When you think about luxury communities near top U.S. ski destinations, what comes to mind? For many people, names like Telluride, Breckenridge, Big Sky, and Park City are at the top of the list. But do ski properties make good investments? Today, we’ll discuss the pros and cons of investing in ski properties. Is it worth it?
Pros of Investing in Luxury Ski Properties
Ski resorts offer investors a unique opportunity. For starters, this is a luxury market, and it’s not just a luxury market. It’s a high-end luxury market. People who buy ski resorts are often buying their second home, and the thought process is typically different than it is for buying a first home.
Before you rush in on a ski property investment, you should decide what you are going to do with the property. You have several options. If it is a fix-and-flip property, you’ll need to make sure your after-repair value will leave you room for a profit. Other options such as renting the home, offering it as a timeshare property, or making it your second home could be just as lucrative in the long-term, but you must decide on your plan. Develop your exit strategy before you enter the investment.
That said, there are some distinct advantages to investing in a ski property. These include:
- The clientele – Since you are dealing with a luxury property, and quite possibly a second home, you will be doing business with people who have a lot of money at their disposal.
- A ready-made market – Ski properties have a built-in market. Not only are they luxury investments, but ski property buyers are in a class by themselves. According to the Mountain Resort Market Outlook by RCLCO Real Estate Advisors, mountain resort sales transactions correspond with the number of skier visits at the resort. If you invest at a popular resort, you’ll be sitting pretty.
- Potential ROI is higher – Because luxury ski properties tend to start in the upper six-figure range, your potential ROI is higher, especially if you invest in a fix-and-flip and buy at a better-than-average LTV.
- Predictable market – Ski resort property markets are more easily predictable than average housing markets. For one thing, it’s seasonal. If you wait to buy at the beginning of ski season, you are too late and will see more competition. Another consideration is the specific geographic location. A more popular resort lends itself to potentially higher transaction values and less time on the market. Another market indicator may be the overall state of the economy.
- The timeshare option – Many winter vacationers do not want to own a property they will only live in for two or three months. A ski property lends itself to timesharing. In fact, there is a solid market for vacation properties that offer fractional opportunities.
In general, there are plenty of upsides to investing in luxury ski properties, but there are also pitfalls.
The Cons of Investing in Ski Properties
One downside to investing in high-end ski properties is property taxes. Higher values homes come with bigger tax burdens. If you are a buy-and-hold investor, prepare to pay a lot of real estate taxes. Other downsides include:
- Property maintenance – If you own the vacation property, you are responsible for the upkeep. If you don’t live near the ski property, that can be a burden. You’ll need to hire someone you can trust to keep an eye on the property.
- Association fees – Many ski resort properties are a part of co-ops, or they are condominiums. If you invest in these properties, expect to pay association dues.
- Risky investment – High-end luxury vacation properties are risky investments. All sorts of things can go wrong. And if you lose on these investments, you could lose a lot of money. The key is to buy at the right place in the right location, and at the right time. Remember, develop your exit plan before you enter the investment.
Ski properties are great opportunities for serious investors if they have a solid business plan. Just make sure it’s solid before getting started.
Here are some properties in Park City that have been funded by Sharestates
- Loan Amount: $2,562,000
- Purchase Price: $2,400,000
- Property Type: Residential
- LTV: 80%
- LTC: 80%
- ARV: 58%
- Loan Amount: $2,103,000
- Purchase Price: $900,000
- Property Type: Residential
- LTV: 80%
- LTC: 73%
- ARV: 64%
To look at more real estate properties that Shareshares has funded or to inquire about funding your next project click below