Buying a vacation property in Silverton, CO

[wanneroo]

Originally Posted by sunsprit

I'd again urge the OP to approach a rental property ownership situation only as a business. Either it will cash flow or it won't ... most properties bought at FMV in the Colorado resort areas will not cash flow for absentee owners after all the other costs are paid out.

I don't think most people recognize that when it comes to the investment angle of mountain real estate that you have to treat the properties as though they are living, breathing things that need feeding, watered, maintenance and so on. It's not something you buy and then without a lot of work, the big checks roll in every month. The people that make money at it, it's a job. I also don't think people appreciate all the costs involved either. Just take utilities for instance, those have to be kept on year round, the place has to be heated, you've got to have water, someone's got to remove the trash, etc.

Since my job in Vail gave me plenty of time to talk to people, if it came up in conversation, I talked to a lot of property owners and it was always interesting to hear their stories. I'd say most outsiders didn't make any money at it, many questioned the hassle and some were so far into it that they almost couldn't bear to sell because they would have to face the losses. The people that made the money were the locals that skimmed off all of the rental fees, property managers, contractors, real estate agents, etc.

I learned a life long lesson from this one wealthy guy I talked to back around 2002. We were talking about all this and I asked why he didn't own a vacation property. He said rent what you need when you need it and that applies to most limited use things in life. Don't tie up money in stuff you hardly use. He said by renting vacation property it gives him the flexibility to try out many places because if you own a place you are almost tied to going there for good in order to make the property worthwhile. In addition it kept his life free of hassles and distractions. I have applied that principle myself and it's worked for me, whether renting a race car or Ferrari, a boat, a vacation house or condo, whatever, I pay my fee, have a great time and walk away leaving someone else to deal with all the upkeep and costs.

[jazzlover]

Originally Posted by wanneroo

I learned a life long lesson from this one wealthy guy I talked to back around 2002. We were talking about all this and I asked why he didn't own a vacation property. He said rent what you need when you need it and that applies to most limited use things in life. Don't tie up money in stuff you hardly use. He said by renting vacation property it gives him the flexibility to try out many places because if you own a place you are almost tied to going there for good in order to make the property worthwhile. In addition it kept his life free of hassles and distractions. I have applied that principle myself and it's worked for me, whether renting a race car or Ferrari, a boat, a vacation house or condo, whatever, I pay my fee, have a great time and walk away leaving someone else to deal with all the upkeep and costs.

Most people just don't understand that resort real estate "investment" is a rigged game, with the property managers, original developers, and real estate agents getting most of the profits, and the owner getting stuck with the costs. Now, some people catch it "right" when the real estate market is appreciating, and make their profit when the sell the property, but the days of that being a "sure thing" are long gone.

Also, one can stay in a lot of first class hotels and resorts for a lot of days for less than the taxes, upkeep costs, and utility costs that a recreational property entails. The best way to "invest" in a recreational property is to buy it with cash that you don't mind if you never see again.

[Mike from back east]

Originally Posted by wanneroo

....I learned a life long lesson from this one wealthy guy I talked to back around 2002. We were talking about all this and I asked why he didn't own a vacation property. He said rent what you need when you need it and that applies to most limited use things in life. Don't tie up money in stuff you hardly use. He said by renting vacation property it gives him the flexibility to try out many places because if you own a place you are almost tied to going there for good in order to make the property worthwhile. In addition it kept his life free of hassles and distractions. I have applied that principle myself and it's worked for me, whether renting a race car or Ferrari, a boat, a vacation house or condo, whatever, I pay my fee, have a great time and walk away leaving someone else to deal with all the upkeep and costs.

Wow, I've said the same things so many times in these forums that people are sick of hearing me.

Unless one uses these assets quite a bit over multiple years, or as part of an ongoing business venture, it's economically smarter to just rent that RV, boat, vacation property, exotic car, ATV, jet ski, etc, then walk away at the end of the day or week and keep the vast bulk of your money in your own stock market account.

Stock dividends or price appreciation will pay for vacations year after year - and your money is always just a mouse click away if you want to cash in, which is nearly impossible to cash in if it's real estate you're holding onto. Motorized assets depreciate quickly; I can't stand the thought of driving a $100k RV off the lot while knowing that the very same day I might only get $60k for it in the "used" market. Ouch.

So, back to the OP's case, I too urge great caution buying investment property in seasonal areas. There are so many great places in COLO to vacation at that I'd prefer trying a different one each vacation, and the most I'd consider is a full time retirement home after sampling a bunch of locales over a number of years.

[wanneroo]

Originally Posted by jazzlover

Also, one can stay in a lot of first class hotels and resorts for a lot of days for less than the taxes, upkeep costs, and utility costs that a recreational property entails. The best way to "invest" in a recreational property is to buy it with cash that you don't mind if you never see again.

One of the places my family rented in Vail was a beautiful 5 bedroom house that comfortably accommodated 7 adults and 2 dogs. Huge living room, dining room, side area off the kitchen, hot tub, deck, game room, tons of room, one bathroom in each bedroom, use of a Chevy Suburban in the garage.

We paid around $3500 for a week, which might sound like a lot but divide by 7 adults and then 8 nights. That's not a bad vacation at all. We had a blast then walked away without a care in the world.

Out of interest my BIL looked up the property taxes on that house. $14000 a year, then add in homeowners association fees and that's a big nut to cover right there before you even get into property management fees, cleaning, upkeep, utilities, repairs, renovations, etc.

My family ended up doing the same thing again and this year we are looking at renting an ocean property in the north east and then over in Europe at some point. I've also done the same in New Zealand and Australia, renting nice condos for less than a nice hotel and having more amenities to boot. Each time we turn up, have a great time and then go home without a care in the world.

What a lot of the real estate business in Colorado preys on is people's desire to say "I own a blah, blah, blah in so and so Colorado". I think what I have always tried to do when I have visited this forum when you have people with the dream and fantasy of mountain real estate is to say yeah that's great but here's the reality, know what you are getting into.

[StealthRabbit]

I stay for $10/night worldwide using hospitality guest homes (for last 25+ yrs).

I usually choose farms and I have often got the whole home as the owners wanted me to stay and watch the animals so they could vacation.

We have had excellent stays in guest homes . spare bedrooms . beach condos... and you get to know the locals and the inside scoop on what to do in the area.

We started doing this while home schooling and met some very interesting families and learned a lot!

Yes... invest your equity in a cash flowing something, and take a bit of the cash and use it on vacation.

Empty homes / cabins are troublesome if setting 8 - 10 months a yr unused.