Here comes Vegas’ new breed of buyer

By Buck Wargo

Monday, Aug. 3, 2009 | 2 a.m.

Southern California investors — a breed apart from those who contributed to the real estate collapse — are converging on Las Vegas, hunting for bargains on single-family homes and driving strong sales in June, housing industry experts said.

The number of investors buying new and existing homes in Las Vegas in June rose by more than a third compared with June 2008, according to San Diego-based DataQuick.

Investors’ demand for existing homes has helped that segment of the market fare the best when it comes to real estate investing over the past year and kept housing prices stable from April to June, analysts said.

Investors made up 38 percent of the buyers of both new and existing homes in June, DataQuick reported, compared with 25 percent in September 2008.

These residential real estate buyers are not the same ones who bought and flipped Las Vegas houses during the boom, said Steve Bottfeld, executive vice president of Marketing Solutions. These investors are looking to hold long term and earn money off rental income, he said.

Buying a home for $100,000 in cash and renting it for $1,000 a month equates to a 12 percent return before taxes and other expenses, Bottfeld said.

Glenn Plantone, a Realtor and president of the Real Estate Insiders Club in Las Vegas, said investors are taking advantage of a steep drop in prices since they peaked in 2006. Prices of some homes in the northwest have fallen by 70 percent.

Homes that sold for about $300,000 are going for about $110,000 he said.

“They are buying them for cash flow,” Plantone said. “We are not even talking about appreciation potential.”

The market to rent homes remains strong, with people who lost their home to foreclosure wanting to stay in a home.

“It is a lot easier to rent houses than condos,” Plantone said. “We are getting people who are walking away from a $2,000-a-month home payment and going across the street to rent a home for $1,200 in immaculate shape.”

Despite the interest in Las Vegas, it is not as strong as in Phoenix, where buyers in 40 percent of sales were investors, Le-

Page said.

Most of the investor buyers that Plantone said he has dealt with are Southern Californians. Many are small-businessmen who have several hundred thousand dollars to invest and have been waiting for an opportunity in real estate.

Plantone said these buyers are drawn to homes less than 7 years old and costing no more than about $120,000.

Robyn Yates, the broker-owner of Windermere Prestige Properties, said her clients include foreign purchasers, some of whom are buying homes without seeing them in person.

For as long as homes can be bought more cheaply than builders can construct them, there will be a market for investors in Las Vegas, Yates said.

Plantone said that many of these buyers will leave the market when prices go up $20,000 to $30,000 because their investments won’t pencil out for rental income as they will now.

“That’s why investors have been so aggressive,” Plantone said. “I am telling people they may not see a better time to buy since the Great Depression.”

Investors are winning out over frustrated first-time buyers for the properties because they are offering more than the list price and because they have the advantage of offering cash, Plantone said. It was only three months ago that buyers could get properties below list price, he said.

Any investors who bought in 2007 or early 2008 wouldn’t have had any luck with appreciation, although single-family homes fared the best out of all real estate investment categories over the past year, according to Larry Murphy, president of SalesTraq, a Las Vegas housing research firm.

“The single-family home has always been the preferred house of choice with most people,” Murphy said. “Most people want the picket fence and the back yard and not being attached to someone.”

From the first six months of 2008 to the first six months of 2009, the median price of single-family homes fell 34 percent, Murphy said.