I took my family to Park City for a ski trip this year shortly after I read Rich Dad, Poor Dad. The condo we stayed in was great. It seemed very well managed. I have been thinking about buying a rental property there ever since. I contacted a realtor in Park City this week to get some market facts. I thought that sharing part of our conversation might be helpful on this forum.
Me- ...In all honesty, I will not be ready to buy this year. Probably not next year either. I am serious about buying within the next 3-4 years. I want to be respectful of your time but I was hoping you could answer a few questions for me.
I know that circumstances vary, but do you recommend a 2 bedroom over a 3 bedroom as a rental property? I assume that there is more demand for these than for single bedrooms. At a place like _______, how many nights per year are the properties occupied? How much does a 2 bedroom rent for per night compared to a 3 bedroom. What are the taxes and insurance like? For cash flow purposes, what price range would you recommend, $350K or $750K. Are ski in ski out properties desirable, ie. are the higher prices made up for by higher occupancy and rents?
Realtor-Those are all good questions, and I am happy to help . It is a big decision and takes time. The short answer is: pretty much .
The best advice I think I can give is: choose a property that works for you and your family. Buy it because you LOVE to be in Park City, and it will help pay for itself as long as you own it. When you sell it, it is likely that it will have increased in value. (I do not know why this is blue)
The Ski in Ski out properties, and the ones near Main Street or on Main Street rent a little more than the ones that are a little farther out. What is most important of all is, where do YOU like to be when in Park City? Properties in Prospector (one bedrooms), and even the ones in Kimball Junction rent to skiers. I am not a rental agent, but I’ll do a little research and find out the average number of days. Summer is also a VERY popular time in Park City. People from Florida, Arizona etc come up for 3 months. (Rents are lower in summer)
Insurance is inexpensive in Utah. Our two bedroom condo costs less than $500. Per year. Taxes are approximately 1% of the assessed value. It usually show up on the mls report.
A few days later from realtor- Here is the answer straight from ________ management, when I asked about the differences in rental revenue between a 3 bedroom vs. 2 bedroom:
“The range does vary a lot. 3 bedrooms typically generate more as the rate is higher, but then again, so are their dues and other expenses.You are right in saying location, rating and size does play a role in rentals. 2 bedrooms grossed from a low of $19K to a high of $43K. That’s a huge swing but low end was economy property and high end was a premium. 3 bedrooms ranged from $30K-$40K but most had some owner use at peak times. Average can run 75-160 nights annually. Sorry to be so vague.”
The average number of nights varies, because some owners prefer not to rent it out in the summer, and some use them a lot in winter.
_________ property management takes 45% as their fee. It’s the typical fee for Park City.
When another ________ property becomes available, and if you are interested in it, I can get the exact numbers on that particular unit. I can usually do the same for any condo in town, right down to the electric bill. You had a lot of great questions, an when you are ready, and find a property you like, we’ll get all of the details on it. As to whether you choose something in the $300K or $750K range it all depends on the unit. There is a one bedroom condo in _______, which is across the street from the Resort Center which grossed $43,000. In 2016. (It must not have had much owner use) I’ll send that one next.
I am trying to analyze these properties but I am new to this so help me out please. The property where I stayed has nothing for sale presently, but 2 BRs have sold recently for around $600K and 3BRs for around $700. Lets say I buy a 2BR for $600 and it generates $40K in gross rent which comes to $3333 per month.
$2432 P&I at 20% down and 4.5%
$1500 Property management (45%)
$500 Taxes (1%)
$100 Insurance wild guess
$400 utilities wild guess
$400 regime fee or hoa (she told me this number over the phone)
It looks like such a property would have negative cash flow of about $2,000 per month. Ouch. That seems like a lot to pay for the hope of appreciation and the ability to have free lodging every year for a family ski trip.
It is interesting how the realtor appealed to my emotions. "”and "What is most important of all is, where do YOU like to be when in Park City”I clearly told her I wanted a property for cash flow rather than appreciation. I do not care so much about loving the location. She did not seem to get it. She says that every property is a good rental. She said that most properties would have good cash flow but she was clearly forgetting about the operating expenses when she talks about cash flow. Having said all that, she was very nice and helpful in getting me the information I requested. Any suggestions about the market in Park City?
