blog: Ski condo ownership for proft?
Vail CO, Colorado
A nice 2bd/2ba condo in East Vail, near the Town of Vail bus rents for almost $500 a night during Christmas time. With that kind of rental income it seems that one could purchase a condo, rent it out, and make money.
The truth is that the under closer examination, that is not the case. First of all, most of the year you won’t get 500 dollars a night in rental income. A condo in good shape in East Vail can expect to gross about 30,000 dollars in a year. This number will vary a lot based on the unit itself, owner usage of the unit, and of course snow conditions.
Expenses on a hypothetical condo will include, mortgage, home owners association dues, utilities, and taxes. The 30,000 that comes in from rental income will have to be split with a short term property management company, typically this service costs 40% of the gross. The grid below shows a breakdown of how these typical expenses might stack up against typical income. Note that it does not include any utility bills.
Property East Vail Condo
Bedrooms + Bath 2 BD/2 BA
List Price 550,000
Approximate Square Footage* 1,190
Downpayment ( 20% ) 110,000
Mortgage Pymnt @ 6% (26,400)
Association Dues (3,600)
Total Annual Cost (31,200)
Projected Net Rental Income 18,000
Net Annual Income/(Expense) (13,200)
Monthly Income/(Expense) (1,100)
Despite a gross rental income of 30,000 dollars this hypothetical unit still loses 1100 dollars a month, certainly not a money maker.
A much larger down payment (around 60%) can result in a property like this breaking even. Given other investment alternatives this may not be the best use of such a large sum of cash.
Mark Conlin can be reached at firstname.lastname@example.org or (970) 367-1426.