Investment Condo - Which Ski Resort? Aspen? Vail? Breck? (Denver: rental car, foreclosure)

[LonelyHiker]

My wife, daughter, and myself rent out a condo in Winter Park through VRBO about once a month during ski season, usually the same condo. It's tiny but we really like everything else about it: ski in location, gas fireplace, indoor-outdoor pool, 2 hot tubs, etc... I noticed it was for sale last January so I did some due diligence: The current owners paid $320k for it about 6 years ago. The property was currently listed as a $140k short sale. Without talking to any real estate agents, I was able to get what I believed were accurate numbers for all fees, utilities, and taxes an owner would be paying on this place. The setup was nice because the condo locks and the parking garage were controlled by remote programmable codes, so owners could use VRBO and not worry about having to meet the renters or mail keys and such. Even with only paying $140k for it, listing it myself on VRBO, and having the lowest cost cleaning company I could find clean the place between customers, it would still lose money.

VRBO's price information for this condo as well as their availability calendar provided accurate occupancy numbers, and calls to the local assessor, utilities, and other local companies confirmed the rest. This is assuming I put 20% down and carried a mortgage on the rest. Paying cash would likely yield a small profit, but then that's cash that I could have invested elsewhere and earned far more. I could invest in a bond fund and earn more than this place would net.

I still look for opportunities, mainly at other resorts, but so far every time I have what I believe are accurate numbers for expenses, the local developers/servicers are the only ones making an income.

[dude_reino]

Originally Posted by wanneroo

As the rich people that used to come to the valley used to explain it to me, you've got to find the next big thing and that big thing is what people of my 1980-2000 generation will be interested in and will that be places like Aspen with 70-80 year old surgically enhanced baby boomers drooling all over themselves on the ski lifts or somewhere else?

I've seen it all. My advice to anyone who just feels they have to have some sort of mountain real estate is to only buy if they really plan on making use of it and enjoying it.

Also take what RE agents and property managers tell you with a grain of salt. They are there to move real estate and they'll even show you BS on paper describing these amazing cash flows. Don't fall for it.

The next big thing doesn't exist in the U.S. It is down in Central America. Costa Rica has be nearly capitalized on, but there may be opportunities in Panama or Nicaragua.

That said, my wife and I are also looking for a ski condo, but we don't expect to make any money out of it, just rent it to cover the mortgage and allow us to have a place to go a couple of times during the season and extended times during mud season.

[sunsprit]

Originally Posted by dude_reino

That said, my wife and I are also looking for a ski condo, but we don't expect to make any money out of it, just rent it to cover the mortgage and allow us to have a place to go a couple of times during the season and extended times during mud season.

Even in the real estate prices in the ski resort towns now being down from where they were a few years ago ...

don't count on having enough cash flow to "cover the mortgage and allow us to have a place to go a couple of times ....".

remember, too, that a ski condo management company will soak up most of the cash flow, and that when you use your place, you'll still be paying some fees .... even if only a "cleaning" fee, it still adds up.

if your goal is to have the use of a place "a couple of times during the season ..." you'll be far better ahead to rent when you want to head up the hill. Use it, enjoy it, and head home with no further obligation or expense.

[wanneroo]

Originally Posted by dude_reino

The next big thing doesn't exist in the U.S. It is down in Central America. Costa Rica has be nearly capitalized on, but there may be opportunities in Panama or Nicaragua.

That said, my wife and I are also looking for a ski condo, but we don't expect to make any money out of it, just rent it to cover the mortgage and allow us to have a place to go a couple of times during the season and extended times during mud season.

I think there are international possibilities out there, sure. But watching that one show "House Hunters International" I see people sink money into condos in Belize and Panama and places like that and looking at the lifestyle of some of the people presented on the show I often ask "How often realistically are these people going to get down there to use the place?". Unless people are planning to move out of the country for the whole year or six months of the year, I don't think overseas is the next big thing for most.

[wanneroo]

Originally Posted by sunsprit

Even in the real estate prices in the ski resort towns now being down from where they were a few years ago ...

don't count on having enough cash flow to "cover the mortgage and allow us to have a place to go a couple of times ....".

remember, too, that a ski condo management company will soak up most of the cash flow, and that when you use your place, you'll still be paying some fees .... even if only a "cleaning" fee, it still adds up.

if your goal is to have the use of a place "a couple of times during the season ..." you'll be far better ahead to rent when you want to head up the hill. Use it, enjoy it, and head home with no further obligation or expense.

I think it must be something about the desire for ownership people want or to be able to boast "I'm headed to MY condo this weekend in Vail".

There are good reasons for ownership, but for many it makes no sense. Rent what you need when you need it and enjoy. I've said that for years on here but I think some believe they have a new angle on it no one has yet discovered and they'll have a cash flow king on their hands. LOL!

Sunsprit you wrote some great posts on your experiences owning a ski town condo a few years ago and they should be a sticky in this thread.

[otterprods]

Originally Posted by wanneroo

I think it must be something about the desire for ownership people want or to be able to boast "I'm headed to MY condo this weekend in Vail".

Indeed.

Vail, Aspen and Breck are the three most overpriced ski towns already so the only reasons I can think of that someone would want to invest there is just that they heard the names and know nothing else, or else they just want that bragging right.

[wanneroo]

Originally Posted by otterprods

Indeed.

Vail, Aspen and Breck are the three most overpriced ski towns already so the only reasons I can think of that someone would want to invest there is just that they heard the names and know nothing else, or else they just want that bragging right.

Which I don't have a problem with. We all have dreams and goals. But I think a lot of people instead of buying a property for it's use and enjoyment are thinking instead it's going to be a profitable endeavor and a great investment when it is not. For a lot of people it ends up being a financial boat anchor around their legs. These people in the business selling these properties know they are selling a dream and perhaps if need be an "investment". But it's like buying a Ferrari. They are not going to tell you about the $100 oil filters and $5000 services to change one belt. No no no.

I have relatives in the mountain real estate sales and development business in Colorado. I know the knowledge and skill they have and the local connections and strings they can pull. There is no way outsiders can fly into town one day, "do the numbers" and beat the locals at their own game.

I just think with the demographics as they are, there are still more falling knives to come. You have a large generation of baby boomers that came into their prime earning years during one of the biggest economic booms in our history from 1982-2007. You have a smaller generation of people aged 20-40 that are coming into their prime earning years in the middle of the Barackolypse Depression. They don't have the money and the boomers have left them with a flaming tire of 17,000 Billion $$$ in debt around their neck with around 90,000 Billion in unfunded liabilities to pay for the boomers social security and medicare. I'm just not seeing the math on condos in ski areas being great investments in those circumstances.

[sammy87]

Anyone see the old South Park episode where the parents went to a time share sale in Aspen?

"just say it out loud to your self, I have a little place in Aspen" Great episode

[dude_reino]

Originally Posted by wanneroo

I think there are international possibilities out there, sure. But watching that one show "House Hunters International" I see people sink money into condos in Belize and Panama and places like that and looking at the lifestyle of some of the people presented on the show I often ask "How often realistically are these people going to get down there to use the place?". Unless people are planning to move out of the country for the whole year or six months of the year, I don't think overseas is the next big thing for most.

If they are retired then most likely they will use it a lot. Many seniors already travel to Central America for medical operations because the cost is far less than going to an American doctor. If they are down there that much already, it pays off to own a place to live.

Originally Posted by wanneroo

I think it must be something about the desire for ownership people want or to be able to boast "I'm headed to MY condo this weekend in Vail".

There are good reasons for ownership, but for many it makes no sense. Rent what you need when you need it and enjoy. I've said that for years on here but I think some believe they have a new angle on it no one has yet discovered and they'll have a cash flow king on their hands. LOL!

Sunsprit you wrote some great posts on your experiences owning a ski town condo a few years ago and they should be a sticky in this thread.

The Vail Valley isn't getting any bigger. Unless they successfully bury I-70 underground, eventually all the land will be built up. Sure, values will not see the exponential growth they have in the past 3 decades, but its not like values are going to plummet. They will always steadily increase. A mountain condo may not be the 'best' investment, but it will never be a 'bad' investment.

[wanneroo]

Originally Posted by dude_reino

If they are retired then most likely they will use it a lot. Many seniors already travel to Central America for medical operations because the cost is far less than going to an American doctor. If they are down there that much already, it pays off to own a place to live.

The Vail Valley isn't getting any bigger. Unless they successfully bury I-70 underground, eventually all the land will be built up. Sure, values will not see the exponential growth they have in the past 3 decades, but its not like values are going to plummet. They will always steadily increase. A mountain condo may not be the 'best' investment, but it will never be a 'bad' investment.

I think there is some room in the market for going overseas but I'm not sure that's the next big thing.

Vail Valley might not be getting any bigger but the world is a constantly evolving place. There are plenty of broke and busted ski areas and towns and towns that have seen better days. I remember being in St. Moritz in Switzerland which was the place to be a 100 years ago and by the 1950's it was built out and lost it's shine to the hipsters and while still a nice town, not what it once was. I wouldn't rule out that happening to Vail and Aspen. Both are getting old in terms of the people that go there. It's mostly gray hair people going there.

In regards to values and that they will always increase, uh well, that is not what has always happened. There are plenty that have lost their shirt and several eras where values have plummeted. The big build out of condos below Beaver Creek in the last decade put some companies and people in bankruptcy and to clear stock they had to slash prices in half and more to sell. I know endless stories first hand of people who ended up with "bad" investments in mountain condos and homes.

The investment is not just only what the property might be worth after inflation the day you go to sell, but all the costs you accumulate along the way. There are a lot of costs involved.