Steamboat Springs Real Estate | Colorado Group Realty Blog

If you haven’t noticed and it’s been hard to miss, numerous articles about Steamboat Springs have appeared in national and local newspapers as well as magazines over the last 24 months.  All of the sudden the media has taken serious notice of Steamboat.  Many of the reasons they are touting to invest in Steamboat have always existed but were a well-kept secret.While many areas of the country as well as the Colorado Front Range have experienced a depressed or flattened market, Steamboat’s market has remained incredibly strong to steady.  Numerous driving forces have contributed to the real estate momentum that Steamboat has enjoyed. Whether it’s been Steamboat’s endearing western/ranching heritage and community, year-round activities, Champagne Powder, affordability for a mountain resort town, the announcement and successful closing of Intrawest’s purchase of the mountain, the Main Street “renaissance” taking place downtown, the transformation and face-lift of the mountain base area, or the fact that Steamboat offers a little more elbow-room that other mountain resort towns each and all have contributed to Steamboat’s desirability and popularity.  People visiting Steamboat like what they see and feel.  Once they experience that warm and fuzzy feeling, the next thing that happens is they want to figure out how they can be a part of it.

Invariably people walk into Steamboat real estate offices every day and say, “I love it here, I want to buy a condo, and I want positive cash-flow”.  We hear it over and over again.  While purchasing a condo can be a great option and starting place, there are a few things every buyer should know and understand before they make that purchase.  A little homework is always a great idea.

With over 100 condominium projects in town, the options are endless.  Price, location and amenities are always at the top of a buyer’s list.  Price will obviously increase with closer proximity to the mountain as well as the number of amenities a complex offers.  At the same time new developments taking place downtown are offering high-end condos/lofts/townhomes for those who prefer the urban experience.  That’s a personal choice a buyer will have to make.  Also depending on a buyer’s needs, there are whole-ownership and fractional condo units available.  Once you have narrowed your selection down, the potential buyer should become familiar with the Home Owners Association’s declarations, covenants, by-laws, rules and regulations, and the financial responsibility such as dues and any special assessments.  Again the more amenities a complex offers, it is highly likely the HOA dues will increase. Each HOA is different and they dictate how things will operate within a condominium complex.  Another place to visit is the county assessor’s office to learn the yearly tax amount for that unit.

Another consideration is whether the buyer intends to place the unit with a management company as well as enjoy it for personal use.    There are numerous top-notch management companies in town.  A general rule of thumb is that they will charge 45-50% of gross rental income to manage the unit.  Obviously the gross rental income is impacted by the number of owner-use days during the year as well as owner-use days at peak weeks.  Buyers are often taken aback when they hear this. However when they understand what a management company is required to do to effectively market that unit for rental, they realize that the duties are countless and daunting.  A management company has to be set-up to offer marketing, an internet website, booking, processing of credit cards, check-in facilities, housekeeping supplies, and employ staff for booking, check-in, housekeeping, and shuttle bus drivers to name a few. 

Be aware that HOAs often have exclusive management agreements with a particular management company.  Before a buyer decides to self-manage from afar or select a management company, they need to check with what is stipulated in the HOA documents.  Management companies also rate the units according to conditions and appearance such as furnishings and updating.  The rating system varies from management company to management company.  One company may use the 1 to 4-star rating while another uses the A to D-rating.  Essentially they represent the same idea.  The higher rated units are usually preferred and rented first or more often.  The idea being that it reflects well on that particular management company, as well as gives other owners in the complex who have units in the rental pool an incentive to keep their units updated and appealing.  So in actuality, it is a win-win situation for everyone.  So again if you have thoughts of purchasing a condo and placing it with a management company, check to see how it is currently rated and take that into consideration in regard to cost for updating and having it rated higher with the management company.

Buyers need to understand that their purchase of a condo and placing it in the rental pool may not produce a plethora of positive cash-flow.  That is not a realistic expectation and if that were the case every Realtor in town would own numerous condo units.  BUT that absolutely does not mean that buying/investing in a condo is not a sound financial decision.  A buyer needs to look at their purchase in regard to short-term vs. long-term.  Looking at it short-term…should a buyer decide to place their condo with a management company, their HOA dues, taxes, and management fee may very well be covered by the rental income but possibly no more.  However when evaluating the long-term benefits of their purchase, a buyer will realize the tax benefit, the enjoyment of personal use, and the potential of the strong appreciation in value that condos have experienced in the recent past.  If a buyer of a condo has no intentions of placing it with a management company, it is still a sound idea for the buyer to have a general working knowledge of how the management company operates within the complex and how some of their neighbors might be managing their investment.

Multitudes of buyers are investing in condos in Steamboat.  A condo suits buyers’ needs for various reasons.  It might be the entry-level buyer making a sound investment decision to purchase while they decide whether to make Steamboat their permanent home and at the same time build equity. It might be the baby-boomer wanting that tangible investment that they can personally enjoy while watching their investment appreciate. Or it might be the retiree who has simply decided to purchase their retirement home.  If you’ve done any homework, you’ll find that Steamboat is still an incredible place to invest and offers the comparable life-style that Park City, Sun Valley, Telluride, Aspen, and Vail offer yet is far more affordable.

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