Saturday, February 25, 2017

Las Vegas CRE Resort Investment Property Do's and Don'ts!

For some reason, quite a few "investors" ask me about financials for certain 'well located' Resort, Hotel, Motel and Gaming Properties.

Looking at and analyzing the financial statement would be the normal way of processing whether or not a 'well located' property is worth a specific sales price.

However, Las Vegas Resort properties suffer from the fact the Owners are well aware about their property situation, and the prominence of their location.  And, since most of the 'Buyers' are unaware, it is important for these Buyers to know and to understand -- before even asking -- that the most important feature of these properties are: the H-1 zoning, the fact that they lie within the Clark County Gaming Overlay; and that there is a future upside IF a certain Resort Property has elements  surrounding the property that would evolve into a massive development.

So, what is the current owner to do?  Well, that answer is easy: they hold out for their price.

Unfortunately, these well intended Buyers come along, and they 'think' they are smarter than the Sellers; and they try in vain to overtly explain to the Seller the 'why?' the Resort property isn't worth what the Seller wants in order to sell.

For example, the $10 Million an acre is a number that is thrown around here in Las Vegas for property located on the Famous Las Vegas Strip.  (Now, this is an approximate measure of value that the land under the Resort hotel, motel that Sellers use as their gauge of value for their property.)

The problem with this is that there are some Buyers who will -- because of a sense of desire -- overpay for a property -- thus set an unrealistic bar for us Real Estate Brokers.

Yeah!  It is great for our bank accounts.  However, it sends an unrealistic value ripple effect through the neighboring properties.

When this happens, the Owners/Sellers now think that their property is worth that or more simply because their properties are NOT vacant, better maintained, even though NOT as 'well located.'

So, when I know of a property that is available for sale at $10 Million an acre, lets say, that I know that, that price -- set by the 'Seller' -- is in fact worth that amount because a similar property down the street sold for that exact amount.

And because of this established price, asking for financial information, will NOT reflect the Sellers Selling value adequately.

I do know that the financials show a particular Cap Rate; and, I do know that the high asking price will be more than a buyer is used to paying to acquire a well located property.  But, since the Seller has bought and Sold properties through the years, I do know, that they know the value and will sell at that value.

You understand, right?

So, potential Resort Buyers, please listen to me: when you review the marketing information I send you, please remember that the price is the price -- especially for a Resort property along the "Strip."

So, 'Do' ask me questions about Las Vegas Commercial Real Estate!  I will gladly answer all of your questions as honestly and as effectively as I can.

But, please 'Don't' come to Las Vegas thinking you are going to acquire a 'well located' Resort property below market value.

Hopefully, you and I are now on the same page?

To Contact David Howes try: davidATdavidhowesDOTnet OR; 7 0 2 5 01 9 3 8 8 AND Please #Follow David on Twitter: @DavidAHowes Have a nice day!

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