Author Topic: Permanent Traveler buying a Ski Condo to use as a "base"  (Read 1244 times)

StetsTerhune

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Permanent Traveler buying a Ski Condo to use as a "base"
« on: October 22, 2018, 06:14:00 AM »
First my situation: My wife and I have been Permanent Travelers for over 4 years now. We're looking to settle down some, but not completely. Ideal is a place we could live 6-8 months a year, then travel the other 4-6 months a year. Many different options we're considering for this purpose, but I just want to focus on one idea here.

The idea: Buy a condo in a ski area (I have a specific resort in mind, we stayed their for a month in ski season a few years ago, and a week in the summer). Rent it out during the 3 months or so of peak ski season, then live there the rest of the year. Depending on how we're feeling, we could list it the rest of the year and just be prepared to leave (maybe just go camping in the summer) if someone actually rents it. What I love about a ski place is that it has a very defined rental season, but is actually really nice almost 365 days a year -- another 2-3 months you can probably ski, plus 3-4 months of good hiking, plus fall foliage.

Everything I read about buying a ski condo is either very wishy-washy ("Don't get bogged down in the numbers, it's a lifestyle decision!") or looking at this purely from an investment point of view (and it sounds like ski condos are one of the worst real estate investmets you can make). I'm not looking at this so much as an investment, as a (hopefully) cheap, and awesome place to live. I don't doubt that a ski condo is a terrible financial purchase for 99% of people who are doing it, but I feel like my unique situation might actually make financial sense.

Help me think through all the costs, here's what I have for costs:

Opportunity Cost of Money: hopefully the property value would appreciate some, but not as much as the stock market, though there is some value in diversification, not sure what % to use here?
Property Tax
HOA fees (and maybe other resort fees depending on the place)
Periodic HOA special assessments etc.
Inside furnishings, repair, periodic remodeling costs: if I'm renting it out quite a bit I'm assuming these would all be considerably higher than a normal condo)
Management fees: I've read widely varying numbers on what this will take of the rental $'s, everything from 20%-50%.
Transaction cost of buying (and probably one day selling) the condo.

Obviously I will do my best to run these numbers for any specific place I'm considering, but I'm really just trying to figure out if this idea is reasonable at all. My logic is that if these places make sense for people who are leaving them empty most of the time, it would have to be a great deal for me, who would happily live there most of the time it's unoccupied. Or maybe it doesn't actually make financial sense for anyone, and it would still be a bad deal no matter what?

Freedomin5

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #1 on: October 22, 2018, 08:23:08 AM »
We have a cottage that we live in for two weeks of the year, when we are back in our home country. Let's just say it covers its operating costs, but the math indicates that it does not make any money. At best we are breaking even. We have it because it's the cheapest way for us to guarantee the same comfortable cottage on the same beautiful lake with the same amenities, in high-demand cottage country, each summer. (Not all Ontario lakes are created equal, so once we find a good one, we want to stick with it.)

A lot of the costs are dependent on the particular area you are interested in. Not only do you have to run the costs, you have to run the potential income to have an accurate comparison. Not sure if it is helpful, but here is our analysis when we were considering purchasing last year, prepared for us by an accountant.

Purchase Price:
Sales Tax:
Capital Improvements: (we added a deck, screen room, upgraded railings to a new build)
Furniture:
TOTAL HOUSE PRICE:

Rental Rates
Peak Season (May to Oct, 26 weeks):  $XXXX/week
Assume (conservative) 50% occupancy rate during peak season

Rental Income:
Management Fee (20%):
Split Income with Resort (50%):
NET RENTAL INCOME:

Operating Expenses
Utilities (Propane, internet):
Property Insurance:
Repairs and Maintenance:
Resort Fee/HOA:
Opening/closing cottage for the season:
TOTAL OPERATING EXPENSES:

NET OPERATING EXPENSES: (Net Rental Income - Total Operating Expenses)

Opportunity Cost: Interest (3.75%): (Total House Price * 3.75%)  ** Use whatever interest rate you see fit

TOTAL NET COST: (Net Operating Expenses + Opportunity Cost)


In your case, it sounds like you're purchasing the condo as your primary home, not as a second home like most owners of ski condos. You're just choosing to locate your primary home in a tourist area. So you need to compare the cost to purchasing a cheaper home in a "normal" neighborhood that you would leave empty part of the year, or the cost of doing a short-term rental for the 6-8 months that you're in the country.

SnackDog

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #2 on: October 22, 2018, 08:54:11 AM »
If you are looking to settle down somewhere, you should choose the location carefully before investing.  I suggest renting for 6-12 months before buying, both to figure out if you want to live there long term and to find which properties would be the best candidates.  Most people stumble once or twice choosing the right location and regret it if they purchased real estate.  Once you choose where you want to live, you can figure out how to rent it when you are away.  AirBNB works pretty well or local rental companies and can be on a day-to-day, weekly, seasonal or whatever.  Ski locations can be hot when the economy is good but tank pretty fast when people have less discretionary money.  If you don't view this as an investment, but as a long term place to live then you can figure out what costs you can handle.  Just don't overestimate the rental income and underestimate the rental and maintenance costs (like most people).

tralfamadorian

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #3 on: October 22, 2018, 12:28:55 PM »
Utilities (Propane, internet)

This is a big one that OP left off the initial list. Short-term renters in general are heavy utility users.

bognish

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #4 on: October 23, 2018, 02:40:57 PM »
What ski resort you have in mind will be a big factor in if this is a good idea. Is it a destination resort or weekend resort? Is it close to an airport? with direct flights? Is the resort hooked into one of the major season pass networks? It seems the trend for ski areas to join onto season pass groups (Icon/Epic/Mountain Accord). A lot of coast skiers are getting passes to the local hill for normal weekends, watching storms in the west, and booking last minute short trips for big snow. At least thats who I see on the chair at my hill on powder, i mean sick days. I don't know how that would impact trying to rent out a condo for the whole winter. Being close to an airport with direct flight from NYC or LA will be a big help. There is a big chance that you could get a bad snow year, no one comes to stay and you wouldn't want to stick around and ski rocks either. If this happens a few years in a row its going to be hard to sell.

Also depending on the resort, 365 of being great might not fit.  Mid April to mid June are usually mud season. Hiking & biking trails are slushy or muddy. Lots of stores are closed and locals head out of town if they can. A place like Tahoe will be a full circus in July & August, but most other places have a slow trickle of tourist. After labor day its empty again until Christmas week. If you are counting on the condo hot tub to stay open 365, you better make sure all the amenities are serviced year round.

I am pretty introverted, but off season ski resorts seem pretty lonely to me.

waltworks

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #5 on: October 23, 2018, 05:01:11 PM »
IMO you'd be better off just renting a place for when you want to be there. Here are the big problems with your plan (I live at a ski area, though in a SFH, not a condo):

-If you rent during the prime ski months, all you get yourself is the tail ends (white strip of death+pond skimming?) of the season. Why do you want to own a place at a ski resort if you're not going to ski when the skiing is good?

-Many at-the-base condos will either prohibit nightly rentals or else subject them to being managed directly by the condo assn/hotel (stay as far away from the condo-tel model as you can!) You can get around that by doing monthly or longer, or by carefully vetting the places/getting something a bit further from the slopes. But you should still expect to pay *minimum* 20% (if renting monthly) to 40-50% (if renting truly short term where housekeeping is required) overhead for management.

-Ski town locals do NOT like out-of-towners who own nightly rentals. If the place is really small, you may find yourself a bit of a pariah because the semi-working-class folks who are your fellow locals have all gotten booted out of their housing in the last 4 or 5 years so rich people from NYC or LA could rent them nightly. Seriously, people are very angry.

-Mud season is 1.5-2 months in the fall and often the same in the spring. Nobody will want to rent your place, and lots of people will leave town. You won't particularly want to be there either.


Your plan sounds like paying a lot to have a place at a ski area in the summertime + mud season. You *might* make most of your expenses back renting during the ski season, but you also very well might not - tons of people thing they'll get rich doing nightly rentals and spend a cool million bucks on a condo that might, in a good year, net them $30k. They are your competition.

-W

bognish

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #6 on: October 24, 2018, 12:19:14 PM »
Seems like you could get a screaming deal if you just wanted to rent out a ski condo for the off season. Avoid all the risk and hassle of ownership and landlording. Lots of flexibility to move around summer to summer.

StetsTerhune

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #7 on: October 26, 2018, 01:30:49 PM »
Thanks for the responses. My back of the envelope math has pretty much convinced me that this doesn't make financial sense.

I think that (for me) there are places that avoid the issues that Waltworks and Bognish point out below, but those are places that are priced so high that there's no way to make it work financially.

I guess I always suspected this was a pipe-dream, but it would have been awesome if I could have gotten to ski a couple of (off-peak) months a year + hike all summer, more or less free.

clarkfan1979

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #8 on: October 27, 2018, 03:22:31 PM »
Big time skier/snowboarder for 30 years. I taught snowboard lessons at Breckenridge in 2002/2003 and got 121 days on the mountain in one season. I have considered the idea of buying a place, renting it during peak season and living there off-season. Living off-peak is my favorite life hack.

To maximize your off-peak you need a ski resort with a longer than normal season. Mammoth or Arapahoe Basin would be my two choices. Both are typically open until the first week of June. Condos at Keystone are 10 minutes from A-Basin.

I would rent it out starting Thanksgiving weekend until Jan 5th. I would ski for one week Jan 5th to 12th, just to get your ski fix. Jan 5th until MLK weekend is usually pretty slow. I would then rent it out Jan 13th until the last week of March. I would ski April 1st until closing day (June 5th?).

I would rent it out to summer tourists June 5th to August 15th. I would live there August 15th until the week before Thanksgiving.


cchrissyy

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Re: Permanent Traveler buying a Ski Condo to use as a "base"
« Reply #9 on: October 27, 2018, 10:04:45 PM »
it sounds like you could be the answer to somebody else's problem - find a ski condo that is rented out or owner occupied for ski season but under-utilized in the summer and/or shoulder seasons, and make a deal to rent it every year as your "home base".  You can have the reliability of one place to stay every year, and none of the responsibility for taxes and maintenance and keeping it booked the rest of the time.