I fully believe that real estate is an excellent form of investing and can provide long-term generational wealth. My wife and I own short- and long-term rentals and feel proud to help others enter into real estate investing for their family or to grow their investment portfolios. Here are some tips on investing in the mountains.

Short-term rentals

Short-term rentals are all the rave and can be very lucrative, but buying in the right location is key.

What do you want?

The first step in buying a short-term rental (STR) is to determine what you want.

• Do you want a ski cabin? Or a mountain chalet? Do you want to focus on winter or summer activities? Do you to be remote or near a mountain town? Different areas of Colorado lead to different perks of owning an investment rental - they also bring different rental cliental. Knowing what you want, where you want it, and how you want to use it is the key step in having a successful rental.

• Do you want to use it for friends and family and rent it every so often? Or do you want to rent it 90% of the year and use it for 1 week a year? We use our house as a rental and it covers 80% of the costs but then we get to use the house as a family with cousins and friends - that cost is worth it to us. But to you, it may be different!

• Do you want to manage it yourself or pay someone to do the rentals?

Before You Buy

Once you find your perfect location and house, you will want to determine what the rules are for renting in that county or town.

1. Every county has their own rules and regulations so it is essential (read: absolutely necessary) that we understand together the limitations placed by the county BEFORE you even begin to look at properties as it may directly influence your investing strategy. Check out the rules for each of these counties in the foothills:

• Jefferson County short term rentals

• Gilpin County short term rentals

• Park County short term rentals

• Clear Creek County short term rentals

• Boulder County short term rentals

2. Once you determine if the county allows, you then need to determine if this potential property has an HOA and if it does, do they allow short-term rentals? County rules cannot trump local HOA rules.

3. Once those two boxes are checked you will want to run the numbers. Look on AirBnB and find comparable homes that are currently renting in that area and see how much money they potentially make in a week, month or year. Compare that estimated cost to the estimated cost of your new house: mortgage, insurance, taxes, fix ups. Do these numbers work? Do you want it to cash-flow and profit, or do you just want some rentals to cover some costs for the year while you also get to use it?

Once You Buy

Ok, all of those issues check out and you buy your dream property. Before you begin renting your property, you must apply for (and pay and receive) a permit with your county or city. Heads up: the permitting process can take a month or a year. It can be lengthy (and, unfortunately, messy).

• The permit process will have you fill out legal and tax information. The good thing about going through VRBO or AirBnB is that they pay taxes for you. If you rent it yourself, you will need to arrange how to pay county and state taxes.

• You will need someone local to be accountable for your property such as a management company, a cleaner, a family member or neighbor.

• The county may have you upgrade or improve your property based on their regulations.

Once you have your permit

• Will you hire a management company? Will you run it yourself?

• Where will you find a cleaner? Go with a big company or someone local?

• Will you use VRBO or AirBnB or booking.com or another? You will need some company to help with your bookings and paying taxes (unless you want to do all of that on your own).

Let Me Help!

We’ve done all of this for our rental in Buena Vista, Colorado. We’ve learned a lot along the way and have some hiccups with the county, our HOA and mice. No need to try to do this all on your own - let me help you run numbers and determine if investing in the mountains is for you!

Long-term rentals

Having affordable housing in the mountains for local residents to live is critical and an issue that is continuing to grow in many mountain towns that are dependent on tourism. To buy a property and provide affordable living options would be a win for the county and the local investor.

However, with high mortgage rates and higher-than-average home prices in mountain areas, finding the right property is a challenge

Run your numbers

When looking at a property to invest in and rent, here’s what you should consider:

• Mortgage (if applicable)

• Taxes

• Insurance

• Any one-time rehab costs

• Ongoing repairs and maintenance allocation

• Vacancy allocation

• Landscaping/yard maintenance and snowplowing

• Hot tub maintenance?

We own several long-term rentals that are a slow-growth investment that will pay off later in life. We use a management company and are very hands-off. It’s possible, if you’re patient!

Building on vacant land

• Buying land and constructing a new build can be a way to jumpstart an investment.

• Permitting in the various counties in the foothills can be a real burden.

• Estimates are around 18 months to 3 years to go from raw land to a new building.

• What is your end goal for building? To live in it? To sell it? To rent it? To use as a short- or long-term rental?

• If building to use as a short-term rental, make sure you are able to get a short-term permit in the county you are building (see below).

• Run your numbers: When running your numbers, remember you need to factor in whether or not your property needs:

  • A water well?

  • A septic system?

  • Propane gas and/or electricity?

  • Road access and/or driveway?

1031 Exchanges

Once you own real estate investments and you’re doing well enough that you are ready to sell a property to upgrade into a larger or more profitable asset, you will want to save on taxes. A 1031 exchange, based on the IRS code, allows you to sell your investment property, reinvest the proceeds in a same or bigger property, and defer paying taxes on that sale. Read more about the 1031 Exchange process.

Let’s Get to Work

Investing in the mountains should be fun (and profitable). Let me help you run the numbers and figure out what best works for your investment vision.