Should You Rent Your Resort Condominium?

Now That You’re In The Market For Buying A Townhome, Should You Rent It Out?

Assuming this isn’t your primary residence, here are some questions that should be addressed before you make an offer? Is the prospective property currently on a rental program? With whom? How long has the rental management company been in business? How much gross rental income has the property earned over the last couple of years? How much does the rental management company charge? What services do they provide? Do they have a website for people to browse? What is their policy for dealing with any damages or stolen property by renters? How many similar sized properties do they manage? How many are in the same project? What should your rental income expectations be? How many days, per year, can you expect rental income? How long of a commitment does the rental management company want?

Addressing these questions, and more, are critical to be making an informed decision before you make an offer on any property you would like to purchase.

In Mammoth Lakes, most condominiums and townhomes can be rented out on a nightly basis. Single family homes, with the exception of those in certain subdivisions, cannot be rented out on a nightly basis.

Depending on the unit size and proximity to the chair lifts/ gondola, your rental income will vary. Particularly during the Holidays! People will pay a premium to stay in ski-in/ ski-out locations. You will also pay a higher price for purchase of such properties.

If you’re paying cash, then a substantial portion of the rental income is going into your pocket. However, if you’re getting a loan there’s a lot more to talk about. Your lender needs to know about your rental intentions. How much are you putting down? How much are your monthly payments? How much is the Your monthly Homeowners Association ( HOA ) payment? What is the local tax rate? Would the current rental income cover your payments, HOA dues and taxes? If not, can you afford to put more money down?

If you can’t afford to put more money down, then you have to discuss looking at smaller properties where the gross rental income is going to be less. The calculation of projected costs needs to be done for these properties too.

You see, when you are counting on cash flows to help you afford the purchase of a property it has to work for you in good times and in bad times. Understanding your projected cash flows/costs and being confident you can handle those costs under varying economic conditions is part of your due diligence prior to writing any offer. In fact, I would go so far as to say that if you can’t afford the purchase, without the rental income, you should think twice-even three times- before proceeding with any written offer.

Your Realtor is going to be an important source of information and local knowledge during this process. Lean on him/her! In addition to your Realtor, you also need to speak with a couple different reservation companies and gather as much information as possible.

Here are a couple of reservation companies, in Mammoth Lakes, that you can contact:

1. Elizabeth Gonzales of Mammoth Property Reservations. 1-888-MAMMOTH. Local: 1-760-615-5295
2. Mammoth Premiere Reservations. 1-800-336-6543. Local: 1-760-934-6543

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For more information on Mammoth Lakes real estate, please log onto my real estate website at www.easternsierraproperties.com