How to get started in buying your first investment home in Breckenridge

Dishon Lutz

09/21/22


There’s no doubt that Breckenridge, Colorado, is truly beautiful. Located at the base of the stunningly scenic Rocky Mountains, there is something to do in every season, from skiing and snowboarding in the winter to hiking and biking in the summer. With the plethora of outdoor adventures available, this is a prime spot for vacationers, whether it’s snow or sunshine they seek.

Thanks to its appeal as a vacation destination, Breckenridge is a great spot to invest in real estate. Dishon Lutz is a leading Summit County agent who is ready to help you make an intelligent investment, every step of the way. Read on for his guide to getting started investing in Breckenridge real estate.

Financial preparation


Breckenridge real estate is desired by many and is quite beautiful, with a backdrop of mountainous scenery. If you intend to use this investment property as a vacation rental, it’s important to be prepared to reach success.

Step one is being financially prepared. It can be easy to get carried away looking at investment property. However, before you get ahead of yourself, you need to figure out what you can reasonably afford.

Talk to your bank or a local credit union, and get pre-approval for your mortgage. Mortgages for second or vacation homes differ significantly from those for your primary residence. You’ll likely need a second home mortgage, and you will probably have a higher interest rate because of the risks involved with renting out the property.

Generally, rental investors will need a 15 to 25% down payment. Know what you technically qualify for, and then look at a mortgage calculator to determine your monthly payment, which will help you determine how much rent to charge. Also, consider the premiums and deductibles when purchasing insurance, as a vacation rental is more likely to encounter damages than your primary home. You may also need landlord insurance and liability protection, so consider those costs as well.

It’s also important to be aware of the taxes and licensure fees involved in owning rental property in Breckenridge. For example, a rental unit of four or more bedrooms must pay an annual tax of $175. There is also an annual regulatory fee of $400 per studio or bedroom. Failure to submit this payment by the deadline results in licensure termination.

Without taking the critical first step to prepare financially, you won’t be able to accurately gauge the size and style of investment home you can comfortably afford. Breckenridge real estate is hot and will continue to be so for quite some time. You don’t want to find your dream investment property, only to miss out because you miscalculated how much your mortgage payment with all the bells and whistles will actually be.

All that considered, it’s important to mention a major pro of owning rental property: passive income. You can earn money while still working your regular job, if you wish. Because you’re purchasing property in a highly sought-after vacation destination, you’re setting yourself up for stable, long-term financial gains.

Abiding by the rules of renting out your property

If you’re planning on renting out your property as a vacation rental, it’s imperative to be aware of the laws regarding this practice.

The Town of Breckenridge defines a short-term rental (“accommodation unit”) as a condo, townhouse, home, trailer, studio apartment, or another similar lodging that is rented out for a period of less than 30 consecutive days.

Also, according to the Town of Breckenridge, your tenants must abide by specific rules and regulations, including those for parking, trash, and noise and nuisance. The accommodations also must be held to certain health and safety standards, and an authorized public inspector may enter the property to inspect for these conditions. There are other guidelines involved, so it’s important to read through all the rules and regulations before proceeding.

In addition, as of September 2022, the town of Breckenridge adopted an ordinance to limit the number of short-term rental licenses by dividing the town into four different zones, each with a maximum of 2,200 short-term rental licenses. The new license caps do not apply to existing short-term rental licenses, but moving forward, licensure will be limited to this maximum number per zone. There will be waitlists available.

Be prepared to be a landlord

While owning a vacation rental can be rewarding, there are certain challenges involved, including operating expenses. You must take care of any maintenance concerns or other issues that arise at any time, day or night. For this reason, it might be beneficial to consult a professional property management company to oversee the property, especially if you do not live nearby. Your property manager can perform yard work, repairs, tenant screenings, and more, but their services will come at a cost. Make sure to budget in this cost when considering your purchase and setting the rental amount for your tenants.

Also, you’ll need to provide home furnishings because an empty vacation property won’t appeal to many renters. You want your rental unit and all these furnishings to look inviting and cozy. You’ll need comfortable bedding, televisions, living room furniture, kitchen appliances and silverware, and bathroom supplies at a bare minimum. Most upscale vacation rentals also include WiFi, Smart thermostats, and extra amenities like a game room, entertainment centers, a Jacuzzi, a pool, a fire pit, and more.

Seasonality

Breckenridge invites visitors on an outdoor adventure in every season. Vacationers enjoy hiking the trail loops, fishing, and mountain biking across the ridges in the summer and fall, while winter and early spring are the perfect time to ski and sled the slopes.

Even with all these possibilities, it’s important to be prepared for the fact that you probably won’t achieve 100% occupancy at all times. For example, if the winter is incredibly cold, you may have fewer renters. Can you still afford the property if it’s vacant for a while?

Know what you want versus what you need


Before you meet with a Breckenridge realtor, sit down and make a list of everything you want to see in your investment property. What are renters looking for when they vacation in Breckenridge? Write it all down on a piece of paper: the number of bedrooms, the number of bathrooms, the proximity to dining spots and the slopes, and any other features that will make your property more desirable.

Be prepared to move quickly

While the Breckenridge real estate market is starting to cool down, it’s still very much a seller’s market. That is, there is far more demand than there is inventory. This means that you need to be prepared for a competitive market. Your Breckenridge realtor can help you determine the exact market conditions and advise you on the best time to buy your investment property.

When you find that perfect piece of Breckenridge real estate you want to invest in, you need to move quickly to secure it. This also means that after your offer goes in, everything else will move rapidly, too. From the home inspection to negotiations, closing, and getting the keys, it’s going to feel very quick once you’ve started the process. Be prepared for the long wait and then the very quick close. It can feel almost dizzying when you’re in the middle of it, but if you go into the process prepared with this knowledge, it may be less overwhelming.

Working with an agent makes sense

Working with a local Breckenridge realtor gives you a leg up when searching for investment properties. They will have all the connections to help you find properties in the most in-demand areas, and they will guide you through negotiations and every step of the process.

When you’re ready to start looking at investment properties in Breckenridge real estate, reach out to Dishon Lutz for the guidance you can trust. Dishon is well-versed in finding the perfect investment opportunities for clients and guiding them as they build their portfolios. Call today, and see what is out there for you.



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