’t think anybody can reasonably learn enough about real estate investing to avoid pitfalls in one day. I also am concerned that amateur investors armed with little more than a few hours training and maybe a couple of books could artificially raise prices. Since they would most likely be competing to purchase properties with buyers in the lower priced end of the market, not only would they be keeping cost-conscious buyers out of the market, they might end up purchasing properties that need a whole lot more work than it appears. I am concerned that these investors — like many investors who bought near the top — may find themselves in over their heads with no choice but to let the bank foreclose.

Real estate investing is a great way to make money, but you will need more than a copy of Rich Dad Poor Dad to make it work. You will need the advice of people who are experts in local real estate market conditions and the laws that apply to real estate transactions. You will need someone who is willing to point out the problems as well as the benefits of a particular property as it relates to your financial goals. And you will need to think for yourself about what those experts tell you, because many times those experts only get paid at the end of the transaction.

Serious about investing in Las Vegas? I can help find suitable properties and set you up with a quality property management team too. Lets talk!

Tags: real estate investment

This entry was posted on April 28, 2010 at 3:26 pm. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Posted in General Real Estate by Bridget Magnus 1 Comment