Park City vacation home and STR investment
Member since 2023 · 7 posts · 8 votes
Park City vacation home and STR investment
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Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 655 posts · 622 votes
2yDerek, here's my advice: Don't do it. I say that very directly because not one person told me to not do it back in 2007. Everyone thinks it's a great idea to have vacation home. I mean come on, we've worked hard already and made some money. We deserve it! Well, I don't agree because it backfired on me and I'll tell you why it might for you also. When I bought a vacation home in our local mountain ski resort area it was 2007 which we now know was the height of the market. What about today in Park City? You said so yourself, it's already the height of the market! Not a great time to buy real estate. I spent a lot of wasted money and ended being negative cash flow for 8 years (I wasn't willing to foreclose like everyone else did) until I could sell for the mortgage balance and get out, after losing around $140k. This could happen to you (what? my real estate agent, mortgage lender, insurance guy, attorney, title rep never told me this?!!) I learned years ago from Robert Kiyosaki that everyone listed there is selling something. Guys like me are true mentors and giving advice I would want... Here's another thing. I can buy several "vacation homes" now but I never will. Want to know why? Because we can stay in any Airbnb across the world for a nightly fee. No other expenses, property tax, insurance, etc. And can go to multiple locations (rather than one). That reminds me: After owning our vacation home for around 6 months my wife was asking about family vacation location we should start booking. I said, our money is in this house and our vacations need to be there. To that she said, "we can't just go to the same location every time we want to get away!". Hmmm a conversation I guess we should have had before the purchase. The ultimate advice I can give, get back to true investment property purchase and ownership. Buy with positive cashflow rather than the money pit the vacation home will be. Then go to Park City is some else's bad-*** Airbnb whenever you want.
7 Replies
- 2yJason WrayPro MemberBanker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
Park City is a great STR location and a solid long term investment. Have you thought about not selling the other property and instead of going 1031 exchange just put 10% down since its a Second Home. Do you have the option to pull cash out on a refinance or LOC and use the tax free cash to put 10% down and save the other property to continue to build doors.
- 2yLindsey VanBusiness MemberReal Estate Agent · Park City, UT · Member since 2018 · 15 posts · 9 votes
Park City is a great place for a long term investment. I think the 1031 Exchange is the way to go. The more you can put down right now the better with the economy. Nightly rental rates have not quite caught up to prices in Park City. Cash flow is really hard to find with the interest rates unless you put down quite a bit. Park City also has a lot more STR's like the rest of the country than they did 3 or 4 years ago. For a STR to work, it has to be in the right location.
You are on the right path thinking more about the equity, vs cash flow. Park City has appreciated 6.8% yearly for over the last 20 years. Buying a STR in Park City will work if you plan to hold it longer, and put a good chunk down.
I'm a agent and an investor in Park City, UT. Please reach out if you like to chat more about your options.
Park City is a primo, primo city. But it's getting more and more saturated. Extremely hard to compete, and the underlying STR regulations(in any city) should make you look at it more like a LTR financially. If it can't pencil out then, then you should pass. If you can also eat it as a second home, and make it an STR to your convenience then sure, but you'd need to buy it as an investment property.
- 2yNate MeekerBusiness MemberReal Estate CPA | California · Member since 2020 · 544 posts · 251 votes
@Derek Todd McCarley - might want to consider the tax benefits or lack thereof of a STR. Clients often think they can stay in it as much as they want, and at the end of the year are surprised they lose out on many tax benefits.
Code Section 280a tells us that if you stay at a property you own during the tax year amounting to the greater of:
- 14 days, OR
- 10% of the total days you rent it to others at a fair rental price.
They will classify it as a personal residence. Losses will be disallowed and carried forward. Expenses must be allocated based on personal days occupied vs. tenant days occupied.
The CPA Realtor 572 Reviews - Real Estate Agent · Park City, UT · Member since 2016 · 113 posts · 112 votes2y
I think Park City is one of the best places in the USA, great skiing, biking, hiking and golfing, and only 30 mins to an international airport. While there is a saturated STR market here, there is still a lot of demand. If you are going to come out and use the rental for some personal use, it could make a lot of sense. If it's strictly a financial decision, it's probably better to look elsewhere, our high property values and high HOA fees make it hard to pencil. One thing to look at for the future is that we are in the running for the 2030 or 2034 olympics and hopefully will get an announcement for that in 2024. Good luck!
- Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 655 posts · 622 votes2y
Derek, here's my advice: Don't do it. I say that very directly because not one person told me to not do it back in 2007. Everyone thinks it's a great idea to have vacation home. I mean come on, we've worked hard already and made some money. We deserve it! Well, I don't agree because it backfired on me and I'll tell you why it might for you also. When I bought a vacation home in our local mountain ski resort area it was 2007 which we now know was the height of the market. What about today in Park City? You said so yourself, it's already the height of the market! Not a great time to buy real estate. I spent a lot of wasted money and ended being negative cash flow for 8 years (I wasn't willing to foreclose like everyone else did) until I could sell for the mortgage balance and get out, after losing around $140k. This could happen to you (what? my real estate agent, mortgage lender, insurance guy, attorney, title rep never told me this?!!) I learned years ago from Robert Kiyosaki that everyone listed there is selling something. Guys like me are true mentors and giving advice I would want... Here's another thing. I can buy several "vacation homes" now but I never will. Want to know why? Because we can stay in any Airbnb across the world for a nightly fee. No other expenses, property tax, insurance, etc. And can go to multiple locations (rather than one). That reminds me: After owning our vacation home for around 6 months my wife was asking about family vacation location we should start booking. I said, our money is in this house and our vacations need to be there. To that she said, "we can't just go to the same location every time we want to get away!". Hmmm a conversation I guess we should have had before the purchase. The ultimate advice I can give, get back to true investment property purchase and ownership. Buy with positive cashflow rather than the money pit the vacation home will be. Then go to Park City is some else's bad-*** Airbnb whenever you want.
- Member since 2023 · 7 posts · 8 votes2yThank you for your candidness. I think I am on the sideline for this, at least temporarily, and will just try to create more wealth and revisit it later down the road.
Quote from @Tim Ryan:
Derek, here's my advice: Don't do it. I say that very directly because not one person told me to not do it back in 2007. Everyone thinks it's a great idea to have vacation home. I mean come on, we've worked hard already and made some money. We deserve it! Well, I don't agree because it backfired on me and I'll tell you why it might for you also. When I bought a vacation home in our local mountain ski resort area it was 2007 which we now know was the height of the market. What about today in Park City? You said so yourself, it's already the height of the market! Not a great time to buy real estate. I spent a lot of wasted money and ended being negative cash flow for 8 years (I wasn't willing to foreclose like everyone else did) until I could sell for the mortgage balance and get out, after losing around $140k. This could happen to you (what? my real estate agent, mortgage lender, insurance guy, attorney, title rep never told me this?!!) I learned years ago from Robert Kiyosaki that everyone listed there is selling something. Guys like me are true mentors and giving advice I would want... Here's another thing. I can buy several "vacation homes" now but I never will. Want to know why? Because we can stay in any Airbnb across the world for a nightly fee. No other expenses, property tax, insurance, etc. And can go to multiple locations (rather than one). That reminds me: After owning our vacation home for around 6 months my wife was asking about family vacation location we should start booking. I said, our money is in this house and our vacations need to be there. To that she said, "we can't just go to the same location every time we want to get away!". Hmmm a conversation I guess we should have had before the purchase. The ultimate advice I can give, get back to true investment property purchase and ownership. Buy with positive cashflow rather than the money pit the vacation home will be. Then go to Park City is some else's bad-*** Airbnb whenever you want.
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