Top Ten Reasons Why Your High Rise Won't Get Built

The number one question I always get from people interested in the Las Vegas high rise condo market is "how can I be sure the project will get built?" And rightly so, since what good is your Phase 1 reservation in a project that won't happen? - And with over 100 projects slated in the Las Vegas high rise landscape, you can be sure many of them won't happen. So how do you weed out the hopefuls from the real thing? Read these top ten signs and see how many you recognize:

10) The developer overly reiterates their "committment" to the Las Vegas high rise marketplace. That's nice to hear every once in a while, but if that's a project's "selling platform", you better be concerned. I'd rather have a developer committed to finishing the actual project instead.

Real world example: The Related Group committed, not once, not twice, but three times to failed Las Vegas projects and amazingly STILL maintain they're committed to the area. Care to go for number 4? Not me...

9) The owners of a high rise project are suing the owners of another. In the real world, legal problems don't go away overnight. In fact, lawyers like long, drawn out battles. That's why legal disputes take so long to settle... and as we wait for the lawsuit to go away, guess what never happens? That's right - the actual project. A legal battle, no matter what the basis, is a sure sign that you better be looking at another high rise project.

Real world example: The Majestic and the ICON were suing each other about shadows obstructing the sun on each other's buildings. Those projects are way gone, but I hear the lawsuit's are still proceeding.

8) The project uses a sexual connotation as the tagline on their marketing materials. Sure, this is Las Vegas, and what happens here stays here, but that's fine for the party scene. When I'm asked to invest $800,000 into a real estate investment, I want a little more substance then just a cool slogan.

Real world example: The tagline for the failed IVANA Project was "In Vegas, Size Matters". Seriously... and they expected sales?

7) A celebrity attaches their name to the project. This is perhaps one of the biggest deal killers of a high rise project out there. Think about the developer's reasoning here - the project's not good in it's own right, they know it, they know the American public is relatively dumb and idolizes celebrities, so they add the "star" to the project in hopes of selling something they'd have no business selling in the first place.

Real world example: George Clooney and Michael Jordan come to mind.

6) No one answers the phone at the sales office. When you continue to get an answering machine message, whether you call for information in the morning, afternoon, or evening - every single day - you can be sure something's up with the project. They're probably not answering because all the sales agents have been let go, there's no more money to pay a receptionist, but the developer still has hopes of continuing the project when a "big money guy" shows up. Problem is, they won't and your project's dead.

Real world example: I think if you call the Club Renaissance project, you'll still get a voice message telling you they're the next greatest downtown project out there, even though the project has been dead for months.

5) 6 months or more have passed since your reservation and nothing has happened. No groundbreaking, no contact from the developer, no calls asking you to prepare for your hard contract. There's only one reason for this, and it's because the developer knows they don't have the money to move forward with the project. Your reservation is useless and you best move on.

Real world example: Remember the Las Vegas Central project? One of these days, they'll be moving forward...

4) The project developer is in secret talks with the competition to sell their project. This one isn't quite as obvious as the others, but if word ever leaks out this is happening - RUN! Most likely, the developer will sell out, and everyone with a current reservation will form a class action and run to a lawyer (see reason #9) where you'll run into so much heartburn and confusion, you'll wonder why you ever got involved in the project in the first place.

Real world example: The Krystle Sands developer sold his project to Turnberry, honoring no contracts and leaving a boatful of investors, agents, and real estate professionals in a lurch which many still haven't escaped from.

3) You see a barrage of advertising all of a sudden, then it just stops completely. Guerilla marketing doesn't always work all the time. The projects that are successful are consistent in their advertising approach. When ads for a particular project are "in your face" all the time, via newspapers, the internet, local TV, in airports, magazines, etc for a month or so, then all of a sudden stop completely - you can be sure they're trying the "throw the spaghetti on the wall to see what sticks" philosophy. Translation - no high rise.

Real world example: Way too many to mention. In fact, this reason applies for just about every project in town that's failed.

2) You see the salesperson from one project mysteriously working for another. Many times, they call it their "sister project". But when a salesperson working for Project "A" talks about their high rise project being "the best in town" (and you hear this often), then see them working for project "B", that's usually a huge sign that something's up with project "A".

Real world example: Again, way too many to mention individually. Baseball players change teams less frequently.

1) The project doesn't pay non-recourse commissions to real estate agents. Wow.. this is a biggie, yet very few buyers make this an issue. If a high rise project is willing to pay a real estate agent a commission whether the project gets built or not, that's an extremely strong sign that the developer thinks their project will truly get built. The others are saying, "sell my project and if it happens, I'll pay you. If not, your out of luck". And since the success of all these high rise projects rest in the hands of real estate agents selling the product, why would an agent waste their time with a project they know isn't solid?

Inverse real world example: Trump, Allure, Sky, MGM... all pay non-recourse real estate commissions to agents. Guess what projects are completed or just about done!

I rest my case.