Out of State - Ski Property - Short Term Rental

Denver, Colorado
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Out of State - Ski Property - Short Term Rental

Jon Steffen
Bermuda · Member since 2017 · 5 posts · 3 votes

Good Day,

I've been looking into purchasing a ski house or condo that I would rent out for the popular seasons, in a popular ski area in Colorado (Avon, Aspen area, Breckenridge etc). I live abroad in Bermuda and I'm currently unable to buy property there due to restrictions and transaction taxes. Given that we like skiing as a family activity and wouldn't mind moving to Colorado at some point this seemed like a potential option.

Where I'm struggling on this is that it seems that the economics don't really make sense given property prices, mortgage rates, and occupancy. Cap rates seem pretty low relative to mortgage interest rates.

Has anyone seen this model work in this economic environment?

Thanks for your thoughts on this.

Jon

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James Carlson
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
2y
Quote from @Jon Steffen:

Good Day,

I've been looking into purchasing a ski house or condo that I would rent out for the popular seasons, in a popular ski area in Colorado (Avon, Aspen area, Breckenridge etc). I live abroad in Bermuda and I'm currently unable to buy property there due to restrictions and transaction taxes. Given that we like skiing as a family activity and wouldn't mind moving to Colorado at some point this seemed like a potential option.

Where I'm struggling on this is that it seems that the economics don't really make sense given property prices, mortgage rates, and occupancy. Cap rates seem pretty low relative to mortgage interest rates.

Has anyone seen this model work in this economic environment?

Thanks for your thoughts on this.

Jon

Unfortunately, there are two potential barriers to ski vacation rentals in Colorado. 

Here's what I see from our STR clients.

1. Places like Breckenridge (and Summit County, where Breck is located) have caps on STR permits and are well beyond those caps.

2. Ski areas thar don't have caps like Vail, Steamboat Springs, etc don't make sense numbers wise.

Solutions? Either A) you need to want a ski Airbnb/VRBO for the personal use of it but not the investment aspect of it or B) you need to be okay with some of the areas within 45 minutes of the ski areas that are totally open to short-term rentals and where the numbers are better. (Leadville, Fairplay, etc)

Good luck. 

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    2y

    Cap rates are irrelevant for what you are looking to do. Those apply to commercial properties, so for apartments, 5 units and up. Your best bet would be to do a short-term rental in the ski area, but you want it to be one that is solid off-season as well. Using a rental is one of the best reasons to buy one so I like your thinking there.

    The proliferation of STR in ski areas have made areas a little farther out more of an option in some of the ski areas so you can track the options by looking where they short-terms stop on the map in the areas you like.

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  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y
    Quote from @Jon Steffen:

    Good Day,

    I've been looking into purchasing a ski house or condo that I would rent out for the popular seasons, in a popular ski area in Colorado (Avon, Aspen area, Breckenridge etc). I live abroad in Bermuda and I'm currently unable to buy property there due to restrictions and transaction taxes. Given that we like skiing as a family activity and wouldn't mind moving to Colorado at some point this seemed like a potential option.

    Where I'm struggling on this is that it seems that the economics don't really make sense given property prices, mortgage rates, and occupancy. Cap rates seem pretty low relative to mortgage interest rates.

    Has anyone seen this model work in this economic environment?

    Thanks for your thoughts on this.

    Jon

    Unfortunately, there are two potential barriers to ski vacation rentals in Colorado. 

    Here's what I see from our STR clients.

    1. Places like Breckenridge (and Summit County, where Breck is located) have caps on STR permits and are well beyond those caps.

    2. Ski areas thar don't have caps like Vail, Steamboat Springs, etc don't make sense numbers wise.

    Solutions? Either A) you need to want a ski Airbnb/VRBO for the personal use of it but not the investment aspect of it or B) you need to be okay with some of the areas within 45 minutes of the ski areas that are totally open to short-term rentals and where the numbers are better. (Leadville, Fairplay, etc)

    Good luck. 

    2Reply
  • Bradley BuxtonBusiness Member
    Real Estate Agent · NV · Member since 2023 · 1k+ posts · 720 votes
    2y

    @Jon Steffen

    Hi Jon, I'm in the Lake Tahoe, NV area and there are some different options for the Ski Lease, STR and MTR. There are a few strategies that our clients use. Happy to share some information on the area.

    1Reply
  • Jon Steffen
    OP
    Bermuda · Member since 2017 · 5 posts · 3 votes
    2y

    So it sounds like Colorado is tough to find ski STR opportunities given high cost of entry or STR restrictions.
    I'll look into NV?

    Are there other areas out west that are attractive Brad mentioned NV so I'll look into that but others (UT, MT, WY)?

    I know there are resorts out east as well but my preference is out West because I prefer the skiing there. 

    1Reply
  • Eric DeNardoPro Member
    Real Estate Agent · Denver · Member since 2020 · 366 posts · 151 votes
    2y

    @Jon Steffen,

    You are right that the current prices, mortgage rats, and occupancy make it tough for the numbers to work. You would need to buy in places further from main ski areas. OR put 50% upfront to make the numbers work, which is a high barrier to achieve. 

    [email protected]
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  • Russell T.
    Denver, CO · Member since 2021 · 28 posts · 10 votes
    2y

    @James Carlson

    Did you see an STR moratorium could now be enacted in Park County?

    https://www.theflume.com/news/article_3166c4ea-f5d7-11ee-b8a7-832f9d67578d.html?fbclid=IwZXh0bgNhZW0BMQABHUn7H3j1Y1iVKKBJxhLlS5d7MBaixGwvDOw9At7NrLCEVQ1uZkPb7t-x5w_aem_Admws2TqS9fX1m1EBpcji-sw02zrfg3gcKGBaXkf1ko6wZ7q0WVNAyTr2dcARYdqDYI

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