By Susana
A client of mine receives our automatic listing alerts. She’s hoping to buy a two-bedroom condominium in the $200,000 – $300,000 price range close to the Steamboat Springs ski area, and one came up that she expressed interest in. She wanted to know what the HOA fee was, as well as the average rental income for 2009.
Built in 1974, the 834 square foot condominium has HOA fees of $1016 quarterly. These are low, especially considering the HOA pays for the gas heat, cable, high-speed internet, water, sewer, shuttle service, landscaping, insurance, snow plowing and shoveling, trash, building maintenance, capital reserves and the clubhouse with its two hot tubs: one indoors and one out.
Why it’s so low is that a communications company pays the homewoner’s association about $20,000 a year to keep a small tower on the buildings’ roof. That income helps out considerably, especially since it is a small, one-building complex.
Rental Income? Well, in 2009 the Gross Revenue average for their two-bedroom units was approximately $10,576.
This amount is before the management company takes its split – which for this particular complex is 42% to the management company, 58% to the homeowner. So, had my client been the owner she would have made roughly $6134 in 2009, which would’ve paid for her annual HOA fees ($1016 x 4 quarters = $4064), her property taxes ($721.72), and probably her electric bill ($1348.28), which is the only other bill she’d have.
Still, the management company told me this is quite a change from the heyday of 2007, when the same unit would have had a Gross Revenue roughly in the $30,000s. A few things have happened since 2007: the recession has brought businesses down by 40-50%, and there are a number of new luxury condominiums which have come on the market to compete for the fewer visitors.
We advise clients to buy vacation homes for their personal enjoyment. And they can also still be beneficial for tax purposes should their accountant so advise. Cash flow and appreciation, on the owther hand, may or may not happen depending on one’s lenght of time in the market, amount of money down, etc.
Talk to your accountant. Talk to your loved ones – those that will likewise be enjoying the vacation home and their vacation time there with you. And then talk to us, and we’ll go out of our way to help you find the best property for you, at the best price.
