Are mountain rental properties a good investment?

I’m often asked, “is buying a rental property in the mountains a good investment”. If one is expected to generate a positive cash flow from a fully mortgaged property, the answer is likely no. As a rule of thumb, investors need to put down 50-60% equity to be cash flow positive on a property that will be marketed and managed by a third party. If you are going to do your own marketing and management, that number might be closer to 25-30% down. In general smaller properties, say a slopeside studio condo, will provide higher returns than larger properties like a 3 bedroom townhome or large single family house. Of course this analysis doesn’t include the tax benefits of renting (assuming limited owner use) and the potential for price appreciation. If you purchase the right property, manage it well , exploit the tax advantages and have a favorable market, owning a rental property can be a good investment.
If you are thinking of buying an investment property, I have a proprietary model that can estimate your potential returns. I would be happy to put together an investment analysis for your property of interest and refer you to a number of property management companies that can estimate your rental potential (if no history exists) and describe their management services.

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