Evaluation Metrics for Ski Resort Property, Esp. with Intrawest?

Question

Hi everyone- I am looking into getting a first property purchased in about 6-8 months.  I have started looking at local real estate targeted at graduation students, mostly townhomes in the 85000 - 110,000 range.

However, when planning a ski trip to Snowshoe Mtn, WV, I noticed they had several units available for similar to lower prices in a resort location.

I have requested information from their sales team regarding cash flow and rental management (they do it for you) but am interested to hear if anyone else here either owns property at Snowshoe, owns property with Intrawest (the company who does the real estate), or owns property near/at a ski resort-  any tips on how to evaluate an opportunity in these niche markets?

Alex K. · Answer

Hey guys, some really good points here, I was acutally looking into a ski rental investment in Vail/lionshead area and wanted to get some of your feedback.  Mainly what kind of #'s would make sense (in terms of %) in a situation like this?

Frank Adams · Answer

Great post Nate! Thanks for pointing out all of that about the new sales vs resales, I had never thought about that.

Frank

Nate Fisher · Answer

PM-
                        I worked for the Intrawest Development for 5 years and help build the Village at Snowshoe, bought property in the first building in the Village, developed my own units there, and  still own property there.  I sold resort real estate in Colorado (for Intrawest at Copper) and WV. That is some background.
                        
                        Frank makes MANY good points, but it is not  impossible to make a resort property cash flow.  You have to buy it right, and have 2 things happen: incredible appreciation and increasing occupancy rates.  Of course your expenses have a huge factor on this as well. 
                        
                        At Intrawest, they want to keep as much of your $$ as possible, so they build the condos to be rented by their own rental management company.  Same thing with F & B, they want to run the easy restaurants. Snowshoe is different than most western resorts, in that they do have a large rental management company they run...maybe 70%(?) of the condo owners use them.   I have some Village condos with Intrawest/Snowshoe, and they fill them up, but the 40% fees have eaten me alive.  I have a large single family there and use a 3rd party and pay 17-20%.  They don't fill the place nearly as much, but I also don't have the add wear and tear, thus not as much maintenance  costs....and their service is far superior. 
                        
                        Going back to occupancy rates, I ran some numbers one time on my places and I'd need 45% annual occupancy to cover costs.  At that time, Snowshoe was seeing a 21% occupancy.  No way could we grow the resort to get to 45%, unless we grow the summer to be larger than winter.  There are only 12 -14  good weekend rentals (realistically) for a resort like Snowshoe.  This year we looking at 16-17 weekends with this cold weather. Typically guests come Thurs and leave Sunday.  It is hard for a small resort to extend the experience and get guests to stay longer...you run out of stuff to do in about 2-3 days vs. a Copper/Breck/Vail resort, were you can easily vacation for a week and not get bored.  
                        
                        Also, keep in mind pre-construction sales vs resales.  This is very different and not all agents follow the rules.   If I am selling you a pre-construction product, I cannot give you projections and numbers on what I think it will generate.  If I do that, then it becomes a security, and that is a big no no.   I would refer you to an Intrawest Owned Rental company and have them show you the comparable #s for like kind units and they they let you connect your own numbers.  The plan would be for you to them get comfortable with the Intrawest Rental group and you sign up with them after you buy your new unit.   If it is a resales product, then you have historical #s to look. 
                        
                        Also, take into account how much you plan to use the place.  I also use VRBO.com to funnel my rental requests to my management company and this helps alot.  Some rental companies do not allow you to use VRBO to drive rental traffic and others give you a free listing on VRBO with their contract.   The latter is the group that gets how this game works.
                        
                        I hope this helps?  It's funny how I got here...I have Google Alerts set up to send me info on Intrawest & Snowshoe...it pulled up this post.
                        
                        Thanks
                        Nate

Frank Adams · Answer

Hi PM;
            
            I've been a REI for 30 years and a skier for 20 years and I've NEVER seen a ski area property that would come close to cash flowing. In fact a couple of years ago we stayed in a condo in Vail and one of the guys I roomed with had looked at the building we were in when it had been new.
            
            He dug out his info on the property when he returned to Houston (he is a huge pack rat) and we calculated that he would have lost (IIRC) about $3K/year over 20 years. And yes that does take into account the big appreciation that they've had in Vail over most of history. That does square with what I've been told by property owners.
            
            I ski with a ski club and I've found that we get very competitive rates on condos and killer rates on lift tickets. But when I look at the condo management company web sites I do find that I can sometimes find as cheap, sometimes cheaper, rates by going the week after holidays, or some other "slower" period.
            
            Remember that in addition to the "normal" expenses encountered with ownership in these properties you will have more breakage on furniture, dishes, sheets, towels (you will be providing all of that) and it's not like a rental across town that you can pop in to fix a garbage disposal, replace a bad fridge etc. The rates charged for those things will turn your hair grey in an instant.
            
            Last year we stayed in a property in Steamboat Springs (my favorite ski area, also an Intrawest resort) and the condo had been updated in the previous year. Management had decided to go up to "gold star" status, this meant the following expenses for each owner; granite countertops in kitchen, flat screen TV master bedroom and living room, stainless steel appliances, new furniture, etc. It looked to me like an easy $10K-$15K per unit owner. But the rate we were paying was in line with what we had paid two years earlier, maybe up 4-5%!
            
            Management fees will run about 40% or more, and remember to judge how long the season is, and that it may be tough to get in your own place when you want it. On the upside being close to major metro areas (Washington DC?) may mean more short stay/long weekend rentals. On the downside I'll bet it's a real short season there! 
            
            BTW, I've skied at several Intrawest resorts, but I've never known them to operate any condos at the resort. I'm assuming this is the same Intrawest that runs Steamboat, Copper Mountain and Winter Park. Besides if you own at one place you'll likely miss a lot of great skiing at other resorts, like here in CO, or UT or British Columbia!

Re-reading your post I'm amazed at how cheap the places are. There's nothing decent at any of these western areas (that you'd want to spend a night in) for under about $275K. But I'll bet we have a lot longer season!
            
            Frank