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Photo by Jeff Scheid. Kyle and Lane McLenna discuss their unit with Cindy L. Calles, left, director of sales at Park Towers. The McLennas sold their home in Aspen, Colo., and will move in to Park Towers in January. They decided to relocate to Las Vegas because of the lifestyle. Photo by Jeff Scheid. Turnberry Place is the newest major development on the north end of the Strip. Photo by Jeff Scheid. Rows of homes show different phases of construction at Rhodes Ranch in the southwest valley. Photo by Jeff Scheid. Related Stories Gap between rich and poor areas narrows Median household income by zip code

Sunday, November 26, 2000
Copyright © Las Vegas Review-Journal

MILLION-DOLLAR HOMES SELL ... BUT WHO'S BUYING: Living the High Life

State tax structure, low real-estate prices and a bright economic outlook attract upscale home buyers

You see them all over the Las Vegas Valley: million-dollar houses lined up along golf courses, settled around cul-de-sacs, sometimes stacked into towering high-rises.

"You have homes at Tournament Hills," in Summerlin, said Fafie Moore, president and broker/owner of Realty Executives of Nevada. "You have homes in Spanish Trail" in Spring Valley. "You have homes at Seven Hills and Anthem" in Henderson. "You have homes down at the Las Vegas Country Club" near the Strip. "And then people who are looking for old-style, down at Rancho Bel Air and that area."

Just off the Strip, the Park Towers and Turnberry Place projects are offering million-dollar condominiums.

"There are (million-dollar) homes everywhere, but those are the clusters of where you're going to find a lot of these homes," Moore said.

Who's buying them? Where do the buyers come from? And where did they get all that money? There are as many answers to these questions as there are light bulbs on the Strip. But in general, they tend to be younger than retirement age, they've made their money themselves in any of a variety of ways, and they find Nevada's tax structure, real-estate prices and economic outlook particularly attractive.

Marilee Latham, 35, is one of them. She and her husband, Larry, and four daughters, ages 5 to 18, moved to the valley about a year ago from Scottsdale, Ariz. They bought a house at Tournament Players Club in Summerlin, paying about $2.5 million.

While Latham's husband had retired two years ago at age 45, she was planning to start a new business.

"We read that Las Vegas was the No. 1 place to open up a new business," she said; the potential was said to be high "just because of the growth and because it's still kind of considered a small town. It isn't saturated with businesses at this point."

Marilee Latham and a partner opened Amandari -- which means "peaceful spirit" in Indonesian -- on West Sahara Avenue.

"My partner and I import pieces from all over the world" for their interior-design business, "so we opened a retail operation here," Latham said. Amandari has customers from Los Angeles, New York and Chicago, she said, and caters to casino executives here, seeing many of them by appointment.

"We just felt that there was such a market out there, because there is a lot of money in Las Vegas. There's really nothing to cater to that market, to people who want to collect. It was the perfect opportunity for us."

Latham said that before he retired, her husband owned a major auctioneering firm, auctioning houses and real estate. He also once owned a golf course in San Diego.

She said they haven't looked back.

"We love it," she said of Las Vegas. "(Scottsdale) was so crowded -- the traffic and everything. We said we would never move back to Scottsdale.

"Summerlin feels like Scottsdale did 15 years ago. We can get anywhere in five minutes. We don't gamble or anything, but we can go down to the Strip for dinner and a show. There's just so much to do here."

She said their daughters also are pleased with the move.

"They love it," Latham said. "They're all in private schools. There's a pretty good selection, so we're real happy with that."

Mel Durao, 57, is another person who recently bought a home in Las Vegas. He's a resident of Tiburon, Calif., near San Francisco. Durao, who said he made his money in the stock market, is buying a 14th-floor condo at Park Towers that costs "somewhere between $2.8 million and $3 million."

It's one of four homes Durao owns: one is in Pebble Beach, Calif., the other two -- one, like the condo at Park Towers, still under construction -- in Tiburon.

How will he divide his time?

"I probably won't live there at all," Durao said of his Park Towers residence. "I'll probably spend three or four weeks a year there."

And what moved him to buy a home in Las Vegas at all?

"I hadn't been there in some time," Durao said in a phone interview from Tiburon. "I used to go there on business all the time. A couple of years ago, I took my wife. There were a lot more things to do. I thought it would be a good place to go on occasion. It's close enough to where my family lives that a large number of family members could go and use the condo."

Durao said he has no children; the family he's referring to consists of siblings and parents.

A natural question for most of us, of course, relates to the size of a mortgage payment for a $3 million home. The answer: no mortgage, thus no mortgage payments.

"Usually, when you get into million dollar and up, you're talking cash, because usually they can afford to do that," Moore said. "There's no point in them paying interest on money that they don't need to.

"If they get loans, they work with a bank's private banking service. They work with them on their business expenses and their business enterprises, so they have those strong banking relationships, which is important."

Steve Schauer, branch manager of First Horizon Home Loans, said in most cases, if a person is paying more than about $2.5 million for a residence, he or she will pay for it in cash.

"You can definitely do a $3 million loan, but you have to know somebody," Schauer said. "Most of the time, these types of people will get their loans from a Merrill Lynch or somebody that they have millions of dollars of stock with. They'll go to that company and they'll give them the loan for it."

Somebody who is buying a $2.5 million home, Schauer said, can put down $500,000, which is 20 percent, and then get a $2 million loan.

The size of their payments? For a 30-year mortgage, about $22,000 a month, Schauer said.

Following standard income guidelines, that would be about $80,000 a month in income, Schauer said.

"I'd say depending on their debt load, normally you're not doing a standard type of loan when you get up that high," he said.

And there's a Catch-22 that all of us Joe Lunchbuckets aren't going to like.

"If you have a person qualifying for a $150,000 mortgage, they're typically more heavily scrutinized than the $2 million loan, but it depends on the situation," Schauer said. "My feeling is that's because there are more $150,000 mortgages out there than there are the $2 million. We have statistical data on the $150,000 -- the tendency to miss payments, foreclosure ratios and risk factors. We have none of that data on the $2 million person."

Schauer said he's written one mortgage in that range -- a $1.8 million loan for a house at Tournament Players Club.

"He was a neurosurgeon," he said. "A very successful local doctor here in town."

Moore said many of the buyers she sees in the upper brackets are in business.

"A lot of them are self-employed," she said. "They're consultants. They lead companies that have high revenues but they're small in terms of employees, and they're companies that they can lead from just about anywhere. A lot of them started their own businesses and have been very successful."

Pamela Benjamin, director of marketing for Park Towers, said that's much the case at Park Towers, where condominiums sell for about $720,000 to about $4.5 million.

"Our buyers are typically 50-plus, they have usually been married, and married for a long time," she said.

"They are usually the heads of their own companies. Very few are retired. Most of them are very active in their businesses."

Among Park Towers buyers, Benjamin said, are Irwin and Betty Helford (he's chairman of Viking Office Products) and Dean and Susie Spanos, who own the San Diego Chargers and also have businesses in Las Vegas.

"Seventy percent of our buyers are coming from out of market -- out of Las Vegas," Benjamin said. "They're coming from California, both northern and southern. A lot of our buyers come from the La Jolla area, but we've also seen a surge of people from Northern California -- Tiburon, to be specific.

"A lot of these people who are not from Las Vegas are buying these as second, third or fourth homes."

Moore said Las Vegas is becoming more attractive to those who have income they want to protect from the tax man.

"The biggest attraction to coming here for people in that price range is the tax advantage," she said. "At that price range, they're in many cases not living in the properties all year long -- in many cases living here seven or eight months."

Nevada has no personal income tax, corporate income tax, franchise tax, franchise-on-income tax, inventory tax, special intangible tax, chain-store tax, admissions tax, inheritance tax or gift tax.

In contrast, Erika Geiser, vice president of marketing for Christopher Homes, said most of the customers who buy the company's homes of $300,000 to more than $1 million are not moving here from out of state.

"A lot of them are newly relocated to Las Vegas, but they're not moving here from another state into our homes," Geiser said.

Sixty percent of Christopher's buyers are from Las Vegas, Geiser said; of the remaining 40 percent, about half are from California and about half from other states.

The company's neighborhoods -- all in the general Summerlin area -- include the Vineyards, Palisades, San Michelle in Queensridge North, The Christopher Collection in Southern Highlands and Bellacere, a custom-home neighborhood.

"A lot of the buyers are doctors or lawyers," she said. "They're all professionals. Casino executives; quite a few of them are business owners.

"We are seeing some that are the new dot-com millionaires; I think we'll start to see more. And we also are starting to see a couple who are investors. They own lots of businesses or they own joint ventures or partnerships in a lot of different businesses with a lot of different people."

And Christopher's buyers tend to be on the young side.

"Our main buyer profile is between 35 and 45," Geiser said. "They're young. You would think they're between 45 and 55; that's our second segment.

"We're getting a little bit more that are between 35 and 45, which are young professionals -- and quite a few of them with young kids, like elementary school or babies. And I think that's something that people don't think of."

Moore concurred.

"It really runs the gamut," she said of buyers' age range. "There's a surprising number of people in their 30s and early 40s with families that are buying these homes. A lot of people tend to stereotype or make the assumption that it's later in your career that you can afford this. But there are a lot of young successful people out there, owning their own businesses or with dot-com money."

Moore said the transplants help the local economy.

"That's why the business community here is so concerned that we preserve that (tax) climate," she said. "When these people come to town, they create so many jobs -- landscapers, maintenance people; they hire caterers. There are so many ancillary services and jobs that are created and sustained. It's very important that we preserve this economic climate and tax haven."

Moore said the influx of Californians who sold their homes at stratospheric prices and relocated to Las Vegas on the proceeds was highest eight to 10 years ago. Now, she said, many Californians have a different motive for moving here -- beyond the tax advantages.

On a recent trip to Los Gatos, Calif., she said, she saw an 1,100-square-foot house that sold for $1.4 million.

"There's an opportunity here for Las Vegas to appeal to those industries and those businesses (in California), because we have glorious housing for what you're paying up there for very small properties," she said. "We not only have a place where they can do business, but we have homes where their executives can live and live comfortably" -- not to mention good airport access, good services and amenities.

Moore said projects such as the recent Street of Dreams, which showcased nine multimillion-dollar homes in the Seven Hills area, reflect a changing Las Vegas.

"We have emerged in the past couple of years as having some really quality design in our luxury homes that could compete with Scottsdale or Palm Desert (Calif.), where I think we haven't had those choices or that option in the past, and that word has to spread," she said.

"Our city is growing to the effect that we can cater to that person who would live in that type of home."