The stories of real-estate millionaires were legendary during the 1990s and early 2000s. The idea of making big money by “flipping” houses or buying them to rent as investments became so popular, the cable television stations were climbing on each other to produce shows as “how-to’s.”

But then came the crunch. Anyone who was investing in real estate post-2005 found themselves in deep holes. These problem investments are one of the big sources of the bank foreclosures we’ve heard so much about. It simply wasn’t feasible to buy and sell the way it had been done for so many years.

But now, when real estate prices have plummeted more than 20 percent in Las Vegas in the last year alone (median home prices are down from $280,000 to $230,000), we have to consider whether it’s now time to jump back in with both feet. After all, the rental market in Las Vegas is not all that different than it was two or three years ago. Everyone needs someplace to live and the population of the area continues to climb, so rental units are still in high demand.

But there are still some serious issues if you’re considering becoming the new-age real estate investor. Here are six rules that you need to understand:

1.) Understand the market. You have to truly know the game of buying a house, renting it and then being a landlord. It’s not an uncomplicated scenario when you own homes where other people live. Yes, they pay you for the privilege of living in your home, but with taxes, repairs, maintenance and wear-and-tear, you need to be vigilant so you earn the money you expect to earn.

2.) Neighborhoods. In Las Vegas, there are some very desirable places to live; places that have not escaped the downturn in the housing market where you can still pick up a bargain. Find these locations and concentrate your search for investment real estate there. Remember, neighborhoods where there are many foreclosures may continue to decline and home values may take years to rebound, if ever.

3.) Let’s make a deal. Your main goal in finding rental property is finding great deals. You need to research the average home value in the location you’ve chosen and then drive a hard bargain so you know you can make money with renters. Remember, fall in love with the deal, not with the house.

4.) Run the numbers. Once you’ve found a house and price you can live with, figure out the minimum renting price you must receive to make money. Don’t forget to include taxes, any utilities you’ll be responsible for (water, sewer, etc.), depreciation, wear-and-tear and more. Consider how long you can leave the house vacant before you rent it. If the numbers don’t work, you have to walk away.

5.) Target your tenants. Your tastes have nothing to do with a rental house. You might not want to live there, but every house has a tenant. Is it a large house near a college? Students will pay big bucks to be close to school. Is it in a close-knit neighborhood with good schools? Families always make great tenants. Is it small but convenient? Single renters with roommates might work there. Learn how to approach your target tenant, whether through newspaper ads, internet postings or bulletin board flyers.

6.) Know your limits. You’re the only one who knows how much money you have to invest. Don’t buy a huge mansion that needs a big rental price-tag if you can’t afford to carry it for a few months. Jump in one house at a time and match them to your ability to finance your investment.

7.) Know your market. It’s an advantage to have your investment close to where you live because you can keep tabs on the tenants. But don’t let that prevent you from renting a little further away if the location and deals are more a match for your tenants and your financing. If your prospective tenants are going to be students, you need access to public transportation. If it’s families, a good school system makes a better match.

8.) Prepare for the worst. Your financial capabilities can be stretched by unforeseen situations. It’s important that you consider the worst-case scenario when investing. Even if you make what you believe to be a great deal, the sliding housing market in Las Vegas may continue to tumble. Your “deal” can quickly become an albatross. Have a plan to combat these kinds of situations and scenarios.

9.) Making the right mortgage. The days of zero-down mortgages are over, which isn’t a bad thing. By putting 20 percent down, you immediately have equity in the home, which will grow as you continue to make payments. Concentrate on bringing down the interest rates and mortgage fees to bring down your overall investment.

10.) Important insurance. Don’t forget this important element of being a landlord. You need protection in case of an accident so you will not lose your total investment. Check the policy on a yearly basis as construction costs are continuing to increase. And consider a clause in your rental agreement that requires the tenant to purchase renter’s insurance. It’s only about $20 a month and could be the best Jackson you ever spent. As the owner, you are not responsible for the tenant’s possessions and this could prevent costly litigation.

So think long and hard before investing, but maybe you could become part of the new wave of millionaires in this difficult real estate market.

By Casino Connection Staff