Winter Park Colorado: anyone investing there have thoughts?
broomfield, CO · Member since 2017 · 98 posts · 31 votes
I am looking into one of the newer townhomes in Winter Park CO as a STR and family vacation spot. I have begun researching some of the costs associated with marketing / advertising a property vs having a management company do it for me. One thought is to have a company do it for me at the beginning and then I can take it over a bit later once the property has garnered some reviews etc. I noticed that many companies claim to advertise on all the top sites. As I started looking into the fees associated with each site, it seems that if one were to advertise on the top 5 sites including booking.com, the fees can add up to around 8K or more a year alone; and that is only on 28K of income. At that point it seems logical to utilize a management company.
I am curious if people are investing in that area with STR and if they are using many sites to advertise on or just something like VRBO?
If there are people utilizing management companies, curious if they have any recommendations?
overall thoughts on the area and growth potential/strength of VRBO ?
would love to hear peoples thoughts :)
Bo
Thanks for the shoutout @Tim Emery.
Hey @Bo A Vanecko, welcome to the neighborhood. :)
First, I would say that you need to remember, just like a traditional rental, you make your money on an STR when you buy. Not when you rent or sell it. It's hard to do that these days (in Colorado), although throughout this summer prices have been dropping. People are starting to realize that they may have missed the boat or that they just priced too high when they put it on the market. In a resort area, demand and prices also fluctuate with the seasons. Regardless, with a 'newer townhome' in the WP area, I think it's going to take some real time and work to make it profitable. Personally, I like to make my STRs as close to passive income as possible, so I try to find off market fixer uppers and do my own remodels.
But, let's consider you've found something where you're confident that the numbers will work, and look at your other questions.
If you're adding up the fees associated with the different Online Travel Agencies (OTAs), consider that those costs will likely be passed on to you. So, hiring a property manager for this reason might not give you the benefit that you think. I also property manage for other STR owners, and if they choose the VRBO subscription over Pay Per Booking (PPB), they are responsible for the $499 annual subscription fee. PPB only makes sense for a property if VRBO brings you less than $10k per year, and in the WP area, you're likely going to see a lot more than this from VRBO, AirBNB, and BDC. At least until your direct booking strategy takes off and people begin finding you directly instead of through the OTAs.
As for management companies... there are several, some good, some terrible. Most of them will charge you at least 40% of your profits. I don't have the overhead that they do, and I streamline my processes with automated systems so that it really cuts back on the amount of work required to manage, so I'm able to do it for a lot less.
My overall thoughts on the area is that I LOVE Grand County. And guests do too. It's growing quite a bit too, and has been for the past few years. This has a lot of benefits, but also challenges. In Granby, they are introducing more STR laws at the beginning of 2020 that will further cut into profits, but hopefully shake out some of the competition that are contributing to the 'race to the bottom' on pricing, pushed mainly by AirBNB.
With that said, you need to be on at least AirBNB and VRBO/Homeaway, and probably BDC as well. My recommendation is the opposite of what you first stated. Instead of starting with a PM, start on your own if you have the time. Setup your accounts on AirBNB and VRBO, start accepting guests, and see how things go. Later, either work on your brand/direct bookings, or hire a PM to take advantage of their systems and brand, and give yourself more free time in exchange for less profit. The added benefit of this is that you will then have a good idea of how things should work, what you should expect to see in terms of occupancy rate and revenue, and you won't have to just believe the marketing info that the PM gives you. You can fact check it and make an informed decision before entering into a partnership with one.
@Bo A Vanecko
Could be interesting. Just did an adventure of Air BnB in KCMO as an experiment to see if it was worth it. Lots of time commitment and your income is subjected to reviews of people etc.
Smaller mountain towns are also putting a cap on the number of vrbo/Airbnb’s they allow. This to me also means that they could say “none allowed” at some point and then you’re either renting long term or it’s an expensive vacant place to own. :) though I do love Winter Park!
I recently did a remodel for a very similar project in Winter Park. Awesome place in my opinion and growth opportunities are tremendous. A preeminent ski area in colorado that still has land to develop. Guy who owns the property had the same idea.
In order to get an str permit he said you needed two local contacts that could be at the property within 1 hr. Seems directly created to discourage self management of strs by folks in Denver and to promote the use of locals. I think the unintended consequence is that it has promoted the use of management companies local or remote who can easily make those local connections to meet that requirement. The management company he picked provided all consumables including bed sheets and towels. They charged 40%of gross! I don't remember if that is all bookings or just theirs??? I believe he has negotiated that down after his first year with them. He got bookings all summer but he didn't have rules on minimum stays so only weekends were booked plus a couple full weeks here and there. I'm not sure how the fall is going and this will be his first full ski season. Will be interesting to watch.
I do know a couple from boulder who is self managing their condo.
WP is an awesome area, and traditionally more affordable than Summit or Eagle counties. Management fees can definitely get high (40-50%) but there are alternative models out there (bookbyowner.com, etc) that can reduce the expense with some work on your end. The 1 hr requirement for STR by the way, is to ensure that when you have an issues (parking, pets, noise, parties - and you will) it can be dealt with asap. The next day is not soon enough to handle problems in close quarters like condos. Make sure to factor in the local STR taxes as well, and have a great winter!
@Garry C. Garry is up there and doing really well. He's got great system. Look him up! @linda
@Linda Weygant can get you in touch with him also
Good luck
Thanks for the shoutout @Tim Emery.
Hey @Bo A Vanecko, welcome to the neighborhood. :)
First, I would say that you need to remember, just like a traditional rental, you make your money on an STR when you buy. Not when you rent or sell it. It's hard to do that these days (in Colorado), although throughout this summer prices have been dropping. People are starting to realize that they may have missed the boat or that they just priced too high when they put it on the market. In a resort area, demand and prices also fluctuate with the seasons. Regardless, with a 'newer townhome' in the WP area, I think it's going to take some real time and work to make it profitable. Personally, I like to make my STRs as close to passive income as possible, so I try to find off market fixer uppers and do my own remodels.
But, let's consider you've found something where you're confident that the numbers will work, and look at your other questions.
If you're adding up the fees associated with the different Online Travel Agencies (OTAs), consider that those costs will likely be passed on to you. So, hiring a property manager for this reason might not give you the benefit that you think. I also property manage for other STR owners, and if they choose the VRBO subscription over Pay Per Booking (PPB), they are responsible for the $499 annual subscription fee. PPB only makes sense for a property if VRBO brings you less than $10k per year, and in the WP area, you're likely going to see a lot more than this from VRBO, AirBNB, and BDC. At least until your direct booking strategy takes off and people begin finding you directly instead of through the OTAs.
As for management companies... there are several, some good, some terrible. Most of them will charge you at least 40% of your profits. I don't have the overhead that they do, and I streamline my processes with automated systems so that it really cuts back on the amount of work required to manage, so I'm able to do it for a lot less.
My overall thoughts on the area is that I LOVE Grand County. And guests do too. It's growing quite a bit too, and has been for the past few years. This has a lot of benefits, but also challenges. In Granby, they are introducing more STR laws at the beginning of 2020 that will further cut into profits, but hopefully shake out some of the competition that are contributing to the 'race to the bottom' on pricing, pushed mainly by AirBNB.
With that said, you need to be on at least AirBNB and VRBO/Homeaway, and probably BDC as well. My recommendation is the opposite of what you first stated. Instead of starting with a PM, start on your own if you have the time. Setup your accounts on AirBNB and VRBO, start accepting guests, and see how things go. Later, either work on your brand/direct bookings, or hire a PM to take advantage of their systems and brand, and give yourself more free time in exchange for less profit. The added benefit of this is that you will then have a good idea of how things should work, what you should expect to see in terms of occupancy rate and revenue, and you won't have to just believe the marketing info that the PM gives you. You can fact check it and make an informed decision before entering into a partnership with one.
An interesting point is that it's not necessary to be "local" to manage properties. I manage properties across 6 states-- for myself and my clients-- at a fraction of the cost of the local management companies. I simply do the research to know the trends and seasonality, and then research dozens of comparable listings to see where my prices should be based on location and season. I think we're the lowest cost solution out there- if there's one lower, I'd be surprised. I have a system which can increase revenue up to 50% (more frequently changing prices and minimum night stay requirements to be "on top of the market" and to show up higher on AirBNB SEO search results-- just one of many tricks I've learned doing this since 2015) which more than pays for itself. Like a good broker--which should pay for him or herself in the form of better advice on buying properties--a good STR property manager should pay for himself by making your listing more competitive through advice (picture order, listing descriptions, design/photography techniques, etc etc etc.) and active management, and thus making you more money! Feel free to reach out with any questions. I live and breathe this stuff and have a lot of fun doing it! We are currently looking to enter Colorodo as well, and have some insights into the market. We are currently based in park city, UT-- another top notch ski town so ski seasonality/pricing comes naturally ;)
@Bo A Vanecko Did you ever net out anywhere? It's been a year since you posted, but thought I'd jump in on the conversation. Grand County can be tough when it comes to short term properties. If you buy anything 3-4 beds or less, you are a dime a dozen in the STR market there. This is mainly due to the fact that many from the front range with a rental here typically rents their properties when they aren't using them so there is a lot of competition. Short Term property management companies in the area usually charge 30-40% which I personally think is too steep. Especially for these sized properties as it typically cuts into any potential profits.
I recently finished building two houses in Fraser. Pull out more money than I put into them so I got paid to build two houses. (e.g. no money into the properties) I'm long term renting one and cash flowing on that. And am short term renting the second larger house. I decided to use Evolve Vacation Rentals. So far so good. And they put the property on all the sites. 10% fee seemed more reasonable. Key thing is getting a good local cleaner. They help coordinate this as well.
Feel free to reach out if I can answer anything else.
Best,
Michael