Mammoth Lakes - Rental Analysis

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Mammoth Lakes - Rental Analysis

Kevin Hu
Rental Property Investor · Chicago, IL · Member since 2011 · 11 posts · 4 votes

Team,

Looking for assistance with STRs in Mammoth Lakes.  I've been reading through some of the earlier forum postings, but have some questions that are better suited for discussion offline.  

Background: I have a property in Savannah that has been paid off thatI would like to 1031 into a STR in Mammoth Lakes. However, my rental experience is all in LTR so I would like to get specific advice on line-item considerations for evaluating property cash flow and local regulatory considerations. Current consideration is a 2/1 or 2/2 apartment that would primarily be STR with occasional personal use for family vacations.

Thanks in advance.

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Tara Faulks
Rental Property Investor · Santa Monica, CA · Member since 2020 · 15 posts · 12 votes
6y

I purchased a STR with some personal use intent about a year ago. Although it is an off year, i learned alot about STR's and have years of income on our unit. Happy to share some knowledge and answer questions. In short, due to restrictions on rentals during COVID we will have negative cash flow this year. In normal times we project to break even but that's with 30 days owner use (none on prime weekends). Mammoth historically doesn't promise great COC return as a sole rental property (just over 1% i believe). My next property is for investment purposes only and I wouldn't choose Mammoth. But if you will use it yourself as well, with it costing nothing, and other people pay down your mortgage, that't a great deal and how we look at this property.

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  • Lisa Graesser
    Rental Property Investor · The Villages, FL · Member since 2017 · 341 posts · 398 votes
    7y

    This won't help you with your question, but I thought it was a coincidence, so I had to chime in! Our family just left the Las Vegas airport and are on our way to Mammoth. We are staying at a STR condo, through Airbnb. The main purpose of our visit is to get acclimated to the altitude to prepare us for a Mt. Whitney hike. While in mammoth we will be doing the Via Ferrata climb, the Bike park and some other hikes close by.

     Mammoth seems like a great destination. Good luck!

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    7y

    Just curious but would the place in Savannah not make a great STR?

    If it would, then you could do a cash out refinance and still buy the new place and have 2 STR's.

    You wouldn't have to pay for a 1031 this way and could deduct the interest from the loan since you are using the money to buy and investment property.

    You would still own the place in Savannah that should appreciate in value.

    1Reply
  • Kevin Hu
    OP
    Rental Property Investor · Chicago, IL · Member since 2011 · 11 posts · 4 votes
    7y

    @Lisa Graesser Mt. Whitney is no joke.  Great call on conditioning and acclimating beforehand!

    @John Underwood we considered STR but we're under an HOA that doesn't allow for it. Was definitely an option I would have loved to pursue otherwise.

    0Reply
  • Account Closed
    Member since 2019 · 18 posts · 5 votes
    7y

    John, Savannah would be a great place for STR but the city restricts them within the historic district and downtown. They only allow a small percentage of properties to operate as STR.

    0Reply
  • Shelby Pracht
    Property Manager · Mammoth Lakes, CA · Member since 2014 · 263 posts · 230 votes
    7y

    @Kevin Hu

    What exactly is your question? Are you looking for a list of expenses to take in to account?

    As far as regulations, in Mammoth you pay 14% tax on the gross income (including cleaning fees) in transient occupancy tax, and in general, only condos are able to be rented nightly.

    4Reply
  • Kevin Hu
    OP
    Rental Property Investor · Chicago, IL · Member since 2011 · 11 posts · 4 votes
    7y

    @Shelby Pracht, a list of expenses would be great.  I've seen some standardized lists on the forum but not one modeled to Mammoth Lakes specifically (such as projected garbage, utility, etc.).  I've put one together but I need a common sense check to ensure my numbers make sense.  

    Does zoning for the condos matter? As in all condos can be used as STR or do they need to be coded for a specific zone?

    0Reply
  • Shelby Pracht
    Property Manager · Mammoth Lakes, CA · Member since 2014 · 263 posts · 230 votes
    7y

    @Kevin Hu

    All condos in Mammoth are zoned for nightly rentals, but there are a handful of complexes that do not allow nightly rentals per their HOA CC&Rs. You can just double check with your agent, but 95% of condos in town are good to go.

    A list of expenses would be difficult because each HOA covers different items. All HOA cover your trash expenses, snow removal, and exterior maintenance and insurance. Most cover your water and sewer. Some cover internet and cable, or you can get discounted internet and cable through the HOA. There are a few that even cover your hot water or propane.

    Your biggest expenses to account for are HOA dues, Management, and TOT. Then check what the HOA you're looking at already has covered, because that will make a huge difference.

    I would personally recommend looking for a unit that either has propane included in the HOA dues, or has a pellet stove (or you are planning to put in a pellet stove). Old electric wall heaters here are really expensive to run in the winter, and guests always crank up the heat. Propane is about $4.50/gal, so it's also crazy expensive to heat a house with forced air. A pellet stove set to a thermostat is the most efficient way to heat a unit that guests can actually understand.

    5Reply
  • Curtis Shapiro
    Real Estate Agent · Mammoth Lakes, CA 93546 · Member since 2019 · 12 posts · 5 votes
    6y

    Hey Kevin! I might be a little too late to this post but nonetheless more than happy to answer and questions you might have about investing in Mammoth. In addition to real estate, I also do Workforce Housing for the Chamber of Commerce so I'm very familiar with both the STR and LTR side of things as well as the tourism landscape here. Let me know if I can answer any questions. Thanks!

    1Reply
  • Jaspreet Singh
    Member since 2019 · 5 posts · 0 votes
    6y

    Came here to ask the same thing. Recently visited Mammoth and absolutely loved the area and was considering buying a STR there. @Shelby Pracht by the "14% tax on the gross income (including cleaning fees) in transient occupancy tax" you mean out of the ~$2680 that would come in from this rental to the owner, 14% straight off the top is paid in taxes?

    "14% tax on the gross income (including cleaning fees) in transient occupancy tax, and in general, only condos are able to be rented nightly.

    0Reply
  • Lisa Graesser
    Rental Property Investor · The Villages, FL · Member since 2017 · 341 posts · 398 votes
    6y

    If this host includes the taxes in his nightly rate than yes. But most hosts charge the taxes as an extra fee

    0Reply
  • Tara Faulks
    Rental Property Investor · Santa Monica, CA · Member since 2020 · 15 posts · 12 votes
    6y

    I purchased a STR with some personal use intent about a year ago. Although it is an off year, i learned alot about STR's and have years of income on our unit. Happy to share some knowledge and answer questions. In short, due to restrictions on rentals during COVID we will have negative cash flow this year. In normal times we project to break even but that's with 30 days owner use (none on prime weekends). Mammoth historically doesn't promise great COC return as a sole rental property (just over 1% i believe). My next property is for investment purposes only and I wouldn't choose Mammoth. But if you will use it yourself as well, with it costing nothing, and other people pay down your mortgage, that't a great deal and how we look at this property.

    5Reply
  • Heather Maves
    Member since 2020 · 7 posts · 2 votes
    5y

    Hi Kevin-

    Did you end up getting a place in Mammoth Lakes? How is that going? Also would love to see your checklist if you made one with the expenses although I know it can vary based on the HOAs and what they cover. I am keeping a running lists of different HOA prices in the different communities but will start to add what they do and do not cover.

    Hope it went well! 

    Heather

    1Reply
  • Lee RipmaPro Member
    Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
    5y

    @Heather Maves

    I own a place in mammoth. Checkout the HOA fee, vary widely. Insurance on condos is very cheap, 500/year. Electrical depends on unit size, my 1/1 runs about 150 in the winter months, water for me is 35/mo but some HOA may include it. Cable TV/internet is about 150/mo. Prop taxes assume 1.2% of purchase price. Very low inventory and high prices in mammoth right now.

    Podcast Guest on Show #373
    1Reply
  • Tara Faulks
    Rental Property Investor · Santa Monica, CA · Member since 2020 · 15 posts · 12 votes
    5y

    @Heather Maves

    @Heather Maves I purchased in Mammoth about a year ago and have my spreadsheet that had 17 properties across 10 different complexes that includes HOA fees, asking price, sq footage, distance from village gondola and canyon lodge, etc... It's out of date but would be a good start for many of the places in the village circle. Happy to send it. DM me if you would like a copy for your research. It's too much to put in here.

    3Reply
  • Tom Kastorff
    Rental Property Investor · Las Vegas, NV · Member since 2014 · 137 posts · 118 votes
    5y
    Originally posted by @Heather Maves:

    Hi Kevin-

    Did you end up getting a place in Mammoth Lakes? How is that going? Also would love to see your checklist if you made one with the expenses although I know it can vary based on the HOAs and what they cover. I am keeping a running lists of different HOA prices in the different communities but will start to add what they do and do not cover.

    Hope it went well! 

    Heather

    Here you go ladies... list of all complexes, each links to all the details of each (HOA fees, what it includes, etc..)(not my site, found this a few years ago when I started my mammoth condo search, it is very handy)

    :) 

    http://www.mammoth1.com/condos...

    1Reply
  • Heather Maves
    Member since 2020 · 7 posts · 2 votes
    5y

    Thank you all, this is wonderful. Things are sparse there, but its a good time to start gathering all this info. 

    0Reply
  • Cole Claassen
    Investor · Phx Tucson DFW, Knoxville TN · Member since 2020 · 5 posts · 0 votes
    5y

    hey guys, is anyone wholesaling in Mammoth? 

    0Reply
  • Tom Kastorff
    Rental Property Investor · Las Vegas, NV · Member since 2014 · 137 posts · 118 votes
    5y
    Originally posted by @Cole Claassen:

    hey guys, is anyone wholesaling in Mammoth? 

    I've never heard of one. Imagine it would be tough to do with so much property owned by out of town investors and 2nd homeowners, most of which have money and are less likely to fall prey to hungry wholesaler spiels. That being said if there was one, they could call me anytime with a deal! 

    0Reply
  • Anna P.
    Investor · Orange, CA · Member since 2020 · 3 posts · 2 votes
    5y

    @Tara Faulks

    I have the same intent with using the STR for personal use. Especially during COVID. I'm currently in the market, however it seems the market has low inventory with some STR's overpriced (in my opinion). Would like to connect if you have any knowledge on operating costs with cleaning and cost of construction if some remodeling was needed.

    1Reply
  • Quyen Pham
    Member since 2021 · 8 posts · 2 votes
    4y

    Hello,

    I am hoping to fulfill my bucket list having a place in Mammoth. I always afraid that it will be a money pit and since we can't just leave it there w/o renting I am doing my research. I wanted to have a place where once our sons older they could also take their families there. So this must be able to sleep 8 ppl. The place can't be -negative and I am hoping to put down max 200k. I plan to manage it myself since we have STR in Maui and I am good with that :). We been to Mammonth for years but never really look @ it as investor until now because our 16 yo love to snowboard so much. I really like Mountainback because it has a view and so pretty, but not sure if its doable for us.

    Help!

    0Reply
  • Jacob Neville
    Rental Property Investor · Baltimore, MD · Member since 2019 · 9 posts · 0 votes
    4y

    Maybe a stupid question, but what is the thought process behind only allowing condos as STRs?

    0Reply
  • Dan McGowen
    Member since 2022 · 1 post · 0 votes
    3y

    I'm not sure either but guessing it has to do with the transient nature of condos in resort towns -- and to drive tourism while minimizing the impact on single-family neighborhoods. Though I'd be really curious to see what % of single-family homes in mammoth are actually seasonal / second homes.

    0Reply
  • Shelby Pracht
    Property Manager · Mammoth Lakes, CA · Member since 2014 · 263 posts · 230 votes
    3y
    Originally posted by @Jaspreet Singh:

    Came here to ask the same thing. Recently visited Mammoth and absolutely loved the area and was considering buying a STR there. @Shelby Pracht by the "14% tax on the gross income (including cleaning fees) in transient occupancy tax" you mean out of the ~$2680 that would come in from this rental to the owner, 14% straight off the top is paid in taxes?

    Yes, that is exactly what that means. That's how the Town of Mammoth Lakes is funded, basically. 

    0Reply
  • Shelby Pracht
    Property Manager · Mammoth Lakes, CA · Member since 2014 · 263 posts · 230 votes
    3y
    Quote from @Dan McGowen:

    I'm not sure either but guessing it has to do with the transient nature of condos in resort towns -- and to drive tourism while minimizing the impact on single-family neighborhoods. Though I'd be really curious to see what % of single-family homes in mammoth are actually seasonal / second homes.

    Only a small percentage of any real estate in Mammoth is actually local-owned, including single family homes, and you're correct in theory. The zoning distinction is attempting to preserve some housing for locals, but also help provide some accountability for STRs when they have the rules and amenities of HOA communities. There should be on call property managers for emergencies in any condo complex, plus you know that snow removal is always going to happen, trash service is paid for, and someone is monitoring the community for any unacceptable behavior from guests.

    2Reply
  • Curtis Shapiro
    Real Estate Agent · Mammoth Lakes, CA 93546 · Member since 2019 · 12 posts · 5 votes
    3y

    @Shelby Pracht @Dan McGowen

    When I worked for the Chamber I believe Mammoth Lakes Housing quoted 80% of SFH in Mammoth were owned by second homeowners and of that 80% roughly 60% sat empty for most of the year.

    1Reply
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