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Can you break even on a ski condo?

Hawk

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My Wife is the President. the other board members are good friends who ski every weekend with us. We just have to find a fair balance for the 3 renters.
 

Mailman

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It's absolutely possible to break even or turn a profit, especially with no mortgage as the OP said is the case in their situation.

I bought my condo at the base of a southern VT resort a couple of years ago, and got a mortgage for 80% of the value. It's a higher end condo which means high maintenance and tax costs (combined approx. $25K annually) but also high nightly rates (regular weekends during the season are in the $800 / night range and holiday weekend rates are in the $1600 / night range).

The first season we owned the condo, the previous owner had already taken a ton of bookings for the season, and we chose when we wanted it for our personal use, cancelled those bookings and kept the remainder. I think there were only 3 regular, non-holiday weekends from the start of Thanksgiving to early April where we didn't use it, and we didn't use it Presidents week when we generally do a family trip out west. It was fully booked for all weekends the we didn't use it, as well as Presidents week and it was booked for approx. 50% of the weekdays we weren't using it during the season. There were a few rentals during the summer and it was booked pretty solid during leaf season also.

All up, in the first year of ownership, we saw about $65K of revenue while using the condo as much as we wanted. After management fees, that netted to around $50K to us, which just about covered all of the expenses for the year including our mortgage. Obviously we have to pay tax on the rental income less expenses, so that needs to be considered also, and probably means we were a bit under break even.

For year 2, we scaled back on the rentals a bit. It was a pain in the ass packing up the condo every weekend to have it ready for mid-week renters and then unpacking it every weekend after the renter had left. That wasn't why we bought it in the first place, so we limited renting last season and will limit it further in this coming season. We'll still rent it for Presidents week and for any extended periods during the winter when we won't be there, and we'll rent it during the summer and fall other than the couple of weeks we'll use it during those times.

So it it definitely possible to break even, and I'm confident I could even turn a profit every year on our condo if I really wanted to. But I think before taking the plunge on purchasing a ski vacation home, it's important to think through what you actually want out of the place. If it's primarily an investment and you're prepared to treat it that way and inconvenience yourself / compromise your own experience to maximize your return, then go for it - you can probably make it work at the right resort for the right condo. If you're thinking about it primarily as something for you and your family to enjoy, I'd think about potential rental income as a bonus to help offset some of the cost, but not as something that is going to give you a free place to stay when you ski.
 

Smellytele

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It's absolutely possible to break even or turn a profit, especially with no mortgage as the OP said is the case in their situation.

I bought my condo at the base of a southern VT resort a couple of years ago, and got a mortgage for 80% of the value. It's a higher end condo which means high maintenance and tax costs (combined approx. $25K annually) but also high nightly rates (regular weekends during the season are in the $800 / night range and holiday weekend rates are in the $1600 / night range).

The first season we owned the condo, the previous owner had already taken a ton of bookings for the season, and we chose when we wanted it for our personal use, cancelled those bookings and kept the remainder. I think there were only 3 regular, non-holiday weekends from the start of Thanksgiving to early April where we didn't use it, and we didn't use it Presidents week when we generally do a family trip out west. It was fully booked for all weekends the we didn't use it, as well as Presidents week and it was booked for approx. 50% of the weekdays we weren't using it during the season. There were a few rentals during the summer and it was booked pretty solid during leaf season also.

All up, in the first year of ownership, we saw about $65K of revenue while using the condo as much as we wanted. After management fees, that netted to around $50K to us, which just about covered all of the expenses for the year including our mortgage. Obviously we have to pay tax on the rental income less expenses, so that needs to be considered also, and probably means we were a bit under break even.

For year 2, we scaled back on the rentals a bit. It was a pain in the ass packing up the condo every weekend to have it ready for mid-week renters and then unpacking it every weekend after the renter had left. That wasn't why we bought it in the first place, so we limited renting last season and will limit it further in this coming season. We'll still rent it for Presidents week and for any extended periods during the winter when we won't be there, and we'll rent it during the summer and fall other than the couple of weeks we'll use it during those times.

So it it definitely possible to break even, and I'm confident I could even turn a profit every year on our condo if I really wanted to. But I think before taking the plunge on purchasing a ski vacation home, it's important to think through what you actually want out of the place. If it's primarily an investment and you're prepared to treat it that way and inconvenience yourself / compromise your own experience to maximize your return, then go for it - you can probably make it work at the right resort for the right condo. If you're thinking about it primarily as something for you and your family to enjoy, I'd think about potential rental income as a bonus to help offset some of the cost, but not as something that is going to give you a free place to stay when you ski.
Well until your condo nazi hoa says you can’t rent
 
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BenedictGomez

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Well until your condo nazi hoa says you can’t rent
Or entire cities. Just happened this week. As I said earlier in the thread, this is rapidly becoming more of a thing. Granted this instance is STR in SFH zones, but just imagine, literally the entire city!

 

joshua segal

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After several pages of comments, I'd like to add:

What do I like about owning (and not being a renter or rentee):
1. The ability to keep my stuff in my closets, drawers, refrigerator, etc.
2. The ability to arrive and not have to unpack stuff
3. The ability to leave and not have to pack up my stuff and to empty the refrigerator.

If you really want to do something like the above 3 and have the money to invest in a condo, I suspect there are many ways to get a better return on capital and you might as well be a renter without the hassle of tenants.

I say that as a one-time landlord who went through the hell of evicting tenants who trashed my property.
 
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Hawk

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In our case we never said we were not going to let people rent. We are just going to change the by law to make people 100% liable for any damage or disruption to the other owners. This includes a complete and comprehensive insurance policy that covers the loss of the building in the case of fire.

You rent, your renters burn down the building, or floods it out, your insurance make us whole. it's that simple.
 

jimmywilson69

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That seems like the approach most insurances would take.

As someone who has to partake in STRs, There needs to be a way they can exist. Right now its the wild west and the advent of VRBO and AirBNB have moved the STR industry way past regulations faster than anyone could've imagined. Outright bans are not good for the local economy, there is no way you can spin that it is.
 

Hawk

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Jimmy, i'm not sure how short term rentals are good for local economies. Most people who own vacaion area properties and are renting are not from that area. Why would you buy a vacation property where you live. And I would add that in most ski areas around NE the large increase of STR's has crushed the housing market for people who want to live and work at the ski area. The result has been resturaunts and shops closing because there are no workers.
 
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jimmywilson69

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I guess my thought is if there aren't short term rentals, how am I supposed to come and spend money in that area? so hypothetically speaking, if MRV outright bans short term rentals, I have to stay in Burlington or somewhere else lets say. I'm way less likely to spend any of my money in the MRV if I'm not staying there. These areas where STRs are popular are "tourist" destinations and there needs to be places for visitors to stay.

I agree that if all of the available housing is turned to STRs, that is bad for the local economy becasue there is nowhere for people to live. Its a balance and right now in ski country, its pretty out of balance.
 

Domeskier

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A ban on STRs would not apply to hotels, motels or other lodging businesses. Just private individuals renting out their houses for supplemental (and likely undeclared) income.
 

kbroderick

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Jimmy, i'm not sure how short term rentals are good for local economies. Most people who own vacaion area properties and are renting are not from that area. Why would you buy a vacation property where you live. And I would add that in most ski areas around NE the large increase of STR's has crushed the housing market for people who want to live and work at the ski area. The result has been resturaunts and shops closing because there are no workers.
I think it's worth distinguishing between housing stock that could well serve local residents and that which was built as vacation homes and wouldn't make sense as workforce housing. One of the more extreme examples near me would be Ski Esta (https://www.skiesta.us/mountains/SkiEsta.shtml), which is listed as sleeping 38. Assuming you're not going to have 30 roommates, managing that as a lease is going to be challenging at best.

Larger groups (e.g. two families traveling together, or a race or freestyle team) tend to do much better in STR-style properties, although I suppose having access to a kitchen isn't helpful to the local economy. But again, taking the last trip I took with athletes with a single rental, we had nine or ten beds filled in a $1.2-million condo (based on the two that have listed in the same complex this summer). That's not well-suited to workforce housing, as the carrying cost is just too high.
 

drjeff

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I think it's worth distinguishing between housing stock that could well serve local residents and that which was built as vacation homes and wouldn't make sense as workforce housing. One of the more extreme examples near me would be Ski Esta (https://www.skiesta.us/mountains/SkiEsta.shtml), which is listed as sleeping 38. Assuming you're not going to have 30 roommates, managing that as a lease is going to be challenging at best.

Larger groups (e.g. two families traveling together, or a race or freestyle team) tend to do much better in STR-style properties, although I suppose having access to a kitchen isn't helpful to the local economy. But again, taking the last trip I took with athletes with a single rental, we had nine or ten beds filled in a $1.2-million condo (based on the two that have listed in the same complex this summer). That's not well-suited to workforce housing, as the carrying cost is just too high.
Truth!

And in addition to that, a decent amount of the homes/condo's that say 5yrs ago or so were in that long term rental pool that seasonal employees used, were bought up and renovated and the new owners put their properties into the STR pool at a higher price point that made them realistcially out of financial reach for the seasonal employees.

No easy answer to this, especially if you are talking about a region where there is local resistance on the planning and zoning boards towards building new "affordable" housing
 

cdskier

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A ban on STRs would not apply to hotels, motels or other lodging businesses. Just private individuals renting out their houses for supplemental (and likely undeclared) income.

Not everyone wants to stay in a hotel, motel, lodge, etc. I rented condos STR in the MRV long before AirBnB was around. As did many other people I'm sure.

As for undeclared income, places like AirBnB centralizing rentals would actually help with that issue once the new lower 1099 limits go into effect (which are actually already required by some states such as MA, VT, and NJ even though the fed changes were delayed last year...so any STRs through AirBnB owned by people in those states are already running out of ways to avoid declaring that income).
 

Domeskier

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Not everyone wants to stay in a hotel, motel, lodge, etc. I rented condos STR in the MRV long before AirBnB was around. As did many other people I'm sure.

As for undeclared income, places like AirBnB centralizing rentals would actually help with that issue once the new lower 1099 limits go into effect (which are actually already required by some states such as MA, VT, and NJ even though the fed changes were delayed last year...so any STRs through AirBnB owned by people in those states are already running out of ways to avoid declaring that income).
True. I was just addressing Jimmy's concern that a (hypothetical) ban on short-term rentals in the MRV would mean tourists would have nowhere to stay in the MRV.

It will be interesting to see what effect, if any, the tax changes will have on the the STR market.
 

2Planker

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We had an escaped Llama on our rd last week. Evidentally he was part of a STR and was exploring the Rockhouse Mt area.

Wonder if the owners knew about him ? The place is not fenced in, so we were wondering where he stayed....
 

djd66

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Not everyone wants to stay in a hotel, motel, lodge, etc. I rented condos STR in the MRV long before AirBnB was around. As did many other people I'm sure.

As for undeclared income, places like AirBnB centralizing rentals would actually help with that issue once the new lower 1099 limits go into effect (which are actually already required by some states such as MA, VT, and NJ even though the fed changes were delayed last year...so any STRs through AirBnB owned by people in those states are already running out of ways to avoid declaring that income).
Not sure what limits you are referring to. We have rented out our place through both Air B&B and VRBO - they both send out 1099's at the end of the Tax Year. I purposely never rented more than 14 days, so we did not have to pay taxes on the income.
 

cdskier

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Not sure what limits you are referring to. We have rented out our place through both Air B&B and VRBO - they both send out 1099's at the end of the Tax Year. I purposely never rented more than 14 days, so we did not have to pay taxes on the income.

No point in me trying to re-word what VRBO already states on their website better than I could:

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