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Should you buy your own ski home?

Should you buy your own ski home?

If you have visited Telluride on a skiing vacation, chances are you’ve fallen in love with this magical place and now dream of owning a home here. But is it a wise decision to buy your own ski home? Famous personalities like Oprah, Tom Cruise, and Ralph Lauren – all homeowners in Telluride – seem to think so. If you have a tighter budget than these superstars, though, it’s probably best to look deeper into several factors before going home shopping.

Here are some of the things to consider:

  1. Are you financially ready?

    Buying a ski home, or any other kind of vacation home, means additional major expenses. For starters, you should be prepared to pay a down payment of at least 20%, which is the standard rate for secondary homes. If you still have an outstanding loan for your primary home, you will need to pay two monthly mortgages. On top of these, there are the costs of maintaining two properties to consider.

    Crunch the numbers and make sure you can comfortably afford a vacation home. “Comfortably” is the key word here. This means not putting your emergency funds or savings at risk or giving up other vacations and hobbies just so you can finance your mountain home.

  2. Will you depend on rental income to support the purchase of your ski home?

    Putting the property up for rent when you’re not using it can help you generate income, which you can use in paying off part of the mortgage or maintenance costs. However, your greatest chances of attracting renters will be during ski season in winter – and this is also the time you’ll likely want to use the home yourself.

    Fortunately, Telluride also gets plenty of tourists during the summer when many of the town’s famous festivals are staged. If you’re not planning to spend the season in your mountain home, then this is perhaps the best chance of making rental income from it.

    Spring is generally a low season for skiing destinations, while the fall market is inconsistent.

    With all this in mind, it’s best to not have to rely on rental income to finance your ski home. While it can put extra cash in your pocket, realistically, it may not be enough to pay for the property.

  3. How long do you plan to own the home?

    If you’re thinking of selling the property after a few years or when it becomes too much of a financial burden, consider that the property’s value may not have increased as much as you’d like by that time.

    According to Zillow, home prices in Telluride has been rising since 2012, and are expected to increase 2.7% more in the next year. While this is highly encouraging, keep in mind that values of vacation homes can fluctuate dramatically from year to year. Among the factors that affect home prices is inventory. In ski towns, this can rise and fall depending on builders’ activity. While new housing may be few and far between, it can increase significantly with a single condo development.

    This unpredictability may be mitigated by holding on to the property for a long time – perhaps 10 years or more. Real estate values in the US do tend to appreciate over time, but you may have to ride out the ups and downs in the short term.

  4. Do you plan to use it as your retirement home?

    An excellent reason to buy a ski home now is if you plan to retire in it, or at least, use it heavily in your retirement. Since property values generally appreciate, investing in your retirement home today can give you significant savings when the time comes. Study the market and your finances carefully to ensure you’re putting your money in the right property.

  5. How often do you plan to use the home?

    The best reason to own a ski home is so you and your family can enjoy it and make wonderful memories in it. Having your own property in Telluride means you can relax and avoid the hassle of finding and booking your accommodations every time you visit. Moreover, if you plan to stay in the town fairly often – perhaps for 60 days or more a year – owning a vacation home might be more economically sound than staying in a hotel or other lodging.

    Look into your future holiday plans and see how many days in a year you can realistically stay in your mountain home. Then compare the costs of paying for lodging every time you visit to buying and maintaining your own property.

Once you’ve made the decision to buy a home, work only with a trusted local Realtor. With over 60 years of combined experience, we at Team TDSmith can guide you to beautiful homes for sale in Telluride, CO and help you start making wonderful memories in our beautiful town. Call us today at +1 970.729.1577 or email us at td@tdsmith.com.

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