Wednesday, May 24, 2006

Going for seconds Buyers snap up secondary homes in LV, sometimes to resell, observer says

Going for seconds Buyers snap up secondary homes in LV, sometimes to resell, observer says By HUBBLE SMITH REVIEW-JOURNAL

Skyrise Development Group is converting the Canyon Lake apartments into a resort-style condominium community with three pools, a clubhouse, a business center, two fitness centers and racquetball courts. It will rename the 504-unit complex The Residence at Canyon Gate.Ph

Laura Boezeman is among the few Las Vegans buying condos converted from apartments as a primary residence.
Boezeman already owns a condominium in Sunrise Villas in eastern Las Vegas and is buying a second home in western Las Vegas, where she'll live.


"I just thought it was a good investment," the real estate attorney said of her three-bedroom unit at The Residence at Canyon Gate, a converted apartment complex at 2200 S. Fort Apache Road, near Sahara Avenue. "The price was pretty good for the area it's in. It's next to Canyon Gate (Country Club) and there's commercial stores available. Whole Foods is there, my favorite store."

Boezeman is paying $209,000 for the condo "as is," which means she'll do her own renovations.
Florida-based Skyrise Development Group entered the Las Vegas condominium conversion market with the $55 million purchase of Canyon Lake apartments, renaming the 30-building, 504-unit complex The Residence at Canyon Gate.

The developer plans to turn the apartments into a resort-style condominium community with three pools, a clubhouse, a business center, two fitness centers and racquetball courts.
The condos are priced from about $160,000 to $230,000 for one-, two- and three-bedroom units ranging from 810 square feet to 1,235 square feet. Buyers can choose from several upgrade levels.

Existing residents, by law, are given first right to buy the condos. Few of them do.
Of the 200 condos sold so far at The Residence at Canyon Gate, less than 10 were bought by existing tenants, sales manager Mike Aagenes said.

"We're seeing a lot of investors from California, Florida, New York," he said. "There's a lot of interest in second homes in Las Vegas at entry-level prices. Some people pay $400 a night for a hotel room on the Strip, when they can have a condo with a mortgage under $1,000 a month."
Chris Bentley, broker and principal of the Bentley Group, said there's about a 50-50 split between condo conversion buyers who plan to live in the units and those who buy as an investment and will put the units back in the rental market.
"There are two kinds of converters," Bentley said. "One focuses on the investors. They'll do less rehabilitation and keep it as a rental. Then you get converters like Pacifica (Investments) that do extensive rehabilitation, totally replace kitchen appliances and cabinets, then sell it to the end user."
Las Vegas is one of the three hottest markets in the country for "flipping" residential properties from 1999 to 2005, said Christopher Cagan, research and analytics director at Anaheim, Calif.-based First American Real Estate Solutions. The other markets are Miami and Orange County, Calif.
"Flipping" is the practice of buying and selling residential properties for a profit, usually within about 24 months.
Cagan said his statistical analysis revealed that the particularly profitable "sweet spot" of elapsed time between a purchase and the flip sale is three to six months.
Real estate prices have risen dramatically in recent years, with annual appreciation rates of 20 percent to 30 percent in some areas, including Las Vegas.
In his study, "Real Estate Flipping: Gold Mine, Mistake or Fraud," Cagan showed that flippers obtained returns far greater than those, even above 100 percent in some cases.
"While the market has done well overall, flippers have done even better," Cagan said. "During the past six years, flippers have exercised a level of strategic intelligence and savvy in their investments that proved to be even more profitable than the strong gains experienced by the general market."

Boezeman said she's not a flipper, but definitely hopes to gain equity in her condos.
"I think Vegas will cap out on prices. They'll keep increasing, but not like last year when they were out of control," she said.

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