Las Vegas, Nevada

I always conclude my annual visit to the American southwest in Las Vegas. I'm finishing a short five day stint where I traveled to Texas and Nevada. One of my oldest and dearest investors lives in Las Vegas and I always look forward to visiting this glitzy city. I just arrived from San Antonio where another great client has resided for many years. Hard to believe we had dinner a few nights ago just a few miles from the Alamo.

Now I'm in Sin City. Either you love it or you hate it. I'm an entertainment junkie. I love Vegas because you can't get bored here. I don't gamble – I have enough risk in my own business, thank you very much – but I do enjoy visiting the hotels (Disneyland for adults), shopping and the great restaurants. I also like the shows. Last night I saw the Rat Pack (I wasn't even born yet when Sinatra, Martin, Davis, Lawford and Bishop dominated this place) and tonight I'll see The Beatles.

Las Vegas, however, is in the midst of a deep recession. Real estate has fallen off a cliff since peaking in 2006 and is among the worst hit in the United States – still about 35% off the peak. The several cab drivers I hired told me business is slowly coming back but still miles below its peak. President Obama visited a few weeks ago but the mayor of Las Vegas never greeted him because the President encouraged the local population to boost savings and chastised gambling. That's not exactly what everyone wants to hear in recession-plagued Vegas.

I checked-out a leading real estate developer yesterday who completed two 45-story residential towers just off the strip in mid- 2008. Talk about bad timing! The West Tower is almost completely sold-out; but the East Tower is about 80% vacant. Despite cutting prices up to 50%, I still don't deem the place to be a bargain. That's because it's 50% off the peak price, which was in bubble-land. Also, buying into a condominium that's only 20% sold is risky. Services might be cut and then you're stuck with a lame-duck property.

Still, I'm interested in Las Vegas as an investment. Prices might not have bottomed yet. But as an investor if you're not sifting through the wreckage after a 35% to 50% crash, then you're not doing your job as a speculator. I'll look at more buildings this afternoon.

I think Las Vegas will make a comeback. Elvis played here. Sinatra owned the town. Many other stars have followed. I urge investors and baby-boomers to come to Vegas and check-out the bargains. But remember: it's definitely "buyer beware" as the real estate recession bites America's entertainment capital. Tread carefully.

Have a good weekend. See you on Monday.