Investment Info:
Other buy & hold investment in Big Sky.
Purchase price: $189,000
Cash invested: $5,000
Innsbruck 1974
I purchased this 440 sq/ft studio in February 2020 as an investment property for the vacation rental market of Big Sky, Montana. This place is a true time-capsule, with all furnishings and appliances dating to the mid-1970s. In January of 2020, the New York Times ranked Big Sky, Montana the second-best place for winter vacation rental investments in the United States behind Killington, Vermont.
I have had my eye on this neighborhood of Big Sky for a few years now and was ecstatic when my offer to purchase this property was accepted. I have owned rentals in the Big Sky vacation rental market for the last four years and have had unprecedented success with renting on Airbnb.
Big Sky is composed of three small villages roughly separated by 9 miles from the Canyon to the Mountain Village. My first investment property is in the Meadow Village of Big Sky (where most of the local citizens live). It does well year-round as many activities are supported from this location from fly-fishing and Yellowstone National Park tours in the summer to skiing Big Sky Resort and cross country ski trails in the winter. However, it is still 6 miles away from Big Sky Resort and many people want to stay as close to the ski lifts as possible during the winter season.
This property, showcasing a jaw-dropping Lone Peak view, is one of the best locations for access to skiing Big Sky Resort and was priced within my budget.
My real estate agent/business partner sent me the listing the day it went on the MLS, at the time I was on a 12-hour bus ride heading due north out of Dehli, India bound for the remote western Himalayas. I already knew what I was looking for, I knew the numbers, as I manage several Airbnbs in this location and after looking through the photos I called my agent to put in a full price offer.
I arrived in the small town of Kasol, India with an altered mindset. I had planned on going full unplugged as I took to a mountain trek hiking from village to village through the Himalaya for the next 4 days. I had to change my plans a bit and found the only cafe in town with Wifi. Stereotype to the T, here comes the American to a very far off remote land and what is the first thing he asks for? Wifi!! Haha, I learned that the seller had accepted my full-price offer and I had to do a little bit of computer work. Navigating my second real estate investment purchase, sight unseen, from the remote western Himalayas was a unique experience. Although it did affect my "full immersion" into the culture I was within, it was really neat knowing that I could conduct business on the home-front from one of the most remote places on Earth.
The locals at the cafe were always appreciative of my business and were glad they had wifi to offer me. Upon return to the United States, I entered the property for the first time, 10 days after I had put my offer in.
I had put a full price offer without financing and my next hurdle would be getting financed. I had been globe-trotting for the previous three months and didn't have a steady job or wonderful bank statements to show the bank. I became nervous as I sat down with multiple loan officers who looked at me and said sorry we can't help you out. I had to make this deal come to fruition!
I began to reach out to a few people to partner on the deal, however, my mentor advised that if I could go alone, I should. It was in my reach to do so.
I had to extend the buy/sell as I still didn't have financing in place for the set close.
Finally, I found a local banker who offered a portfolio loan at 5% interest, but I had to bring 35% down. I came up with the money, shook hands and closed the deal!
What made you interested in investing in this type of deal?
I have my hand in the STR cookie jar of Big Sky and had been waiting for a cookie-cutter investment deal similar to the property I already have.
How did you find this deal and how did you negotiate it?
I was on a 12-hour bus ride from Dehli, India to Kasol in the Himalayas when my agent at home in Montana emailed me the MLS listing. I scrolled through the photos and emailed her back that I was very interested. The next day she went into the unit and sent a video via fb messenger, walking through and talking about everything in the unit. I put then executed a full price offer within 24 hours of the property being listed on the MLS. The owner accepted as I arrived to the Himalaya.
How did you finance this deal?
This was the most difficult part of the deal. I put an offer in without pre-approved financing and the seller had accepted. I had been traveling for three months and my bank statements had only been drawing funds with little inflow. Bank after bank turned me away. I was nearing close without financing and had to extend the deal as I kept on the hunt. Finally, with help from a mentor, I found a local portfolio lender willing to finance the deal.
How did you add value to the deal?
As an STR investment, it was crucial that I get the property listed as quickly as possible. We were in the middle of the busy season with the ski resort running at full speed. I called up a few buddies who were able to help with the 10-day mini-renovation. We painted the unit, made some upgrades and then were out!
What was the outcome?
Guests arrived within 10 days after close and the unit had over $3,000 in bookings within the first week on Airbnb. Then Covid-19 hit, the ski resort closed and everything flatlined. Now I sit and wait. Hopefully, I have the cash to weather this storm.
Lessons learned? Challenges?
The Covid-19 crisis hit two weeks after the purchase of this property. Time will tell what this brings.
