Thinking about Buying a Ski Vacation Property?
Thinking about Buying a Ski Vacation Property?
Breckenridge & Keystone
Properties that are suited for vacation rental (also known as short-term rentals, “STR”) are a popular request in ski resort areas like Breckenridge and Keystone. Breckenridge and Keystone both require short-term rental licenses to operate a vacation rental. If you are considering purchasing a vacation rental property in Breckenridge and Keystone, here are my tips for understanding the pros and cons of buying, ways to be more effective with your property search and considerations for what to expect in the process of purchasing and closing.
Why are buyers seeking vacation rental properties in Breckenridge & Keystone?
- Income and enjoyment can be experienced year-round in Breckenridge & Keystone – not all ski destinations compete with this. From summer-time biking, hiking, music and fall festivals to winter time snowboarding, skiing, cross-country skiing, snowmobiling, Olympic athletes and more – these are two world class, amenity-rich and Epic Pass outdoor havens that hold four-season value.
- Breckenridge and Keystone repeatedly attract high demand for guest lodging – that can correlate to better rental rates and income potential. For example, the Rocky Mountain region experienced over 25 million skier visits in 2020-21, according to the National Skier Areas Association (NSAA). The Rocky Mountain region also consistently reports among the highest number of skier visits compared to other regions year after year. Both communities are also within a short distance of Denver International Airport, which attracts visitors from all over the world.
- Owners can enjoy the benefit of frequent personal use and earn income, without being encumbered by long-term lease schedules. Particularly if owners intend to use their property frequently, they may find short-term rentals are a great option for them. Whereas owners who may not be using their property as often might consider the benefit of either long-term guest stays, short-term rental, or long-term leases, depending on their goals.
- Vacation rental properties lift buyer purchasing power because they can augment the costs of a rental property. The on-going expenses, such as utilities, snow removal, taxes and property care are all expenses regardless of whether the owner is renting the home or leaving it vacant when they are not here. However, as a vacation rental, these expenses can become potential tax deductions and the income typically covers many carrying costs.
- Vacation rental properties increase attainability. Vacation rental properties can help uplevel affordability and this helps some buyers get a foot in the door with a destination resort property that they may have been otherwise unable to attain. This can help broaden the demographic of buyers eligible to buy in destination resorts.
What to expect when buying a vacation rental property in Breckenridge & Keystone?
- Buyers should consult with property managers about operating a vacation rental before identifying the property they want to buy. As a real estate broker, I can connect buyers with local property management companies and resources for getting started.
- Buyers can expect homeowner association fees (HOA) to be applicable to qualified vacation rental properties, yet this isn’t necessarily a bad thing for containing costs and lowering stress. Properties with a HOA also tend to have amenities that attract higher guest rental income year-round (i.e. pools, garage parking, and hot tubs). Homeowners Associations in Breckenridge and Keystone cater to a maintenance-free experience – many HOAs include all utilities, even Wi-Fi and cable and they handle loads of property maintenance with dedicated resources to the property. Buyers should compare the monthly HOA costs with what they would have otherwise spent incurring exterior upkeep, the stress of maintenance and utility costs (e.g. plowing drives, shoveling snow, roof and siding maintenance in the elements, etc.).
- HOA rules should align to buyers’ intended use. For example, some HOAs will prohibit or make it cumbersome for do-it-yourself vacation rental management – they may prefer owners use their approved property management services and impose penalties or disallow other forms of property management. HOAs may have pet rules for guests that do not apply to owners. As a local Realtor, I can help buyers navigate information about HOA dues, inclusions, special assessments, and other costs to help buyers.
- Licenses are required to operate a short-term rental in Breckenridge and Keystone – this entails fees and onsite support costs that are in addition to ordinary property management and maintenance expenses. License fees will differ between Breckenridge and Keystone, and they can also differ for the type of license for the specific property. As part of the license rules, both Breckenridge and Keystone also require a designated on-site property agent who can respond in-person to emergencies within a certain timeframe.
- Short-term rental licenses run with the owner, not the property – STR licenses do not transfer with the title of the property. Even if the buyer is buying a property with existing or future-dated rentals, or the seller already has a short-term rental license, the buyer still needs to apply for their own short-term rental license upon closing. Currently, buyers cannot apply for the short-term rental license until after they have closed, and the title is transferred into the buyer’s name. This means buyers will not necessarily know whether the short-term rental license will be approved prior to closing on the property. However, there are ways to hedge some of this risk through preliminary due diligence on the specific property prior to the closing.
- Vacation rentals eligible for short-term rental tend to be situated in sought-after areas and in luxury properties that command a higher purchase price point compared to off-slope areas. Many properties may have security features or front desk options that accommodate seamless guest check-ins. Ask me about the starting prices of walk-to-slopes and ski-in/ski-out properties for the latest information in Breckenridge and Keystone.
How do you find properties that are eligible for short-term rental in Breckenridge & Keystone? Buyers will need smarter search tactics if they want to be successful with a vacation rental property purchase. Even though Breckenridge and Keystone are resort destinations, there can be short-term rental friendly zones and wait-listed zones. Zillow and other websites do not allow buyers to set search parameters based on these property zones – this can lead to wasted time looking at properties that will not be eligible for the buyers’ vacation rental income goals. Buyers should be talking with their intended property managers before the purchase as this can also influence their search criteria based on their income goals.
As a skilled, local real estate broker, I can support buyers with smarter property searches that optimize their time looking at eligible properties. I equip buyers with resources, such as local GIS zone mapping links, which enable buyers to search more independently, too.
How soon can you start earning from your vacation rental purchase? If immediate income is important, buyers should contemplate the factors that influence their timeline for generating cash flow. Here are a short list of factors that can influence the time to upstart a vacation rental:
- After the buyer has closed on the property, the timeline from submitting the short-term rental application to obtaining a license approval ranges from 72 hours to 30 days, depending on the local government entity. This presumes the property is in a short-term rental friendly zone with licenses available (i.e., this does not apply to wait list only zones where licenses are not readily available).
- If the property for purchase includes future dated “rentals on the books” this can be a feature to incorporate into the offer to purchase and reduce time to upstart earnings potential. However, some buyers may have other plans and want to structure their closing date to be after all of the sellers’ bookings have commenced.
- Is the closing going to occur at the start of the off-season? If you’re taking on extra risk for closing at a slower time of the year, this may be a worthwhile consideration for negotiations, depending on the latest market conditions.
- If the property needs to be re-fashioned, re-furnished or repaired, this can delay the timeline to take on guest rentals.
- Property managers should be consulted about the time it takes to procure management agreements, new photography, cleanings, advertising the rental or other modifications that they propose.
Ready to make memories and make money? Let’s talk soon about the wonderful opportunity of owning resort destination real estate in Breckenridge and Keystone.
Are you considering selling or buying mountain real estate? Taryn is a nationally certified Pricing Strategy Advisor (PSA) by the National Association of Realtors. Taryn is a second-generation Realtor with experience in ski resort real estate and mountain cabins. Contact Taryn Brooke by phone at 970.333.8297 or by email at firstname.lastname@example.org.