Real Estate Moguls

Maneuver the ski resort property market.

Maneuver the ski resort property market-and avoid the bumps- with this how-to guide to buying and renting a mountain home.

The condominium complex at the base of Peak 8 in Breckenridge, CO, isn't the fanciest on the mountain, nor is it the newest. But the '70s-era building does adhere to the cardinal rule of real estate: It's in a fantastic location, so close to the slopes that skis are the most logical mode of transportation out the front door.

After five years of renting in the complex for ski vacations, Bruce and Sally Patton decided that they, too, deserved a ski lift in their front yard. In 2004, the St. Louis residents joined with Sally's brother and sister-in-law to purchase a two-bedroom condo for $435,000.

Soon, the renters became the landlords, when the Pattons decided that renting the condo to vacationers would help make their investment feasible. Four years later, the condo rents 80 to 100 days per year, netting $15,000-about half of its annual expenses. "Financially, it's nice to cut into our costs," Patton says.

Across the country, many ski-town property owners have reached the same conclusion: Renting, done properly, is a viable way to make a mountain getaway a reality. Ken Libby, owner of Stowe Realty in Vermont, figures 90% of his second-home buyers plan to rent the home part time. "It's the norm," Libby says. "We're seeing a very strong rental market."

THE RENTAL EQUATION

How much an investment property will earn as a rental relies on location, the type of property and how it's marketed.

In Breckenridge, property situated downtown, on the mountain or on a bus route is "pretty much a slam dunk" to attract renters, says John Pfeiffer, a broker with Slifer Smith & Frampton Real Estate.

But how much that property earns varies in proportion to its quality. According to Pfeiffer, a typical two-bedroom condo in a prime location sells for about $800,000 and grosses $28,000 to $40,000, renting an average of 125 days annually. Meanwhile, a $1.4 million luxury two-bedroom condo might rent for 175 days per year and gross around $50,000.

Revenue also depends on whether the property is rented short-term-for a few nights or weeks at a time-or seasonally. Short-term rentals have the greatest earning potential, but also pose a greater risk, says Walter Findeisen, owner of ERA Mountain Real Estate in Killington, VT.

A $350,000, three-bedroom house in Killington could net about $16,000 for a seasonal rental from November to April, or about $18,000 rented on a short-term basis, Findeisen says. However, if the snow is poor, a locked-in seasonal rate makes for guaranteed income.

Though realtors can help buyers determine how much a specific property will earn as a rental, Libby offers a general rule of thumb: Expect vacation rentals to cover 100% of expenses such as taxes, maintenance and condo fees, plus three to four months of mortgage payments.

MAXIMIZING PROFITS

From his home in Kansas City, MO, Jeff Owsley can't do much if a pipe bursts in his one-bedroom condo in Copper Mountain, CO, or if his renters have a 2am complaint. That's why, for Owsley, it's worth paying a property management company 50% of his condo's rental income to take over its upkeep and rental booking.

Despite the steep management commission, owners like Owsley can actually net greater profits using a company that has the resources to get the property rented out frequently. "The management companies do a lot more than people realize," Pfeiff er says.

If 50% off the top is too diffi cult to stomach, owners can pay less by getting more involved. Heather Coburn Snyder, who lives in Pennsylvania and owns a four-bedroom home in Stowe, maintains a website for her home's rental bookings. If Snyder attracts her own renter, she pays a real estate offi ce just 15% to 17% to collect the rental fees and security deposit.

Other companies, like Rentals By Owner (which has branches in about a dozen Western ski towns), charge around 18% strictly to advertise the property. The company keeps Denver resident Eileen Hyatt's five-bedroom duplex in Vail filled about 15 weeks per year. Though Hyatt prefers to care for the property herself, she says she is too busy to find her own renters.

"Most owners don't have that kind of time on their hands," says Lisa Talcott, Rentals By Owner's general manger.

Homeowners can make renters' stays more pleasant by forging relationships via email, as Hyatt does, and compiling a book with information about the house and surrounding area, as Snyder recommends.

"It's a business," Hyatt says. "You have to look at your rental guest as your guest, and treat them as a customer just as you would in any other business."

MARKET VALUES

Considering an investment in mountain property? See how much these recently sold homes went for-and how much they'll earn.

	STOWE, VT Broker: Peggy Smith, Coldwell Banker Carlson Real Estate Property: Three-bedroom farmhouse Features: Fully remodeled 1850 home with hot-tub room Sale price: $568,000 Estimated rental period: Five months, November to April Estimated rental income: $15,000 to $18,000
	BRECKENRIDGE, CO Broker: John Pfeiffer, Slifer Smith & Frampton Real Estate Property: Three-bedroom townhouse Features: Ski-in/ski-out; one block from Main Street Sale price: $900,000 Estimated rental period: 100 days Estimated rental income: $42,000
	VAIL, CO Broker: Tracy Bossow, Prudential Colorado Properties Property: Three-bedroom condo in The Arrabelle at Vail Square Features: Ski-in/ski-out, new luxury construction Sale price: $2,595,000 Estimated rental period: more than 100 days Estimated rental income: $80,000