Investment Condo - Which Ski Resort? Aspen? Vail? Breck? (Denver: real estate, rentals)

[JJPCheers]

We are looking to purchase an invest condo at either Breck, Keystone, Vail, or Copper. I believe all of these would have good rental history during ski season but which of these would also have more people wanting to rent in the summer? Since it's an investment and we will not live there I want to try to get at many weeks per year possibly rented out.

[hammertime33]

Breck or Vail

[JJPCheers]

What about Telluride? A friend just told me about it. We have never been so I know nothing about it. We have been to all the other resorts mentioned in first post.

[sunsprit]

Summit and Eagle county properties are more likely your best bet for rental activity ... they are far more accessible for Front Range rentals and very accessible for destination vacationers. With all the summertime activity in the area, these are excellent rental areas.

My choice is Vail due to the year 'round activity, but .... if ROI is the most important consideration to your purchase ...

what really counts is the actual cash flow/rental track record of the particular property you are considering. All of the areas first mentioned have good potential.

Telluride is more of a destination resort location, which means that you won't attract casual short-term rentals ... it's expensive in cost and time to access compared to the areas within a 100 mile range of Denver. Even for people like me who can fly ourselves into Telluride, it's still a very expensive ride from the airstrip into town ... so I don't go there more than once every few years. While the place has it's charms, it's one of the most expensive destinations in the region, even compared to Aspen ... when you factor in the total cost of access, ground transportation, cost of lodging, and the cost of food. IMO, it's a place with a much more limited attraction than the other resorts.

I was in Vail this last weekend, and the weather and colors were spectacular. There were a lot of interim season promo's for golf and restaurants, and the town wasn't packed like it is in the height of ski season/holidays ... I got a great meal at a well known japanese restaurant for 50% off. Went sailing at Dillon for an afternoon, and it was very pleasant with light to moderate winds through the day ... another reason why Vail is so attractive, as one has access to the water 25 minutes away from Vail for boating/fishing activity. Riding my bicycle on Sunday AM up the pass was a real pleasure ....

[JJPCheers]

Great info. Thank you. I will focus my condo search on Vail, Breck and Keystone. Currently there is more inventory in Breck and Keystone so there may be a good deal to be found.

[golfgod]

While there may be a "great deal" to be found, don't plan on making any money on it! If owning your own place instead of renting appeals to you, and you can afford to FEED a NON-INVESTMENT, then do it. Just don't plan on making any money on it. I've been a RE investor for over 30 years, a skier for more than 20 and able to pay CASH for a condo in any US ski area for the last 15, and I've always said NO to buying a place.

If I want a RE investment, I want one that makes money for me, not one I have to feed! Before you plunk down any money ask the following questions of the seller/agent;

What is the TRUE rent roll?

What commission do you charge for rentals?

How many days/weeks do I have to GIVE your agency in addition to the commission?

How much does YOUR electrician/plumber/painter/handyman charge per hour, or per typical job? This is a critical one, because unless you plan on spending your summer vacation painting, tiling, carpeting, installing new fixtures, etc, then get ready for some rates that will knock your socks off.

A few years ago a some of us stayed in a place in Vail that my buddy swore he had looked at when it was new. Checking on the year built we decided it probably was the place he remembered. He stated he could have purchased a 2/2 in '82/'83 for $X. I pointed out that had he just put his money in an index mutual fund it would have grown to a greater amount than the market value of the places at present.

He pointed out that the building was FULL (or nearly so) the week we were there. We asked the desk clerk what it looked like for the next 3 weeks. He said if we looked at the website we'd see that we could rent almost any unit in there for about 1/4 of what we were paying.

Then we asked what the monthly condo fees were. My buddy almost collapsed when he heard because this place was not ski-in/ski-out. The clerk pointed out that this covered the pool, hot tub and the VANS that they had to run, and the drivers because without those no one would want to stay on the "wrong" side of I-70.

I asked about how often the furniture had to be replaced to maintain a "preferred" (or star, or "plus) rating with in the rental pool. What about amenity upgrades like counter tops, new, upgraded appliances etc.

By the time we'd spent an hour discussing it my buddy was glad that he hadn't bought one.

[JJPCheers]

Thanks so much for the helpful insight. We assumed we would probably break even every year (even though we are paying cash I printed a ammoritization schedule off the internet on what the monthly payments would be and figured the rental income including paying a management company would be about even) However, I didn't take into consideration all of the extra expenses you mentioned. The stock market is still a scary place and it doesn't make sense to leave such a large amount of cash in the bank not earning any kind of interest. With you bringing these additional items to light, we may look into another type of investment instead of a condo.

[Mike from back east]

Originally Posted by JJPCheers

.... The stock market is still a scary place and it doesn't make sense to leave such a large amount of cash in the bank not earning any kind of interest. ...

I don't do real estate, but I do the stock market and find it not to be scary at all. Below is a list of TEN stocks that are paying dividends between 7% and 10.7% and IMO a better investment than many properties.

If you invest that $100k at an average 8% dividend that's $8k a year in passive income and NO costs for repairs or management fees and you can sell stocks in 30 seconds on Charles Schwab or other on-line broker. Stocks can rise or decline in value, and dividends can be increased, reduced or eliminated too, but you can get out of stocks asap. Dividends are taxable income. On the other hand, selling real estate these days could take 30 weeks and you could take a bath on the place to boot.

Since you don't intend to ski there, why buy there. The dividends will fund your actual vacation trips AND you still have your original lump sum in your account at all times to sell and deploy to other uses on a moment's notice.

Ticker symbols on these ten stocks are: ENP, MMLP, CQP, EVEP, LGCY, VNR, EXLP, GLP, NS, LINE.

[sunsprit]

Originally Posted by JJPCheers

Thanks so much for the helpful insight. We assumed we would probably break even every year (even though we are paying cash I printed a ammoritization schedule off the internet on what the monthly payments would be and figured the rental income including paying a management company would be about even) However, I didn't take into consideration all of the extra expenses you mentioned. The stock market is still a scary place and it doesn't make sense to leave such a large amount of cash in the bank not earning any kind of interest. With you bringing these additional items to light, we may look into another type of investment instead of a condo.

I don't believe that any "good" investment vehicle today is a totally "hands off" passive activity.

The folks who advocate any specific investment vehicle and have a successful track record, good ROI, and are happy with the results ... all had to work at it. There's no such thing today as invest without risk, even when your are looking at very low rates of return in some investments.

For me, I stayed with what I know. All require capital, time, expertise, and have risk. Real Estate is where I've made my best returns, either as a sole owner or in REIT's. Next to that were my service businesses, which did very well (12% or better ROI every year, even after paying me a wage as an overhead expense for the business).

Sole owner properties take WORK after having made a reasonably good (you must know your market and rental/leasing opportunity) purchase. For example, I was in Vail last weekend, working on replacing a domestic hot water heater (after 21 years of service!) and servicing a heating system boiler/valves in one of my properties (I like SFH's, not condo's). When done with that, I had time to enjoy the visit, but the WORK was the #1 priority of the trip because I cannot justify the expense of local contractors to do what I did.

If you know the stock market and can work it to your advantage, so be it. Some of us don't have that insight and ... even in high flying times ... were advised to make investments which burned us pretty badly while others made money. As a result, I only have a small portion of my investments in the stock market.

Whatever investment vehicle you choose, it's not realistic ... IMO, anyway ... to expect instant positive cash flow, although certain opportunities do exist and may present from time to time if you have the ability to act on them immediately. If you're looking at Real Estate, you need to ask yourself if you're willing to work at it as needed and are in it for the long haul. I did, and it's paid off for me. With no mortgages, the rental cash flow covers all the overhead/taxes, and I net over 20% ROI every year ... but I bought distress properties in a down market, fixed them up myself, and have held them for many years. Hindsight says I wish I'd bought more of these when they were available.

[Dogmama50]

I have a SFH rental and stocks, I'll take the stock market any day. My house is only a couple years old and well built, but when the the ignition switch goes on the Viking range it's $150 just to get the tech out there to fix it, the little things add up quickly and really take a bite out of you ROI. The market isn't for everyone, but it has been good for me. As with any investment patience and practicality will help you keep your sanity.

Mike, thanks for some new tickers symbols to research. -DM