Can you make a good profit with a ski rental?

[Rainbow Demon]

I think these mountain property acquisitions are also time sensitive and much of the return or lack of return depends on how long you've held the property (I won't say "investment" for obvious reasons), your initial investment costs/etc. Buying a condo today is a different animal than it was/then what happened from 1989 to 2008 here in the VV...which was a steady, constant escalation of property value. The property we bought in '89 was mega-cheap compared to today's pricing. Unlike the advice here...we are seriously sorry we didn't have the capital to invest in a series/number of condo units locally in the late 80's-early 90's. Some of these units are now worth 10X what they sold for in '89. IMO, timing is key....and now isn't the time to buy a condo for an "investment". (sales prices ARE up/rising currently)

Some do...but not everyone loses money on their mountain property. Again...it's all timing and duration. We were lucky and our timing was right. My guess is that the folks who didn't make any money and who paint the doom and gloom simply made poor choices and bought at the wrong time. Either way, not everyone loses money on these ventures.

Jus' sayin'....

good luck folks.......

[sunsprit]

[quote=Rainbow Demon;38847001](snip) IMO, timing is key....and now isn't the time to buy a condo for an "investment". (sales prices ARE up/rising currently)

Some do...but not everyone loses money on their mountain property. Again...it's all timing and duration. We were lucky and our timing was right. My guess is that the folks who didn't make any money and who paint the doom and gloom simply made poor choices and bought at the wrong time. Either way, not everyone loses money on these ventures. (snip)
[quote]

The most important "keys" here, as you point out ... are "timing and duration".

I was fortunate to have the capital and opportunity to invest in the Vail marketplace in the very early 1980's, when the market was very depressed and repo's that were getting stale in the lender's portfolios were being forced by Fed rules to be dumped.

But make no mistake: even at the extremely low prices relative to the prior market values and generally at price points of about 10% of today's market values I enjoyed, none of these places "cash flowed" for the first 4-6 years to a break-even point, let alone made any "money". The whole concept of resort area property ownership was based upon my belief that the VV marketplace would come back strongly in time. Keep in mind that you do not capture that appreciated value until you sell the place.

At the time I was dealing with 12% mortgages with minimal money down on Non-Owner Occupied residences, insurance, repairs/maintenance issues ... every one of these properties was a cash loser requiring far more money to keep and operate than they ever brought in. The only benefits I derived for years ... outside of having a place to stay in Vail that I could call my own that I got to work on for most of the days that I stayed there ... was the tax write-offs against my other business income. And I had some pretty good tenants; some of my places were rented out full time with 100% occupancy to above average income earners in the area. Understand what that means as a property owner: you don't get to use the place for your own forays to the ski resort. It's purely an investment.

I'm lucky that I was correct that Colorado resort property would go up in value, and now ... over 30 years later ... it's quite a portfolio asset. But it didn't come without a lot of trauma, tenant issues, property management issues, tax/assessor issues, and maintenance/repairs issues. On the whole, if I'd taken the money and put it into mutual funds or even the 8% annuities that were readily available at the time, I'd have come out way way way ahead on the bottom line with purely passive investments. Indeed, if I'd have invested that way ... I could afford to rent whatever and whenever I cared to in the Vail area for my stays there, which due to other circumstances are now dwindling numbers of days per year.

From an "investment" standpoint, Rainbow Demon's perspective on VV home ownership numbers is an entirely different financial situation than being a casual owner from a distance. A local enjoys numerous advantages when it comes to property management and repairs/maintenance over an arm's-length investor.

And I have to question whether or not Rainbow Demon is addressing the difference between a mortgage/ownership costs of a primary residence vs a non-owner occupied investment property. You don't get the same low money down and favorable interest rates, nor easy qualifying that a primary residence mortgage gets. Many people without having actually investigated such a loan don't know the difference and think they're gonna' get the same low interest rate and % of monthly income qualifiers to get a loan. It's not the same at all, the lenders require that you can show enough disposable income independent of the projected cash income from the non-owner occupied place to make the payments so that if the place isn't rented out, you still have the ability to make the payments. The only way you can play that primary residence mortgage game is to rent out your current residence and declare the new place to be your primary residence; the lender is still going to look at all of your numbers and obligations. I've known folk who gamed that situation and didn't move out of the one residence to the new one ... and the lender caught up with them; it's mortgage fraud and a serious problem to not make that move for at least 6 months and a day. You've got to have more than an intent to move, you've actually got to make the physical change of primary residence. And yes, I do know a couple of real estate agents in the area who did just that ... changing residence once a year for years in the VV area, but they had the cash flow and resources to do so and also traveled lightly (everything they owned for household furnishings could be moved in a pick-up truckload).

In any event, I've known many VV (and other resort locales in Colorado) "investors" who sought to offset their costs of a 2nd home in the area. Except for the handful such as me who invested decades ago, none today has ever "made any money" in the short term, and only captured the appreciation when they sold out. For every one of them, it was a loser from a cash flow standpoint and they all needed to pay for their play. At today's market price points and the rental prices/occupancy rates/management fees ... it looks harder than ever for a possible cash flow. I wouldn't advise anybody to approach resort property today unless they had deep pockets to afford their indulgence.


PS: one thing I consistently see in these "investment" threads about resort properties is an almost complete absence of folk coming on and saying that they did invest and have made money at this. If it was so friggin' easy to invest in this marketplace and make money, I believe that a lot of folk would be bragging about the killing they made at this. But you don't see this happening in the same way that the economics or retirement forums on C-D have folk bragging about their ROI's where they were in the right place at the right time with all the smarts to invest and now they're on easy street. And that's from the perspective of somebody ... myself ... who did invest in Vail at the right place and the right time decades ago. You'll not see that type of upside potential again in our lifetimes.

[wanneroo]

No I don't see that upside potential for quite some time, too much supply and not enough demand.

I think sunsprit makes some great points which I think in a nutshell can be summed up as:

1. You don't capture the appreciated value of an asset until it's actually sold.
2. There is a lot of work involved in owning a vacation property.
3. There are a lot of extra hidden expenses involved in owning a vacation property.
4. Expenses usually exceed the income.

The four points above I think most people ignore and instead believe the dream of having a stress free, pain free, income producing property that will enable you to vacation for free.

[wanneroo]

Originally Posted by Rainbow Demon

I think these mountain property acquisitions are also time sensitive and much of the return or lack of return depends on how long you've held the property (I won't say "investment" for obvious reasons), your initial investment costs/etc. Buying a condo today is a different animal than it was/then what happened from 1989 to 2008 here in the VV...which was a steady, constant escalation of property value. The property we bought in '89 was mega-cheap compared to today's pricing. Unlike the advice here...we are seriously sorry we didn't have the capital to invest in a series/number of condo units locally in the late 80's-early 90's. Some of these units are now worth 10X what they sold for in '89. IMO, timing is key....and now isn't the time to buy a condo for an "investment". (sales prices ARE up/rising currently)

Some do...but not everyone loses money on their mountain property. Again...it's all timing and duration. We were lucky and our timing was right. My guess is that the folks who didn't make any money and who paint the doom and gloom simply made poor choices and bought at the wrong time. Either way, not everyone loses money on these ventures.

Jus' sayin'....

good luck folks.......

Some units might be worth 10x more, but then people have to be intellectually honest about all the expenses over the years and adjustments for inflation. After all of that, it might not be as attractive an investment.

Not everyone loses money but you've got to work at it and most of the people coming to this forum over the years seeking such advice about "investment condos" are not local people with their fingers on the pulse and in all the right pies. Instead they are people that live outside the area that will be dependent on property managers and other contractors to make it happen to be able to rent their property out for income.

[Teckeeee]

Thanks for the good posts I have always wondered this myself. Good to know not much better ROI than a time share.

[Teckeeee]

Originally Posted by VileTat

Before buying any condo I've heard to always ask to see the HOA's finances and their budget / schedule for repairing major stuff (probably not the right term). Read many horror stories of huge multi-thousand-dollar special assessments from bad HOA's that did not budget properly or keep up with repairs (boilers/new roofs/other regular maintenance anyone component would plan for well in advance).

Good advice for any condo HOA esp. the smaller ones.

[BarryK123]

Originally Posted by Teckeeee

Thanks for the good posts I have always wondered this myself. Good to know not much better ROI than a time share.

Timeshares are the world's biggest ripoff. Just ask anyone who has tried to sell their share.

[wanneroo]

Originally Posted by BarryK123

Timeshares are the world's biggest ripoff. Just ask anyone who has tried to sell their share.

It's a total rip, locks you in forever killing your vacation mobility and preys on this inner need of people to own stuff.

[Teckeeee]

I have always avoided the TS but now I know to be wary of the ski rental $$ machine