I've recently been turned onto a possible source of passive income properties. There's a mountaintop ski resort in West Virginia that sells condominiums within the resort and then has in-house property managers that run the unit as a rental property whenever it's not in use by the owner (in my case, that would mean always). At first I thought that a ski resort would be a poor choice because of high vacancy in summer months, but apparently the resort manages to stay mostly booked year round with golf and mountain biking bringing in visitors in the warm months. The lower end of the price range has units at around the 35k mark in listing price. While there is never any guarantee that the unit would produce consistently, it would only need to be rented a few days per month to cover operating expenses. I'm still waiting on some numbers on a couple of properties, but I thought I'd reach out here in the mean time.
Has anyone ever bought properties in a setup like this? Experiences, thoughts, potential pitfalls?
I wanted to buy one of those every time I went to ski in Vermont. But my brain told me no. If I want investment, I would not think anything else than investment, especially when starting out. I still wanted to own maybe one some day when my income will more than enough to justify something like that.
-- my disclaimer: I don't own any vacation rentals, but I would really like to--
I have a good friend that has a very nice vacation rental in Park City, Utah. It is occupied for about 85-90% of the ski season, and then only 35-40% of spring/summer/fall. The ski season easily covers the cost for the entire year and it's then available for personal use and parties whenever it's not airBNB'ed.
Was a huge expense - super costly to get up and running, but this guy pays cash and plays in the higher end, so it works great for him.
In the vacation market it's all about location and local events / attractions.
Personally I prefer a well-placed vacation condo over a hotel. Gives me the ability to make my own meals, my kids feel more at home in a condo environment, and often times we can park the car for most of the week and either walk or ride beach cruisers wherever we're going.
Maybe check with the local chamber of commerce and look at historical performance of the tourism industry there - that might give you a good idea of how busy the place is year round.
Hi @Alex SImon check out some listings in VRBO, AirBnB, Homeaway, etc... to see how well others in that certain complex and area are performing. I'm not sure if the resort managers advertise on these sites, but check them out anyways to get a feel of what occupancy rate to expect during the down seasons.
On those vacation rental listing sites, send inquiries to owners letting them know you are thinking about purchasing a unit there and see if they are willing to answer some questions. We did this when we purchased our Maui vacation rental and just about every owner we did this with were very happy to answer any questions that I sent them. By doing this you can really gauge how happy owners are with the area, performance of their unit, how happy they are with the hoa and their experience with different property managers, housekeepers, etc...
Living here in the Denver metro, we've thought about getting a place near ski areas here in the Rockies, but it's tough to get a decent occupancy rate in the summer, not impossible but very tough to do and inconsistent. Prices for condos here are actually right at the same price as ones in Maui and there is no "low" season there, so that's where we decided to put our money. There's no $35K units here, so at your price point you may be able to handle a slow offseason much better than you could with a $350K condo in Breckenridge.
Jeremy Baker | [email protected]
Which resort is this at? As a WV native, I'm familiar with nearly all of them (Snowshoe, Timberline, Canaan, Winterplace) and can offer some insight as to which ones to steer clear of.
@zach liu (can't tag on mobile)
I wasn't really planning to use these units myself. There's nothing to this besides the investment aspect for me. I mean hell, maybe in the off season or something.
The 35k ones are just small studios. Nothing fancy but I figure they'd offer the best ROI since this sort of destination is about everything except the room. The fancier ones (scaling all the way up to half million dollar slope side mansions) are the sort of thing people would buy if they wanted to use it a lot, and rent it out part time. For me this just seems like a good source of full time rentals.
Hi Alex, my family has owned a few vacation rentals in the past. What i learned form all of that is more than the property itself, research, research, research the management company by talking to existing owners in the resort. There are the good ones, the medium ones (that bring in cash but have high fees), then the downright evil ones.
Here's one example one of my friends is currently wrestling with. Beachfront condo in South Carolina, fairly large project, i think something like 250 units. Management company owner has a second company that buys and owns units in same condo. What is their play? Fill their own units first, then the other owners, as a result a few owners are unable to make their loan payment due to the awful cash flow, then second company swoops in and buys these condos at a discount, rinse and repeat. Second company now owns so many units they are HOA majority. So guess who sits on board of HOA chair? CEO of management company. Guess whose management company gets the contract every year by sheer number of proxy votes? you guessed right.
Point is that there is lots of this sort of nonsense going on so be really careful.
Well there's a good point. But how would I go about getting in touch with existing owners at that resort? I'm drawing a blank.
As Jeremy said, check VRBO and Airbnb. At any resort, there will be many owners on there. Airbnb redacts all phone numbers and email addresses for "privacy reasons", so it's a pain to contact them for information
Just a thought about ski resorts... The high mountains of Colorado may actually see an increase in snowfall due to global warming. Everywhere else may not have any skiable snow in twenty years.
Without any specific WV knowledge I would steer you away from studios. I think you can get away with them in areas with high rental prices because you'll always have people looking for a more affordable option, but in a ski/golf destination you're more likely to have families and groups traveling and they usually want a few bedrooms, kitchen, etc.
Hey guys, I thought I'd come back and update this thread with what I found out. It turns out that these condos are an absolute pitfall. Like, seriously, don't go there. Maybe there's a mountain somewhere that will let you make good returns, but the one I was looking at (Snowshoe, WV) was a terrible idea, it just took some coaxing to get all the hidden costs out in the open. The HOA fees are horrendous, and then there are little nickel and dime fees everywhere and special assessments every year that amount to a "mountain tax". You also have to deal with elevated property management costs (25% in this case!!!) and a whole host of other garbage. The studio condos that sold for $35k ended up $3k in the negative every year, and that's before you factor in the mortgage. It's that bad. The nicer units only mitigated the loss, they didn't actually make the unit profitable. The only units that turned any kind of a profit were the $200k super luxury ones, and those didn't make enough to justify the money out of pocket.
Long story short, these sort of condos are no better for your cashflow than normal condos, and for the most part they're worse. If I want a ski condo, I'll rent one for the weekend!
I have been recently looking at a condo at snowshoe as well and have been finding it to be difficult to get close to cash flowing. Even using it a few times a year I do not see great appreciation in the property as they are older and there are a lot of units there. Better to rent if going there
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