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What are the different style properties available to buy?
  • Single Family Home- You own the entire home and the land and you are fully responsible for any repairs and maintenance to the property. You still may be constrained to architectural guidelines by the subdivision or the town.
  • Townhome- You own all vertical space, generally you share a common side(s) wall with a neighbor. Usually, you are part of a Homeowners Association.
  • Condo- You can be surrounded by someone on your side, below and/or above you. Again, you are part of a Homeowners Association.
  • Duplex- Almost like a home, but you only own ½ the property and generally share a common wall with the other owner.
What is the Association Fee all about and why does it vary so much by project?
If you are part of an Association (usually condo or townhomes) you have to pay an Association Fee for shared expenses to the project such as (trash pick-up, common area insurance, property management, snow removal, Cable TV…) Associations self-govern to an extent so they can set their own fees within reason. Some associations may have higher fees as heat is included in their fees (as they would have a common boiler) while another association does not have heat included as individual units are separately metered and have their own water heater. Also, some associations are better at saving gradually for future BIG repairs (roof, siding…) while others do not make much of an effort to save for a Replacement Reserve. This is something you would want to further look into and discuss with the Property Management company or a Board Member. Just because an association fee is lower than a comparable property, doesn’t always make it better, as the complex with the lower fee may not be budgeting as well as they should or does not include as much in their fee.
What is a Special Assessment?
This is when a repair or upgrade is needed and the Association does not have enough funds to cover the repair/upgrade, so they need to special assess the membership.
What is this 1% transfer tax?
Most towns in Summit County have a 1% transfer tax. This is another means of collecting funds for local expenses. The 1% transfer tax is based off the sales price of the property. If you are buying a property for $500,000, then the transfer tax is 1% of that or $5,000. In the contract, it is negotiable which party pays for this expense.
I plan to buy a single family home and only use it part-time, any thing I should be aware of?
YES! Pipes freezing in the winter. It is very important that you hire a local company to do security/maintenance checks on your property at regular intervals to make sure there are no complications with your home while you are away. You will also need to hire someone to snowplow as well as someone to remove the snow from your roof and decks. Another problem up here is snow being left on the roof causing Ice Dams which backs up melting water causing it to sit on the roof and eventually go thru the roof causing water damage inside the home. Also, when the snow does slide off, if it slides onto a deck, the snow load may cause the deck to buckle under the weight. For pipe freezing, ask a local company about installing technology that can monitor your inside air temperature (near the water heater) and that will send out a call when the temperature drops below a certain temperature.
I want to short-term rent a property, where do I start?
First you will have to decide whether you will self-manage or hire a property management company that specializes in short-term property management. If you are thinking about self-managing, you should look at www.vrbo.com as well as google Vacation Rentals by owner. You will need to interview a local cleaning company in order to coordinate cleans after guests leave as well as figure out a system to get guests a key. If you are going to go thru a property management company, it is best to meet with a few companies, discuss their fees, what they include and exclude, rental history on similar types of properties and ask to review their contract.
Any tips on looking for a short-term rental property?
Location is always key. We are dominated by a skier clientele. They are typically looking for proximity to the lift and at least some form of hot tub access. Also, big properties that deal with convention business can also have more of a steady year round rental income. Some examples are Beaver Run Resort and The Village At Breckenridge in Breckenridge and the immediate vicinity of the Convention Center in Keystone. Try not to get caught up in how much a property sells for, but how much it will cost you on a monthly basis (big difference). Figure out how much your expected loan will be, association fee, property taxes, utilities… and subtract net income to get a monthly figure. Compare this number to other properties. Believe it or not, sometimes a property that costs more but is a great income producing property will cost you less per month than an average income producing property that was selling for less.
Is the market seasonal in Summit County?
Yes! Typically, a majority of properties sell between mid June and Mid September. Summer is our big season here. You will typically have more inventory on the market in the Summer and more Buyers out and about. Winter is slower due to many properties being in a rental program and the Owners not wanting to list during their peak rental season. Just this year in Frisco, the inventory on the market almost doubled by mid Summer versus the inventory that was on the market in Feb & March.
Is it possible to cash flow a short-term rental property with 20% down?
Assuming you are using a property management company, the answer would be no. Even some of the absolute best rental properties would require ~50% down to break even when you take into account the mortgage, association fee, utilities… being offset by the income produced after the % split with a property management company.
I am buying a condo that has Insurance on the building. My lendor is not requiring any other insurance. Should I get more?
I would if I were you. Typically the Insurance the association provides covers the complex as a whole. If you have a problem that originates in your unit (say a pipe that burst), you may very well be financially responsible for the damage to your unit and any other affected unit. If you are renting, you may want to speak with your Insurance company to make sure you are covered for any liability should a renter have an accident while at your property.
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