BRECKENRIDGE STR // Will I cash flow?

Question

I’m considering buying an STR in Breckenridge Colorado. I just want to get some opinions from people who know / have an STR in that area. Would I cash flow here ? I know that question has many more layers then “yes or no” but I want to know if the possibility is high or not. I’m looking to spend around 500k . I already have a very successful STR in Gatlinburg TN that I gross around $120k  a year on and I spend $800k on that . I was wondering if numbers like that are possibly for this area .

Heike Spichal · Answer

@Tyler Chameroy, I've been looking at STRs in the Bailey/Conifer area and after running the numbers on AIR DNA and other calculators, it seems only about 30% of STR properties rent more than 180 days a year. Once I calculated average daily rate, it'd would have to rent 60-70% of the year to break even after costs. I noticed in Airbnb, a couple owners have nice loft set ups over their garage - they live in the main house and can manage it there. Of course that wouldn't work for me, but it does seems a less risky approach if you can set it up like that.

Amanda Carlo · Answer

@robert jordan we've been looking at Silverthorne too and can't find a way to make the #s work. Such a bummer!

Robert Jordan · Answer

I have been crunching numbers for a similar STR strategy in Silverthorne. So far I don't see a pathway to cash flow. Best case scenario is breaking even(or small loss) and having a condo to visit in the off season. The appreciation increase in summit county over the past 3-4 yrs has priced out profitability of a new purchase in the STR market. I am also weary of the potential of a future appreciation increase. Much like Denver metro, which is still incrementally increasing, a drastic increase in value that recent years have brought is probably not in the near future. People have grown accustom to 20%-30% appreciation in 2 yrs. I am not sure its a reality anymore.

It will be interesting to see how the expiration of the CARES act effects the 2nd home/vacation home market.

Nicko Ferguson · Answer

@Brandon Bonfiglio it comes down to convince.  vs price per night. Can guests walk to the chair lift? Does it have off st parking? Hot tub? Close to bars and food? I'm not up to speed on Breckenridge pricing but I live in Telluride. $500k will get you a studio here... possibly a 1 bedroom. Right now there's a cap in colorado on how much a place can be rented or how much inventory a PM can rent. Do some research into that. Personally I would wait and see if the resort even opens for the winter. Things could get real weird and some properties may become distressed in the next year or so.

Tyler Chameroy · Answer

How about somewhere in Park County, Bailey or Fairplay? I have been looking into that area and with self managing it seems like it would cash flow since the property is cheaper, does anyone have experience there?

Matt M. · Answer

IIRC STR management fees up there are 35-50%! My client up there does $150k+ a year with his house that I sold him a few years ago. It was $900k. The HOA fees on these places are huge as well. STRs up there are more cover your nut and have a free place to stay when you want than a CF deal.

They rent almost year round minus Oct and mud season. The market is insane right now since people can't/won't travel overseas AND now more people are able to work remotely. I'd wait until the Fall or Winter to pick something up.

Tanya Delahoz · Answer

I've been an investor, Realtor and full time resident of Breckenridge for 20+ years. You won't cash flow-but you'll make a ton of money on the back end with appreciation. Think of the STR income as a mitigation for your monthly carrying costs. You'll make bang when you sell.

Paul Sandhu · Answer

@Collin H. Read my old posts.  I rent to refinery contractors.  They are travelling workers with a per diem.  They basically want to stay somewhere where they can do 5 things. Drink beer, cook food, do laundry, shower and sleep.  They can only do 3 of those things in a motel room.

Collin Hays · Answer

Paul, tell me about Borger TX.  I am an hour from there and have never even considered it.  It's a refinery town.  Isn't that a boom/bust situation?  What would you be looking to buy there, and who is your customer?

Collin Hays · Answer

I don't think Breck would even come close to cash flowing.  I love it there, but it's just too seasonal and hit or miss, and the price psf is very high.  If I was going to buy in Breck, I would rent my place out just to help with my overhead a little.

I don't know of a Rocky Mountain town that would cash flow.  I've looked at a bunch over the years.  But if you held a gun to my head and I had to buy somewhere in CO, Durango would probably be the best chance to cash flow.  You've got parts of 4 seasons of tourists there, plus the college.

BRECKENRIDGE STR // Will I cash flow?

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