Ski Condo as Investment Property

Hi All - thinking about buying a ski condo as an investment property with the intent to rent it out for 48-50 weeks out of the year, but also have available for personal use a few weeks out of the year. Curious to know if anyone else here has done any similar research / reached any conclusions on the idea?

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Comments (20)

Jan 3, 2022 - 1:44pm
CRESF, what's your opinion? Comment below:

Generally I'm skeptical about condos as investment properties. I've looked into this strategy a bit. Two big issues: (1) if you are looking at condos, there will be an HOA to deal with. You always run the risk that the HOA wakes up one day and concludes that all this transient traffic in the building is a detriment to their "lifestyle" and thus no longer allowed. Second issue is management...if it's a rental, that's a bit more straightforward, but if you're looking at it for STR, the management fees start to get egregious. I think Vacasa charges something like 30% (someone can let me know if this dropped). They are really set up for homeowners to generate a little bit of income off their vacation home, and not for investors to turn a profit. A possible third risk is a market deciding that STR's in general are bad and outlawing them completely or only allowing people to rent out their primary home. The latter has been done in many markets. 

Jan 3, 2022 - 1:47pm
jkbpop357, what's your opinion? Comment below:

Thanks for the response! Your points make a lot of sense. It's the kind of thing that sounds great in your head, but in reality you will always be a very small player competing against bigger players with more incumbent power (hotels and homeowners)

Jan 3, 2022 - 1:55pm
CRESF, what's your opinion? Comment below:

I wouldn't worry as much about that. In a vacuum, the fact that you can be more nimble, design-focused, and personal than a hotel is in your favor - even if they are much much larger than you. To boil the risk down to a simple point - the value of your investment is dependent on several external factors that are completely out your control, in addition to the normal risks (economy, etc.). STR's can be a wonderful business, but they are extremely time intensive and right now are subject to a lot of regulatory risk. Once you layer that ontop of it being a condo, the risks just aren't worth what is probably a pretty modest return in my book. 

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Jan 3, 2022 - 1:53pm
TheDebtStar, what's your opinion? Comment below:

Hey there. Although I'm not buying a ski condo, I've toyed around the idea of buying a beach house with similar plans to use it and rent it out when I'm not there. 

I own two airbnb's so I am familiar with the process. So here's what you should do to calculate what you want to do here...

Go to airDNA or look at airbnb.com and check out rental rates for the area you'd like to buy a condo in. Look at occupancy rates for comparable properties to what you would buy as well as booking rates for each property depending on bedrooms. You need to shoot for properties with more bedrooms. Something where more bedrooms = more guests and therefore asking rates don't matter as much because the guests will be splitting it between multiple guests.

Go underwrite it, figure out occupancy x ADR (average daily rate or RevPAR as the sophisticated hotel underwriters would say) and then figure in your mortgage payment, taxes, insurance, expenses and management fee (if you will have a manager). Also, go ahead and figure that it'll probably cost you $7 - $15,000 to furnish the place.

If you're seriously considering buying a condo, realize that some of these HOAs can be quite expensive and some ban the use of short term rentals. 

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Jan 3, 2022 - 2:11pm
TheDebtStar, what's your opinion? Comment below:

South Georgia. I own in markets that people haven't heard of. Right now I'm just testing the area after I had a hypothesis that I might be able to purchase higher end properties (with a greater chance of appreciation) but still achieve a monthly return that would be more typical of my lower end long term rentals. We'll see what happens after maybe a year of operating it. At least it will give me experience if I ever decide to  buy a vacation property.

Jan 3, 2022 - 3:48pm
CREnadian, what's your opinion? Comment below:

Other points here are all valid. Another thing you need to consider is whether there is truly year-round demand for a condo on a ski resort. I think your off season occupancy is likely to be pretty low unless it's a massive tourist destination in the summer for mountain biking, surrounding attractions, etc.

Jan 3, 2022 - 5:13pm
prospie, what's your opinion? Comment below:

The existence of this thread is proof that we're at the top

Jan 3, 2022 - 10:56pm
prospie, what's your opinion? Comment below:

Thanks for the monkey shit 

If this is your idea of a thoughtful real estate investment you should sign up for Picasa or buy some timeshares 

  • Prospect in IB - Gen
Jan 4, 2022 - 3:26am

Love skiing but climate change is really hitting the industry hard and it's only going to get worse

Jan 5, 2022 - 10:10am
COYB, what's your opinion? Comment below:

You should also take the political atmosphere of the mountain town into play.

Lots of mountain towns in the west are playing with the idea of restricting/limiting STRs to create more affordable housing opportunities for workers and year round residents. That said, buying a small MF property or splitting a residential house into 2-3 units could be more your speed... 

Here's a link to an article on Tahoe restricting STRs for your reference: https://www.sfchronicle.com/travel/article/Lake-Tahoe-cracking-down-on-vacation-rentals-in-15955662.php#

Jan 5, 2022 - 11:47am
KClubs, what's your opinion? Comment below:

I live a 2hr drive from a world-class resort and have considered this as well. Three issues I ran into:

1. The best time to rent and make money is also when I want to go

2. Summer season / activities become just as important (eg. mountain biking)

3. Time between winter activities & summer activities is very slow, so if you're managing yourself, you need to be fairly diligent with pricing

Other good points have been brought up like changing politics in these towns. Also don't forget, most people who own know the basic math on renting/airbnb'ing, so the better the resort, the less likely you are going to get a "good deal". It's usually already priced in, and if anything, you will pay a premium because what you are buying is investment + vacation home.

Jan 5, 2022 - 11:50am
jkbpop357, what's your opinion? Comment below:

Thanks for sharing your thoughts. I reached a similar conclusion re. STR already being priced into the market. Great idea in theory, but probably going to pass on this one

Jan 5, 2022 - 9:06pm
ke18sb, what's your opinion? Comment below:

I've done a decent amount of research into buying a ski condo these days. Where the market in terms of pricing, its unlikely that you will get a better return on a ski town condo vs. just buying a normal investment property. 

Ski condos should be thought of as a luxury good, with some (likely small) offset to the total expense. Depending on the resort town, it can be difficult to self manage and get things like cleaning crews and handymen because the supply/reliability is so limited. From all accounts I've heard, its much easier to have a property management company handle everything - however they take 30-40%. The other big issue is many resort towns are weekend getaways and thus expect vacancy during the many weekdays. Getting close to 100% occupancy when not in use is probably never gonna happened. My guess is hitting 50-60% would be best case scenario, maybe even worse. Then of course as others have mentioned, if you're relying on the income production, you won't be able to use it as much and during ideal times where peak prices are high. 

For example, I was looking at a place around 900k - this breaks down to a mortgage at 3% of 3k + 825 in property taxes + 500 in HOA + 300 in expenses (likely high) for a total of ~4,600. The place I was looking at probably get 500/night on weekends and 350 weekdays. Being conservative I assumed 400 a night. Thus to break even, I was going to have to rent it 12 nights a month. Given that full weekly rentals are less common, it likely means I'd never hit that number if I wanted to use it 1-2 weekends a month. Thats assuming I managed it, if it was outsourced as advised, its pushing the break even up to 17 nights a month. Thus the reality is you're going out of 2-3k a month of that 4600 - or at least that is a conservative way to look at it. 

Long story short - ski condos should be things that 1) you can buy near to all cash just bc you want it, or 2) something you're ok with bleeding money on a monthly basis bc you want it, and you might get some rental income to offset but likely not enough to even met the month to month nut. 

  • Investment Analyst in PE - Other
Jan 5, 2022 - 9:09pm

Have looked at this from the other side of this equation as the developer of the condo building. Of course we run the numbers on the condo owners ROI and they have never been that compelling. I always found that you'd probably end up in a better spot with more efficient allocation of capital if you just rented when you wanted to go skiing.

Jan 5, 2022 - 9:11pm
jkbpop357, what's your opinion? Comment below:

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