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Summit County Colorado Investment Property

One of the most common questions I am asked has to do with the rental income potential of investment property within Summit County Colorado. Below you will find some general investment property guidelines and specific investment property case studies which I hope will begin answer some of these questions.

Investment Property Case Studies

General Short Term Investment Property Guidelines

By "short term" I mean those investment properties being rented to tourists. Any rental agreement involving a lease will be covered under "Long Term Rental Investment Guidelines". I would like to emphasize that these are GENERAL guidelines! Every property type, price range, location, etc. will have variations and the guidelines below are intended only to help you to start your understanding of the investment property market. This information is not intended for decision making purposes. I will help you gather specific information for specific properties for the purpose of making a decision as to the best property for you when the time comes.

  1. The closer a rental investment condo, townhome, or home is to a chair lift, the higher the rental income will be. The reason for this is that the ski season is the peak rental season and people put a premium on convenience. Ski-in/ski-out investment properties out perform those that are within walking distance to the chair lifts. Those within walking distance out perform those that require a shuttle ride. And those on the shuttle route our perform those that are not.

  2. Within a given price range, condos tend to out perform townhomes which in turn out perform homes. This guideline is related to the one above and has to do with proximity to the chair lifts. Another component of this guideline is the onsite amenities like hot tubs, pools, exercise facilities, saunas, steam rooms, tennis courts, conference facilities etc. which are more plentiful with many condo complexes than other property types. A common exception to this guideline includes large high end homes, especially if they have ski-in/ski-out access.

  3. For a GOOD investment property, gross rental income is approximately 10% of the purchase price. While less common than prior to 9/11 and the recession, there are investment properties which produce a gross rental income of 10%, or better, of their purchase price. I repeat, this is a general guideline! You should request and I will provide specific rental histories for specific properties. Also, past rental performance does not guarantee future rental performance. Also, rental income numbers are on the increase once again.

  4. Rental management companies take about 40% of gross rental income. This is another general guideline and every rental management company has different fees. If an investment property has a front desk or if it is located in Keystone, the percentage paid to the rental management company may very well be higher. Also, companies that charge 40% or less, may have "deep cleaning" fees every 3 or 6 months and a whole range of various other charges such as kitchenware and/or towel and linen rental. Prior to buying any investment property, make sure you completely understand the rental management agreement.

  5. Of course you can use your investment property! Most rental management companies require a certain amount of notice if you would like to not have your property rented and use it yourself. 30 or 45 days is common. But, if your property is not rented, most rental management companies will allow you to block out time at the very last minute as well.

General Long Term Investment Property Guidelines

By "Long Term" I mean any rental scenario which requires a lease, be it for a month, a year, or any other period of time. Again, I would like to emphasize that these are GENERAL guidelines! Every property type, price range, location, etc. will have variations and the guidelines below are intended only to help you to start your understanding of the investment property market. This information is not intended for decision making purposes. I will help you gather specific information for specific properties for the purpose of making a decision as to the best property for you when the time comes.

  1. The lower the price per square foot, the better the property will be as a long term rental investment property. Good long term rental properties are in many ways the exact opposite from good short term rental investment properties. For long term rental properties, the best investments are in those properties that have the most space for the lowest price. This means that they will not be located the most conveniently located.

  2. Rents of $400 to $500 per month per bedroom are common. Although rents will vary greatly from one property to another, following the guideline that the best long term rental income producing properties are those with the lowest price per square foot, $400 to $500 per bedroom is a common monthly rent. More expensive properties may command higher rents, but these rents do not increase proportionally with the price of the investment property.

  3. Most people manage long term rental investment properties themselves. If you would like to have a company collect rents for you, I am sure I can find you one. But, this is so uncommon that I do not have any numbers as to what this service might cost.

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Realtor ® Ted Amenta is an Associate Broker with Resort Brokers

Each office Independently Owned and Operated

 

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