Las Vegas Real Estate Investing Basics
Las Vegas Real Estate Investing Basics
The real estate in Las Vegas, Nevada is in its own category of real estate investing.
A guide can be helpful when you are starting a new venture such as investing in commercial realty. Although commercial real estate (CRE), has the potential for significant income for investors or brokers, there are many things to know before you dive in.
Even experienced realty professionals can benefit from a guide on commercial investing if the business is new to them.
This guide to commercial real estate will cover all aspects of CRE including common terms and different types of property, how to invest and types or loans.
Commercial real estate can also offer higher potential income. You could generate hundreds of thousands of dollars in cash flow each year depending on the size and condition of your property.
Commercial real estate leases are different from residential.
CRE leases can place the responsibility for property taxes, insurance and maintenance on the tenants.
A single unit rental, such as a light industrial property, may require major repairs, which could reduce costs.
For new investors and brokers, commercial real estate is not the best starting point. It can be intimidating to see the higher price tags on CRE properties.
The higher the property's cost, the more money you will need to make a down payment.
Passive real estate investments are passive. The investor does not actively manage or own the property. Passive investing usually generates income in the form a dividend or preferred return, equity split or some combination.
Real estate investment trusts (REITs)
One of the most straightforward ways to invest in commercial real property is through REITs. REITs pool money to buy and manage commercial properties professionally and pay dividends to investors. REITs are eligible for special tax benefits when they pay their investors 90% or more of their income in dividends. This makes them reliable sources of passive income.
Accredited investors can use CRE crowdfunding as a passive investment option. Investors have the option to join crowdfunding platforms that match them with developers or third-party investors who have an investment opportunity that needs funding.
CRE crowdfunding opportunities are available for investors as low as a few thousand dollars. However, some opportunities require hundreds of thousands. Crowdfunding offers a greater return than real estate ETFs or REITs, but it also has less liquidity and higher risk. Most crowdfunding opportunities offer two- to five year terms. The investor cannot withdraw their funds from the deal during that period.
As a funding partner, you can also partner with active CRE investors. In exchange for a preferred rate, equity split or combination of both, you can be a passive, silent partner that provides funding for the downpayment or cash purchase of the property.
Similar to crowdfunding, the number of participants is smaller and the returns are higher. However, there is more risk.
In the real estate industry, equity and funding partners are very common, especially in CRE. These opportunities are not publicly advertised. The majority of equity opportunities can be found through established relationships with active investors.
You should do your research on the investor and the investment. You must be confident in their ability and competence to manage your investment.
Evaluate investment opportunities
Once you have identified the area you wish to invest in and the location you prefer, you can start looking for investment opportunities. Loopnet, Crexi and Craigslist allow you to search for properties for sale. You can also use your direct mail campaign to find them.
A broker will usually send an offering memo (OM) if the property has been listed. This document outlines the current performance and pro forma of the property, as well as the potential income that the property could produce if managed and leased properly.
This information can be useful but you must confirm the estimated expenses and actual expenses.
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