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Whether it's a two-bedroom, two-bath starter condominium on the bus route for $500,000 or a ski village
residence for $5,000,000, Vail, Colorado real estate price points usually boil down to two essential
financial elements: a specified down payment (typically 20-30%) and an annual "cost to carry" after
possible short term rental income offsets. (Sorry, there is no such thing as "breakeven" or "cash flow
neutral" properties without large down payments.)
Therefore, in an attempt to illustrate the magnitude of these two financial variables (at differing
price points in different geographic locations), we offer the following menu of category alternatives.
In order to help buyers understand the differences of "price per square foot" relationships based upon
proximity to the ski slopes and size of structure, we have divided the Upper Vail Valley into four (4)
distinct appellations. Please keep in mind, these are case studies
and NOT necessarily available "for sale" properties. These best-of-breed examples are intended only as
financial guidelines illustrating the effects of a maximum leverage purchase model in conjunction with
short-term rental income offsets, where applicable.
Although our examples are financial in nature, we can compare qualitative issues in an easy-to-use spreadsheet format.
To our knowledge, Vail Property Brokerage is the only local luxury Vail real estate agent offering this unique approach
towards the decision making process. So please give us a call for your own customized property report.
A thorough understanding of the marketplace and comprehensive financial analyses is what sets a "smart" Vail,
Colorado real estate decision apart from the average.
2) Price-per-square foot which equalizes the dilemma of varying sizes
3) The monthly "cost of carry" as measured by negative cash flow
Shopping and pricing property without some form of spreadsheet analysis is an almost impossible task. Not all equally priced properties are the same! Each and every home has its unique personality reflecting location, floor plan, square footage, cost of maintenance, property management and an ability to generate short term rental income (or lack thereof) from vacation home rentals in the Vail Valley. Therefore, net income is the great leveler to this varied and bumpy playing field. Income reflects all of the property variables – good or bad – as represented by the market's willingness to pay set prices for use during high tourist seasons. Using
these three indicators of value, properties which intuitively offer the best price point value (in relation to
available inventory), have the lowest cost per square foot and suffer the least amount of negative cash flow,
typically tend to qualify as "best buy" recommendations. To find properties that
are truly worthy of serious consideration, our spreadsheet analyses will distill an array of variables into a
simple-to-use format where you can quickly identify the players in the field. For the purpose of determining true
market value, properties that make the "short list" are then compared to past sales records. Additionally,
sellers are well advised to utilize this methodology when listing property. Packaging a "to be sold" home from the
buyer's perspective will greatly accelerate the sale; eliminating pricing errors and presentation flaws which
oftentimes prevent sellers from maximizing their financial goals and objectives. If
we have intrigued you with our unique approach towards the buying and selling of Beaver Creek and Vail, Colorado real
estate, please give us a call. As the Vail Valley's only real estate consulting and advisory service company we offer
unbiased counsel and information designed to put you in control of the overall process.
| Vail / Lionshead – Village Center Condos | |||||||||||||||||||||||||||||||||||
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Cost of Ownership
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DESCRIPTION:
A newly remodeled residence with magnificent appointments,in the heart of Vail Village overlooking Gore Creek and ski slope views. |
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Projected Return on Down Payment |
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| Purchase Price | $ | 1,695,000 | ||||
| Downpayment | $ | 508,500 | ||||
| Investment Timeline (Years) | 10 | |||||
| Compound Rate of Appreciation | 3% | 5% | 8% | |||
| Projected Selling Price | $ | 2,277,938 | $ | 2,760,976 | $ | 3,659,378 |
| Selling Expenses @7% | $ | (159,456) | $ | (193,268) | $ | (256,156) |
| Remaining Loan Balance | $ | (972,930) | $ | (972,930) | $ | (972,930) |
| Anticipated Improvements | $ | (200,000) | $ | (200,000) | $ | (200,000) |
| Negative Cash Flow Reimbursement | $ | (888,238) | $ | (888,238) | $ | (888,238) |
| Net Rental Income @ 3% Growth Rate | $ | 548,005 | $ | 548,005 | $ | 548,005 |
| Net Resale Proceeds | $ | 605,319 | $ | 1,054,545 | $ | 1,890,058 |
| Net Resale Proceeds / Year (Numerator) | $ | 60,532 | $ | 105,454 | $ | 189,006 |
| Weighted Value of Invested Capital (Denominator) | $ | 882,619 | $ | 882,619 | $ | 882,619 |
| Average Return / Year(1) | 7% | 12% | 21% | |||
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Notes: Average compounded appreciation rate has been 5.25% since 1991.
(1) Net Resale Proceeds divided by Investment Timeline (Years) Time value of money (IRR) is not calculated but the afore described weighted amount of Invested Capital is utilized for the purpose of recognizing the different time intervals for the three stated capital call items. These projections are provided for informational reasons only. Vail Property Brokerage does not guarantee nor imply that the illustrated outcome will produce the stated return calculation(s). |
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Click on any of the four following areas/categories to view three representative properties at
escalating price points with cost of ownership financial calculations.
escalating price points with cost of ownership financial calculations.
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Slope-side – The Tyrolean-themed village that started it all
offers pedestrian access to the ski mountain, restaurants and shopping. Lionshead, which provides easy
access to the Eagle Bahn Gondola, has a history of lower real estate prices than Vail but is now
coming on strong as a result of massive re-investment in the area. Cascade Village – the most
under rated and least understood of the three villages – offers walk-to-the-lift access in
combination with Vail Cascade Hotel and Aria Spa amenities at two-thirds the price. |
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East to West Vail – At half the cost of ski village pricing, these
10-plus "micro" neighborhoods offer more space for less money in relaxed residential settings just
10 minutes from the slopes. Typically, there are more properties to choose from and bus service is generally
available. |
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Beaver Creek – The last major ski resort to be developed in the U.S.
(along with Deer Valley, Utah), Beaver Creek is a master planned community featuring true ski/in ski/out access.
These properties cost 40% less with newer physical improvements than in Vail or Lionshead. |
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Super-Premium Homes – Some of the most architecturally
significant homes for sale within the industry can be found here in Vail, Colorado and other nearby exclusive
residential enclaves. When it comes to discovering the best of mountain resort living, these magnificent
homes demonstrate both the diversity and selection available for discriminating buyers. |
Typically, "value" is measured in three ways:
1) Price point as compared to the overall field2) Price-per-square foot which equalizes the dilemma of varying sizes
3) The monthly "cost of carry" as measured by negative cash flow
Shopping and pricing property without some form of spreadsheet analysis is an almost impossible task. Not all equally priced properties are the same! Each and every home has its unique personality reflecting location, floor plan, square footage, cost of maintenance, property management and an ability to generate short term rental income (or lack thereof) from vacation home rentals in the Vail Valley. Therefore, net income is the great leveler to this varied and bumpy playing field. Income reflects all of the property variables – good or bad – as represented by the market's willingness to pay set prices for use during high tourist seasons.
