Demand and desirability for multifamily investment are increasing in conjunction with the dramatic rise in development here, David Baird, senior adviser for Sperry Van Ness in Las Vegas, said Friday.

"There's some good upside in it at that price per unit," he said. "We're seeing deals move up so rapidly (in price)."

Baird said he had an investor who walked away from a contract last year to buy an apartment complex in North Las Vegas for $60,000 a unit. It eventually sold for $92,000 a unit.

Higher prices for apartment units are being partly driven by condo conversions, a trend that was spotlighted by Dennis Smith of Home Builders Research at his housing outlook earlier this year.

With median new home prices climbing toward $250,000 and resale prices well above $200,000, condominiums selling for $90,000 to $150,000 offer an affordable housing alternative, Smith said.
 

"Many homeowners are sitting on more equity in their homes than they realize, particularly in a recently robust real estate market like Las Vegas."

A home equity loan, sometimes called a second mortgage, is a one-time loan secured through equity in the borrower's home as collateral. Equity is the difference between the appraised value of a home and the current principal balance on the mortgage.

Jill Amonica, vice president and mortgage loan officer for BankWest of Nevada, said she's definitely seen an increase in home equity loans this year.

"Most people refinanced over the last three years, so they're already at the lowest possible interest rate," she said. "Rather than paying to refinance the whole amount again to pull out equity, they're moving toward getting a home equity line behind that."

In Las Vegas, where homes are appreciating at double-digit rates, it makes even more sense to take out a home equity loan because of increased values, Amonica said.

"It doesn't make sense to refinance $300,000 to pull $20,000 out," she said. Regan said equity loans are often used for home repairs and remodeling, college costs, debt consolidation, automobile purchases or perhaps to cover unexpected medical bills.

Interest rates on home equity loans are tiered, starting at prime, which is now 4.25 percent, and going as high as prime plus 1.5 percentage points, depending on the loan amount, Amonica said.

Another option is a home equity line of credit, which works somewhat like a credit card but is drawn against the equity in a home, allowing the borrower to obtain cash as needed. Monthly payments vary based on fluctuating interest rates and the amount drawn against the line of credit.

Interest paid on a home equity loan may be tax-deductible.

"What I'm finding is a lot more people are taking home equity loans to buy investment property," said Angela Turner, loan officer for First National Bank of Nevada.

 New High Rise Tower Planned

Preliminary plans are for about 350 units that will range in size from 800 square feet to 2,500 square feet. Prices are expected to range from $400,000 to more than $3 million. In addition to penthouse units, the developers plan to offer two-story rooftop suites.

In addition to the residential tower, plans call for three stories of commercial space for offices and retail. Construction is expected to begin during the first quarter 2005.