Bozeman vacation rental market

8 Replies

I am looking to invest in Bozeman and specifically target the str market there. My fiancé recently had her bachelorette party there and absolutely loved it. We have talked about buying a vacation home somewhere and renting it short term either to travelers or travel nurses between our trips out.

Does Bozeman have a strong str market?

Check on Vrbo and Airbnb and see how many properties are STR's in that market.

You can also see rates people are charging and how full their calendars are.

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Hi @Stephen Conrad jr , I live in Bozeman and have a couple of STRs here. The market is strong, but seasonal in that summer is busy and rates high whereas fall, winter and spring is less busy with lower rates. Also, the city of Bozeman passed STR regulation in 2017 severely restricting non-owner occupied STRs and requiring licensing for all STRs. More info on city STR regulation here: https://www.bozeman.net/government/planning/short-term-rentals-str

@Stephen Conrad jr I PM'd you... I would agree with @Matt Conner on the STR in Bozeman, busy in the summer and intermittent (not dead) for the rest of the year, busy around the holidays, graduation, conferences, etc. Depending on the zoning it can be up to $1500 to get a Conditional Use Permit (CUP) if needed, plus a $250 a year annual registration fee, and a one time inspection fee of $250. If you are outside of the city limits you can avoid most of these costs...

Depending on what your investing goals are I would caution against the Big Sky market (or at least do your due diligence to make sure that it does what you want). I have clients up there that are doing STR and just barely breaking even (even though they are quite busy and were self managing and bought a few years ago). They are doing great on appreciation but might have to start putting money in on a regular basis to make ends meet. Also the town is struggling with having enough long term housing for the workers up there. I know a few of the HOA's are looking into getting rid of STR in their associations altogether. The spring/summer/fall market for STR's isn't great but summer is starting to get better with the Resort trying to push summer activities more and more (i.e. mountain biking).

@Alan Brown The median price of a SF home in Bozeman city limits have increased 78% since 2013 averaging approx. 10% a year. And 8.5% in the last year.

Big Sky as you know is a small primarily vacation town with some very high end sales that will severely skew the numbers, but the data shows a 130% increase in residential sales since 2013 or averaging 16.95% a year. And 27.8% over the last year.

Hi Stephen, thanks for looking into Bozeman's market for STR's. I manage exclusively STR's for residential real estate and some STR's mixed into my commercial property. Our market, if you can find a cash-flowing property, is great in terms of vacancy if that's what you mean? I have 6 active rentals with occupancy at +90% in the summer, and around 65% in the slowest times of year, of which there are 2, 2 month periods. Talking with other competitors and professionals in my field in town and in my area, I think that is a pretty good number. As with all things real estate, location is crucial, but we also have the complexities of offering the best amenities when competing with each other.

Currently our market is pretty saturated with STR in all the new low-rise buildings going up all over town. I honestly have no idea how they compete with each other. I will give you a huge tip for free... Buy something in the county for STR's. Also factor in those amenities. There are so many generic rentals in Bozeman, and with no amenities, they just won't be worth the investment because of costs. Costs: STR managers want 20-30%, and the upkeep on furnishings is much higher than with a LTR. It will suck out all your profit with a poorly chosen property.

The thing with the city of Bozeman is that they have regulated STR ops within city limits, such that an owner, to be in compliance, will need to live in 1 unit for 6 months out of the year. The most successful STR ops within city limits are multi-families with an owner/operator. These types of property comprise R2 with an ADU, R3 with multi-family or ADU, R4 with multi family and/or ADU. RO is also a property designation, but there's no restrictions in that zoning designation as far as I know. I don't know any agents or property managers, including myself, who would manage an unregistered property inside city limits, as it is now a misdemeanor, and there's possible sanctions by the Realty Reg board, even though STR's are not regulated by the Montana Landlord Act. Those are no joke, upwards of $5000.

I hope I helped you out a bit, but to answer your question in one word: yes. You can always DM me if you have any more detailed questions.