I've recently written a white paper on what buyers need to know about short term rentals in the Crested Butte area.
Here it is: 7 Things buyers need to know about short term rentals.
The most important aspects of maximizing the return on your investments are buying for the right price, getting as many rental days as possible, and maximizing the price of those rental days.
Most vacation property owners also use the property for their own enjoyment. It’s important to consider how often and when you use the property, as you will be taking the property out of the rental pool during those days. If you plan on being in the property all summer, you will be losing the most valuable days for rental, thus lessening the return on the property. You might want to consider using the property during less “valuable days” such as in June, September and October, leaving the key months of July and August and the week of the New Year available for rentals.
Getting the highest price per rental night is also very important. I tend to look at similar properties on online listings to gauge what prices people can get for similar properties. Having the lowest priced 3 bedroom property can increase the number of days you rent it for, maximizing your return. If you plan on merely subsidizing your vacation home with a few rentals, that may result in your choosing to rent it for a higher price less often. Do the math and multiply the number of nights rented times the price at which you can rent. Spreadsheets go a long way towards informing you of rental income you can expect.
HOA fees are an important consideration as they are monthly expenses that will likely never go down, but may go up. During your purchase, it’s important to look at the HOA documents and budgets to make sure you are aware if there are any upcoming assessments or large capital projects. Not all properties have HOAs, but most condos do. Homes in the towns of Crested Butte and Mt Crested Butte don’t have HOA fees, but there are HOA fees in CB South and Skyland that aren’t very high.
Buying at the right price – that’s where a knowledgeable real estate professional can help. They know the market and the comps, and can help you negotiate the best buying price possible.
2 – Location
Location is often cited as the most important component in deciding which property to purchase. This is even more important when considering a rental property. In the Crested Butte area, there are different rules about short term rentals in various locations, so it’s important to research all of the facts. For example, the Red Mountain Ranch, Glacier Lily, Silver Sage, Rivergreen and Moon Ridge subdivisions have restrictions on short term rentals, usually restricted to 30 day minimum rental periods.
The town of Crested Butte is developing its own restrictions as well. Currently the ordinance that has been passed incorporates the following restrictions:
The current zoning restrictions will remain
There will be a cost for a rental license, as yet undetermined
The license will be for a period of 2 years and there will be property inspections every other year
Rental of a portion of your property requires a representative staying on site
An STR license doesn't transfer in a sale of the property
All neighbors within 100 feet of the property must be notified of the STR license
A contact person must be available to respond to an issue at the property within 1 hour
There is a maximum number of people (10) who may occupy the rental, unless issued a variance
There is a 30% cap on the number of short term rental licenses in the Verzuh area, any more will be put on a waiting list
Primary home owners, except for deed restricted areas, can short term rent for 60 days/year
3 – Taxes
Taxes charged for short term rentals also vary due to the municipality. The towns of Crested Butte and Mt Crested Butte charge a fee for a rental license, and taxes are an additional 13.5% (paid by the renter).
4 – Marketing
How do you want to market your rental property? Most people use websites like Homeaway, Airbnb and Vacasa. You want to make your listing on these websites stand out with great pictures and videos, some details about the location and even personal facts about the property to give renters a more emotional feel for it.
5- Property Management
The 2 main considerations here are: do you want to do it yourself or have a management company do it for you? Property management fees vary, as does the list of things they do for you. We have a number of property managers in town, and there are also national companies that do the job as well. Both tend to use websites to market the property. I would suggest contacting both local and national managers with a list of what you would like them to do and then compare prices and the fit. Some people choose to advertise their property on the various websites themselves, then arrange for local cleaners and a lockbox for access to the property. Deciding how to manage this part of the equation is very individual to your accessibility, desire to do it yourself and level of service you wish to offer. There are going to be questions from renters periodically (like what is the Wifi password?) and emergencies, so consider your desire of how hands on you want the process to be.
6- Presentation
Taking great photos is very important in giving people a great impression of your property. Outside amenities and views should be highlighted as well. It often pays to have professional photos done in order to best portray the property. Video is another great tool, and drone photography is becoming much more common too. Eradicating clutter and personal items go a long way in helping the renters feel more at home. However, DVDs, games and even a deck of cards are great things to have around.
7 – Getting the property ready
Getting the property ready for rental means having basic necessities on hand for your renters. Imagine coming off a delayed flight when they have lost your luggage. You get into town and every store is closed. It’s very welcoming to have basics on hand for guests under those circumstances. Besides towels and linens, you may want to stock toiletries (soap, shampoo and conditioner, a hair dryer) laundry detergent, plenty of kitchen items (dishes, silverware, glasses, utensils, pots and pans, cleaning supplies) bedding, TV and cable/satellite/Apple tv. If this property also doubles as a vacation home for you, it’s nice to have a lock off area, which can be a closet and/or storage area. That way you can keep your own linens and towels apart from the renters’ and not have to restock your own items all of the time.
Those are the 7 most important things to consider in an investment property in Crested Butte, Colorado.
Here it is: 7 Things buyers need to know about short term rentals.
- Maximizing return
- Location
- Taxes
- Marketing
- Property Management
- Presentation of property
- Getting property ready
The most important aspects of maximizing the return on your investments are buying for the right price, getting as many rental days as possible, and maximizing the price of those rental days.
Most vacation property owners also use the property for their own enjoyment. It’s important to consider how often and when you use the property, as you will be taking the property out of the rental pool during those days. If you plan on being in the property all summer, you will be losing the most valuable days for rental, thus lessening the return on the property. You might want to consider using the property during less “valuable days” such as in June, September and October, leaving the key months of July and August and the week of the New Year available for rentals.
Getting the highest price per rental night is also very important. I tend to look at similar properties on online listings to gauge what prices people can get for similar properties. Having the lowest priced 3 bedroom property can increase the number of days you rent it for, maximizing your return. If you plan on merely subsidizing your vacation home with a few rentals, that may result in your choosing to rent it for a higher price less often. Do the math and multiply the number of nights rented times the price at which you can rent. Spreadsheets go a long way towards informing you of rental income you can expect.
HOA fees are an important consideration as they are monthly expenses that will likely never go down, but may go up. During your purchase, it’s important to look at the HOA documents and budgets to make sure you are aware if there are any upcoming assessments or large capital projects. Not all properties have HOAs, but most condos do. Homes in the towns of Crested Butte and Mt Crested Butte don’t have HOA fees, but there are HOA fees in CB South and Skyland that aren’t very high.
Buying at the right price – that’s where a knowledgeable real estate professional can help. They know the market and the comps, and can help you negotiate the best buying price possible.
2 – Location
Location is often cited as the most important component in deciding which property to purchase. This is even more important when considering a rental property. In the Crested Butte area, there are different rules about short term rentals in various locations, so it’s important to research all of the facts. For example, the Red Mountain Ranch, Glacier Lily, Silver Sage, Rivergreen and Moon Ridge subdivisions have restrictions on short term rentals, usually restricted to 30 day minimum rental periods.
The town of Crested Butte is developing its own restrictions as well. Currently the ordinance that has been passed incorporates the following restrictions:
The current zoning restrictions will remain
There will be a cost for a rental license, as yet undetermined
The license will be for a period of 2 years and there will be property inspections every other year
Rental of a portion of your property requires a representative staying on site
An STR license doesn't transfer in a sale of the property
All neighbors within 100 feet of the property must be notified of the STR license
A contact person must be available to respond to an issue at the property within 1 hour
There is a maximum number of people (10) who may occupy the rental, unless issued a variance
There is a 30% cap on the number of short term rental licenses in the Verzuh area, any more will be put on a waiting list
Primary home owners, except for deed restricted areas, can short term rent for 60 days/year
3 – Taxes
Taxes charged for short term rentals also vary due to the municipality. The towns of Crested Butte and Mt Crested Butte charge a fee for a rental license, and taxes are an additional 13.5% (paid by the renter).
4 – Marketing
How do you want to market your rental property? Most people use websites like Homeaway, Airbnb and Vacasa. You want to make your listing on these websites stand out with great pictures and videos, some details about the location and even personal facts about the property to give renters a more emotional feel for it.
5- Property Management
The 2 main considerations here are: do you want to do it yourself or have a management company do it for you? Property management fees vary, as does the list of things they do for you. We have a number of property managers in town, and there are also national companies that do the job as well. Both tend to use websites to market the property. I would suggest contacting both local and national managers with a list of what you would like them to do and then compare prices and the fit. Some people choose to advertise their property on the various websites themselves, then arrange for local cleaners and a lockbox for access to the property. Deciding how to manage this part of the equation is very individual to your accessibility, desire to do it yourself and level of service you wish to offer. There are going to be questions from renters periodically (like what is the Wifi password?) and emergencies, so consider your desire of how hands on you want the process to be.
6- Presentation
Taking great photos is very important in giving people a great impression of your property. Outside amenities and views should be highlighted as well. It often pays to have professional photos done in order to best portray the property. Video is another great tool, and drone photography is becoming much more common too. Eradicating clutter and personal items go a long way in helping the renters feel more at home. However, DVDs, games and even a deck of cards are great things to have around.
7 – Getting the property ready
Getting the property ready for rental means having basic necessities on hand for your renters. Imagine coming off a delayed flight when they have lost your luggage. You get into town and every store is closed. It’s very welcoming to have basics on hand for guests under those circumstances. Besides towels and linens, you may want to stock toiletries (soap, shampoo and conditioner, a hair dryer) laundry detergent, plenty of kitchen items (dishes, silverware, glasses, utensils, pots and pans, cleaning supplies) bedding, TV and cable/satellite/Apple tv. If this property also doubles as a vacation home for you, it’s nice to have a lock off area, which can be a closet and/or storage area. That way you can keep your own linens and towels apart from the renters’ and not have to restock your own items all of the time.
Those are the 7 most important things to consider in an investment property in Crested Butte, Colorado.
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