Summer is a popular season for buying a vacation home in the Colorado Rockies, says Denver-area Realtor Bryan Messick. But, he says, finding the right place requires careful research, good financial planning and smart execution.
Here are some things to consider if you’re in the market for a second home in the mountains — as well as tips to help you rent the place out to help defray your costs.
Can You Afford It?
As an investment, vacation homes can have some downsides, Messick says. You have to pay property taxes, utilities and other ongoing expenses, as well as regular maintenance and repairs (like possible burst pipes during frigid Colorado winters). Vacation homes can also take work to rent out and may see limited appreciation over the years, he says.
Still, if you choose a good location that fits your needs and market trends — and accurately estimate the ongoing costs — you can slowly build equity, diversify your portfolio and create a lasting family treasure, say Justin and Krystal Knott, broker associates based in the area.
“Talk with a mortgage banker to figure out if you can qualify for a second home or investment property,” says Bobby Kurpinsky, a mortgage banker with Peoples Bank. “Second homes require 5 to 10 percent down, while investment properties [may] require 20 percent.” And remember, Kurpinsky adds, second-home interest rates are generally higher than those for primary homes.
Pick a Location
Research Colorado mountain properties at places like Mountain Homes Illustrated, a property listing database, and through local real estate agents. Over time, you’ll likely come across one consistent message: Location is key.
In Colorado, that means proximity to ski areas, trails, hunting, fishing and open spaces, as well as access to restaurants and nightlife.
Want a place close to a ski area? The average listing price in Pitkin County (near Aspen) was more than $2.9 million as of early July, according to a Colorado home price map on Trulia.com. Eagle County, which provides easy access to Vail and Beaver Creek, comes in at more than $1.8 million, and Summit County has an average listing price of more than $630,000, according to Trulia.
Routt County near Steamboat has average listings of more than $691,000 and San Miguel County, where you’ll find the Telluride ski area, comes in at more than $2.1 million, according to Trulia.
For non-skiers, there is Park County (average price more than $304,000) with easy access to the Collegiate Peaks and large national forests, Grand County ($435,000) that backs into Rocky Mountain National Park and Grand Lake, and Gunnison County ($659,000), that offers access to the Black Canyon of the Gunnison and Crested Butte, according to Trulia.
Many homeowners often plan to rent out their second homes through sites like Vacation Rental By Owner (VRBO) and AirBnB. This is a good strategy, Kurpinksy says, but you need to be honest with yourself about how much you can really make off your rental.
“If it’s vacant for a month or two while you’re looking for a renter [or during the off-season], can you affordthe payment on your own?” he says.
If your house is near a ski area, you’ll make most of your money during Christmas and the months of February and March, says Gabriel Olivieri of Mountain Top Exclusive Properties.
Remember, though, that if you use a property manager to take care of your house and find renters, they will typically take 40 percent of all rental revenue, Olivieri adds.
Still, renting is one way to defray the cost and build equity.
“If you can charge more rent than your mortgage payment, apply that extra money toward principal,” Kurpinsky says.
Owning a vacation home in Denver has many perks, you just need to make sure that you’ve done your homework before signing on the dotted line.