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CO Ski Vacation Home w/ Week to Week Rental. Good Idea?
I live in the Denver area and have considered buying a vacation condo/ SFH in the mountains near destination ski resorts for rentals and personal use. I don't have a particular property in mind, but wondering if anyone owns one and does week to week rentals? I know the week to week rental costs are very high in the mountains during the ski season. The home prices are also very high, but I have found some townhouses with low HOA's ($60) for reasonable prices. Most condos I see have $200-$400 HOA's which seems ridiculous to me. What are your thoughts on this type of rental?
I have looked into this. Without doing an exhaustive analysis, I felt that there was no profit in it unless I could self manage and had the contacts to do the turnovers at reasonable rates. The best case would be ending up with a paid for unit after 20 years. You also have appreciation in your favor but it's hard to pay the monthly bills with appreciation. Also there would be lots more wear and tear on the unit because you typically have large groups and they use hard.
If I wanted to use it, then it would "cost" me the same as if was simply renting a place due to lost income. If I only used it when it wasn't rented I wouldn't have the use when I wanted it. In the end it seemed like it was a better approach to invest where it was easier to manage and take the profit and rent a place where and when I wanted.
There is just too much competition to purchase property there. The one model I saw that might work was someone purchased a large house and did the boarding house approach. 5-6 bedrooms at something like 800-1200 per month on year leases. They rented to workers in the area. Seemed like it might eventually pay for itself but it takes a large down payment.
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Real Estate Agent Colorado (#IR044146)
- Reliant Real Estate, Inc.
Location, location, location.
My friends 2 bedroom, 3BA near winter park only gets rented about 5 weeks a year and another couple weekends. Some other people I know have a one bedroom slopeside in breckenridge that they can't get into if there is snow on the ground.
I'm sure the property management & placement company has a fair bit to do with it as well.
In my book, you probably won't make money on it. I'd be shocked to hear you covered the expenses every year. But if you're looking for a place to use, it's not a bad way to go.
I'd want to know how long is the season? What are the rents? what are the expenses including property management?
Here's an analogy for you, at the mid-Atlantic beach areas the season is 12 weeks. You have to make your entire income on 12 weeks of rent and 40 weeks of vacancy every year. It sounds like a great idea, I can own a beach property and somebody else pays for it, but in reality its hard to pull off and most people are negative cash flow whether they want or not.
So I purchased a home in Portland hoping to make it pay for itself and am actually making money and am really torn between expanding my "furnished rental portfolio of 1 :)" or turning to traditional homes or multi-family residences.
While my market is different than yours, the best way I have found to determine the market is to look at VRBO.com. Homeaway.com, and Flipkey.com to determine: a) what other rentals are nearby and b) how booked they are.
VRBO.com is the best source so start there and search by dates using the "my dates are flexible option."
Vacation rental owners will tell you that in most cases you can bet on renting your place 17 to 24 weeks a year, so you need to figure your profit on that. Also, you can review the listings that you find to see you can get away with charging additional for the cleaning that will be required between each visitor to cover that.
Finally, be sure to check the HOA's for the condo, usually condo's in resort areas have no "less than 30 day rental restrictions" in the bylaws, but most condo's in the city specifically forbid it.
A lost note of caution is if the area is only good for skiing - one poor snow year and poof your profit goes away with the sunshine...
Sounds about right. Winter Park is definitely more inexpensive, but I wouldn't consider it. I look in the Breckenridge, Frisco, Keystone, Silverthorne area often. I guess my main thought is if I could break even or cash flow even a little bit, it would worth doing for appreciation and personal use. Then again, are the condos really appreciating? @Bill S. The boarding house approach is a good idea, but like you said, it would take a large amount of money to make that happen.
@Account Closed Thanks for the resources, I will take a look. Also good point on HOA rental rules. Something to look into for sure. @David Krulac The tourist ski season runs December to about April (Christmas and Spring Break are big). I think it is a little different from a beach rental because people do also vacation here in the summer for various mountain activities. Rent prices and demand are lower, but I would say it is possible to rent year round here. Maybe not booked every week, but I'm sure there would be some business to be had. For me I think it would be more about helping to cover costs for my own use and less about actually making a solid rental earning on it. Just curious how that is working for others with the same idea.
The place you buy has to be where people want to rent so look at occupancy for rentals in that complex. Weekly rental with a short season is tough. What is ski season in Colorado, 12 weeks? I am sure I would figure as high as 17 weeks. Run the numbers and be honest with yourself.
Now not speaking as investor. If you want to own a place and use it when you want while raising a little to supplement your mortgage payment that is something you can do, it has its paybacks. if you are an avid skier, have a family that skis and want to always ski in one place might be a lifestyle choice with some perks (less planning, less competition for accommodations, able to leave your stuff there). Then again joining a ski club with a house might be cheaper.
We lost a deal in Vermont on buying a ski club house something like the boarding house Bill mentioned, we were involved prior to the house going for sale and it is a management challenge to book those rooms and have people share the common space. You really need an onsite caretaker especially in the off season but there are a fair number of people willing to do it for a free room.
I've thought about a ski rental as well but haven't looked into it enough to know what the rental rates are. Is there anyone on BP that specializes in vacation rentals?
I manage dozens of vacation rentals, not in CO, but in a ski resort town. I can tell you from experience that it is very unlikely that you will rent it enough to cover your expenses. You will do really well in the winter, then it will mostly sit empty the rest of the year. Also, you will have really high utility bills, because your guests will leave the heat at 75 degrees with the window open.
You will also have to either get a management company or deal with marketing, reservations, contracts, receiving payments from guests, security deposits, housekeepers, maintenance, keys, etc yourself.
Originally posted by @Kyle Doney:
@Account Closed Thanks for the resources, I will take a look. Also good point on HOA rental rules. Something to look into for sure. @David Krulac The tourist ski season runs December to about April (Christmas and Spring Break are big). I think it is a little different from a beach rental because people do also vacation here in the summer for various mountain activities. Rent prices and demand are lower, but I would say it is possible to rent year round here. Maybe not booked every week, but I'm sure there would be some business to be had. For me I think it would be more about helping to cover costs for my own use and less about actually making a solid rental earning on it. Just curious how that is working for others with the same idea.
This sounds like the right attitude at least. The big problem is the times you want to use it are likely the same times someone else wants to rent it. (Holidays, etc.)
If you were aggressive, I'd bet you could cover half the costs in a given year without too much trouble. Not quite what I would call investing, but a good way to reduce the cost of ownership for a personal use place.
-Matt
After doing some research on VRBO it looks like most one bedrooms in Breckenridge rent for about $200-$250/ night. Looking at the calendars it seems most are pretty well booked too. Obviously in the summer it won't be the case and rents will be much lower, but to help offset the costs of a personal vacation home this still wouldn't be a bad idea.
@Account Closed Thanks for the advice, it makes sense. Would you say buying in the summer is the time to get the best deal or is it slower in the winter like most residential areas?
You should probably call a real estate agent in the area you want to buy in. They could give you the best advice about when is the best time to buy. You might also want to call a local property management company and see what they have to say about the rental market there.
I just joined the BP community and thought I would add in my personal experience on this topic. My husband and I own a 1BR/1BA ski condo in Keystone. We live in Kansas City, so we pay a management company that handles all of the details like contracts, payments, cleaning, maintenance, keys, etc. They book some rentals for us, but we get most of our bookings from VRBO. We put about $10k in for new furniture and upgrades when we purchased. Net of commissions we cover about 75% of our costs each year which includes the $350/mo HOA. Season is Thanksgiving through end of April depending on snow. We book a solid 100-125 nights during the ski season and only 25-50 nights the entire rest of the year (mostly weddings in July/August).
If you are looking for a positive cash flow on this type of investment, run. Run fast! My advice, don't go on the cheap if you really want to maximize rental income. Concentrate on location and make your unit stand out in the pictures. You would be amazed how many people book with us because of the trendy red couch in the photo!
If you do purchase, look to do it April - November when inventory is higher and owners are not getting any rental income. They are less likely to negotiate a sale when they are getting ski rental income. Many take their properties off the market during the ski season and put them back on sale in April when rental income dries up.
Accidental post.
@Katherine Conrad Thanks, great advice from your personal experience!
Hey @Kyle Doney I was just considering the same thing and came across your post. I was actually thinking of buying a condo and turning it into a ski condo share, with 6-10 people sharing a condo/townhome for about 6 months and then potentially using it as a vacation rental during the off-season, as I know there are always people along the Front Range looking for a seasonal rental. Have you made any progress since the last post?
-Tara
Hi @Tara Hall. I haven't found anything yet. I found a good deal a few months ago, but it got snatched up before I even got an offer in. I've been more so looking for land or SFH over a condo. The HOA's in the mountains are pretty steep in most areas.
Thanks @Kyle Doney you read my mind, HOAs up there are crazy expensive & there's more restrictions with them.
The way I typically view vacation rentals (Beach/Snow) is that you will pay for the mortgage and the expected revenue minus upkeep/ property management will possibly pay the HOA/Taxes/Insurance. Ergo, you have to be sure you are going to make personal use of the property.
@ Kyle Doney just following up to see if you had any luck finding a unit in Breckenridge area. I have the same idea as you do. I'll be in Breck this March...are there any local REIA's nearby or are they only in Denver?
Thanks
Chip Fernandez
Central Florida investor
I'm a Realtor and RSPS (Resort and Second Homes Property Specialist) with RE/MAX Properties of the Summit in Breckenridge. I agree with a lot of what has been said here. Our resort-area real estate is really best thought of as a lifestyle purchase, though you can offset your costs by renting out the property in the short term rental market.
Rental income does vary greatly, across the seasons and across the years. If a property doesn’t have historic rental income, I will often ask for a projection from one of the vacation rental management companies. Of course, past figures won’t necessarily predict the future, but some homes/condos available for sale have an established rental base and renters that come back year after year. Those properties are especially nice to find.
You do have to watch those HOA fees, as they can get very high, particularly in the kind of properties that boast the amenities so popular in the short term rental market. Another factor to always keep in mind: on average, the property management or vacation rental management companies will take 25% to 45% (and sometimes more) of your gross rental income.
You may have the option of running your property management yourself, through sites such as VRBO. Taking on as many of the management tasks as you can will, of course, help you maximize your net income. Some companies up here offer a hybrid model of property management – one in which you do some of the work and the property management company does the rest. The company might take care of check-ins and the cleaning of the unit, for example, while you handle the promotions and the bookings.
You'll also want to take care when you choose a property that you choose one that is especially attractive to the short term rental market. Condo complexes with a pool or - at the very least, a hot tub - tend to rent better. The more people your unit sleeps, the better, so it's a good idea to have a sleeper sofa or two in there somewhere. (The HOA and property management company will likely have some guidelines on this.) And then make sure the condo is available to rent during Summit County's peak times (December holidays and the entire of month of March, for example.)
I spend a lot of time looking at rental income on various properties, so don’t hesitate to let me know if I can help.
