Owning a vacation rental in Steamboat (Denver, Winter Park: appointed, real estate, leasing)

[Jaxx99]

For years, since I left Denver, I've thought that a nice comprimise would be to buy a vacation rental and use it a couple weeks per winter. Realtors are giving me what I think is an overly optimistic view of how often it would be rented.

Anyone here actually own a vacation rental in Steamboat, or know someone who does? Do they stay rented pretty much year round? Even the mud season (I can't see how they would)?

Thanks!

[sunsprit]

Depends a lot on what you're thinking of buying.

You can get a place to rent out year around to the locals .... which may be tough to find a good buy price point where you could get a decent cash flow. Of course, that defeats your purpose of having a place to use in high season ski time.

If you get a ski-in/out location, it's rentals are generally pretty limited to ski season in Steamboat.

If you buy in one of the area condo developments, then check out the on-site management and their rental history. Some units may be more desirable and rented more frequently ... some units may not generate much revenue.

Unless you want to be an absentee landlord and have a good ability to be back in the 'boat when you need to be, you'd be better off just renting or leasing a place when you want to be there to ski.

IMO ... from 28 years of owning rental/lease properties in Colorado mountain resort towns ... unless you can find a real "steal" of a deal, you'd be wasting your money to buy a place for 1-2 weeks use per year in ski season. The only reason my places "cash flow" well now is because I bought them way back when the market was much lower (and depressed, with bank repo's all over the place, too). I treated it as a business from the start, not a recreational hobby. Of course, if you need a tax write-off, this type of investment may work just fine ....

[Jaxx99]

Originally Posted by sunsprit

Depends a lot on what you're thinking of buying.

Unless you want to be an absentee landlord and have a good ability to be back in the 'boat when you need to be, you'd be better off just renting or leasing a place when you want to be there to ski.
....

Thanks! With 28 years of experience, I highly value your opinion. One point I should have made - part of the "plan" here would be for this property to also be one we use in retirement, likely heavily. That is part of the motivation of buying now, assuming that over time prices will gradually rise.

[sunsprit]

I'd expect that there will be a great difference in the type, location, and quality of a place you'd be able to afford now as a "rental" property and what you'll really want years from now as a "retirement" place.

IMO, you'd be better off now to invest your money in other markets and spend what you need on your 1-2 weeks of recreational skiing in the interim. Essentially, you're looking at buying now at the "top of the market" and I don't forsee a great deal of appreciation in a property that will generate rentals.

Keep in mind, too, that a property rented out a lot will sustain a lot of aging and functional wear and tear. If you really want it to be "your place" in retirement some years from now, you may very well be disappointed.

Perhaps you can schedule your winters so that a reasonably priced "time share" may be a suitable investment for your skiing. There's a lot of distress deals available in that sector. But be very careful about the total annual costs that you're about to sign up for. Again, it may be more cost effective to head to your favorite resort hotel when you want to head up to the 'boat. It's a fixed price for your stay each time .... so much per night, etc. Plus, they may have a "promo" going on for included lift tickets, ski rentals, dining, etc ... that may well offset lots of the cost of enjoying your stay.

Additionally, consider that some years the skiing may be better in other venues in Colorado or Utah. Heading up to the same place when it doesn't have good conditions .... and some others do .... is a real disappointment. Flexibility has it's cost, but it has it's benefits, too. For me, Steamboat has been problematic for many years ... I've had only a few days of "powder heaven" in the glades out of 30+ days up there. (Used to fly up with a friend that had a ski in/out house up there).

[Katiana]

My cousin and her husband owned a ski-in, ski-out at Steamboat for many yrs. They kept it rented most of the time, saved it for themselves for the month of Jan. It was usually empty some in the summer. They had a management company as they lived in Dallas at the time. Sure was nice for us!

[BillRadio]

We own multiple units in different ski towns and rental figures quoted to us when we bought were quite accurate. Our first condo (in Winter Park) did so well that we started buying in other areas, including Steamboat. The closer the units were to the ski slope, the better they rented. If you want summer rentals you need a pool. A whole athletic club is better.

Things weren't so rosy when the whole complex needed refurbishing, and special assessments were made, some in the tens of thousands. But after they were done, rentals went up.

Many people do what you're planning on doing, and as they use the unit more, they rent it less. There is a lot of wear & tear w/rentals and short-term renters break or steal the oddest things. We've lost a lot of blankets because renters get cold and take a blanket home to keep warm. Housekeeping rarely catches in time to know who to blame.

We had one unit cash flow positive for one year after taxes and the tax breaks are substantial. But some are just delayed. If you use your unit yourself for more than 2 weeks a year, most tax breaks don't apply, so if you decide to, say, use the unit yourself all summer, and rent it in the winter, your tax breaks are limited.

Normally, for people who buy, the novelty wears off after 7 years (that's why there's a 7-year adjustable mortgage), and by the time you retire, you're interested in something, or somewhere, else. But if you can keep the discipline necessary you can do well.

We do well because we bought all units for less than one third of where they are priced today. Rental days range from 90 to 120. We used ours in the "mud" seasons, and the IRS allows so many days of use that are not considered personal for upkeep and improvements.

Like a full-time residence, these are based on their personal value to you, not their investment or rental value. We found ourselves not using the units much after a decade and are slowly selling, and some of the taxes came back to haunt us. We will keep one for retirement.

I'm a bottom-line guy, but for resort area real estate, you must follow your heart and do what you enjoy. The rental income must be very secondary. Steamboat was one of our favorites.