Frothing Developer Inside In Business Las Vegas

image Brian Wargo writes a nice article about Frothing Developer in this week’s issue:

Well, Las Vegas developer Alex Edelstein, chief executive of Gemstone Development, has taken some of Twain’s advice. He has launched a blog called Frothing Developer (www.frothingdeveloper.com), which he says is dedicated to the truth and counters “negative media spin” about housing and the economy.

“If you read and believe all of the negative stories in the traditional media, it’s easy to get a skewed perspective on what’s really happening in the economy and the housing markets today, particularly in the local Las Vegas market,” Edelstein says.

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6 Responses to Frothing Developer Inside In Business Las Vegas

  1. The Judge says:

    Oh, great, another happy-talk web site for the Real Estate Industrial Complex, hoping to drum up business for the six-percenters. … Dude, don’t waste your money on this site. And your Chicago position? I can tell you right now what it will be worth in 2012: zero.

    Can’t wait till I pass this site along to the rest of the housing blogs. Hope you’ve got a good server, because it’s going to crash once the rest of the internet stops by this site to laugh at you.

    — The Judge

  2. frothingdeveloper says:

    Judge, if you take issue with any of the data or statistics published here, I’m happy to substantiate the numbers. Please do pass this site along. Page views are good. And the Internet needs to know the truth about Las Vegas.
    Frothing Developer

  3. The Judge says:

    The truth about Las Vegas? That’s a good one.

    The truth is, Gemstone has a bunch of overpriced inventory it can’t sell. At the reduced prices you have to sell at now, you can’t make it pencil out.

    Oh, well. There’s always bankruptcy, personal and business. Better luck in the next Las Vegas property boom in 2019. Anyone who think the banks are going to make loans to anyone with less than 20 percent down until then, needs to have their heads examined.

    How many regular casino workers do you know in Vegas who have 20 percent to put down? Those of us who do have that kind of money accumulated it by being smarter than the average subprime loser in Las Vegas.

    But I guess, it’s always a good time to buy, right? All of Las Vegas is laughing at you, except for In Business Las Vegas, which was too stupid to realize it was getting used so you can sell your sorry inventory.

  4. Bill says:

    I see you are renting out units now at Manhattan on the strip. How does that play into your outlook for the Las Vegas Real Estate Market.

  5. frothingdeveloper says:

    Judge,

    You bring up several points that you state are the truth:

    1. “Gemstone has a bunch of overpriced inventory it can’t sell. At the reduced prices you have to sell at now, you can’t make it pencil out.”

    I don’t know where you’re getting your numbers, but this is simply not accurate. Gemstone has two projects, Manhattan and ManhattanWest.

    Manhattan sold out in 2006. Out of 700 residences approximately 60 ended up in our portfolio through contract cancellations, a very low percentage given the timing of the project.

    For the past year we have been managing those 60 some homes as rentals, commanding rates that have generated positive cash flows across the board.

    Because we see the market starting to stabilize we are slowly returning some of these units to the resale market as they come off lease. The reaction has been positive, and homes are already selling. This project absolutely pencils out, if you have real data that points to the contrary please let me know.

    Our second project, ManhattanWest, is in its first phase. This phase consists of two commercial buildings (office, hotel, shops and restaurant) and three residential buildings.

    All five buildings are well under construction, and the tallest is topping off in July.
    We have been one of the most successful new condo developments to launch in Las Vegas since 2007. In fact we’re one of the only condo developments to successfully launch since then.

    The first phase consists of 236 residences, of which nearly 70% are in hard contract, all with substantial deposits and loan pre-qualifications.

    More than 60% of the commercial space is already pre-leased, months before the buildings are scheduled to receive their certificates of occupancy.

    We have actually significantly increased residential prices since our launch in 2007, and our primary concern at this point is not having enough of certain floor plans that are already sold out prior to our opening- not whether we’ll be able to sell the remaining 30% when the building open later this year.

    I’m not sure where you got the idea that this project has been reduced in price or that it’s not penciling, but that’s simply not accurate either. If you have specific information to the contrary please feel free to share it.

    2. “Anyone who thinks the banks are going to make loans to anyone with less than 20% down…needs to have their heads examined.”

    Again, this is simply not true. FHA loans are readily available with as little as 3-5% down, and don’t require perfect credit or FICO scores. For more information, visit :

    http://www.hud.gov/buying/loans.cfm

    These are standard, conforming loans and will cover the vast majority of homes being purchased at Manhattan or ManhattanWest.

    Additional loans programs are also available from MetLife, our preferred lender, which allow buyers to put anywhere from 5-10% down, depending on their credit history. These are 30 year fixed loans with competitive interest rates- not teaser programs that reset after a year.

    3. You ask, “How many regular casino workers do you know in Vegas who have 20% to put down?”

    With FHA loans, these workers don’t have to put 20% down as long as they are able to prove income.

    The only loans today that require 20% down are those for buyers who can’t prove income, buyers for whom the home is an investment, or buyers with serious credit challenges who can’t go through FHA. Given that FHA will allow buyers with BK’s the challenges have to be significant.

    Buyers with stated income will find it tougher to get a loan, but contrary to the conventional wisdom that everyone in Vegas makes all their money from tips, the vast majority of the prospects we see are earning their wages through regular paychecks.

    4. “I guess it’s a good time to buy, right?” Well… I can’t disagree with you there.

    5. “All of Las Vegas is laughing at you, except for In Business Las Vegas.”

    I don’t know “all of Las Vegas”, and I doubt that most of them know me, but I’ve generally found that things start to improve just when everyone else thinks they can only get worse. If everyone in Las Vegas is really laughing at me, that’s probably a pretty good sign I’m on the right track.

    Finally, as for In Business, Mr. Wargo is a seasoned journalist, and would hardly let himself be used to help us sell inventory. He presented an accurate story on an interesting topic, and didn’t hesitate to mention where current numbers contradicted our numbers in older stories.

    I’d welcome your additional comments with any data or links you have that back up your assertions.

  6. frothingdeveloper says:

    Bill asked,

    “I see you are renting out units now at Manhattan on the strip. How does that play into your outlook for the Las Vegas Real Estate Market?”

    We’ve been renting homes at Manhattan for the past year or so. We have found there to be a very vibrant and stable rental market, and we’ve been able to command rents that allow us to experience a positive return on our portfolio of residences.

    As we’ve seen the market stabilize, we’ve just recently started to release some of these homes back into the resale market.

    We expect there to be a continued strong demand for rental properties. Las Vegas is at the start of a huge job growth wave with the opening of the major Strip projects coming online in the next two to three years.

    Many of the new residents who will move to town to meet the increased job demand will prefer to rent as they get acclimated to their environs.

    This will put upward pressure on rental rates, which we believe has already started to impact new home sales in a positive way. There are a number of homes available at Manhattan where it’s now less expensive to buy than it is to rent.

    Strong rental demand also helps the resale home market. Sellers who would have been forced to sell at any price will find it easier to either cover, or come close to covering their monthly mortgage and taxes by renting their homes.

    With fewer homes on the market at liquidation pricing, the resale market will start to pick up.

    So while there will always be demand for rentals, the new and resale home markets will benefit from strong rental demand as well.

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