Have you dreamed about owning a second home in Crested Butte, Colorado?
Perhaps you find yourself in a position where it would make sense to consider having another home or condo in a vacation location or near family or friends.
If your life and finances make owning a second home an option, you’ll be interested to know that there are still tax benefits, along with lifestyle perks to owning a second home.
Some exciting parts of home ownership are pretty evident in the purchase of a second home. Firstly, if you can afford the initial expense, in terms of quality vacation time and relaxing with family, a second home in the location of your choice for yearly breaks is a lot more “fun” than investing in mutual fund. Crested Butte is a great destination in the Summer or Winter with lots of events and a strong offering from the Arts all year long. Many second hom owners first ventured to Crested Butte for the downhill alpine skiing in the Winter and found there are over 50 miles of groomed Nordic cross country skiing trails, and the Winter temperatures are not as harsh as they thought with the sunny days and dry climate. Generally, once people come and experience the Summers they are hooked – with so many community events and activities available as well as the outdoor pursuits including hiking, fly fishing, golf, mountain biking, wildflowers, wildlife viewing… there are endless adventures out your back door. There is a trend for families to “summer in Crested Butte”, especially those from Texas, Oklahoma, & Louisiana who want to escape the heat. The norm is for the breadwinner to work from here, with occasional commutes in and out. Most second homeowners have found that buying a place in Crested Butte gives them an opportunity to spend more quality family time together, become a part of this great extended community, and have a home to share with extended family and friends while creating life-long memories.
A second home used as a rental property can be a way to offset the annual expenses, including finance costs, taxes, and some properties have HOA dues. Many people inquire about properties in Crested Butte that “cash flow” (meaning they generate a positive net profit after all annual expenses including finance charges) – this does not exist in Crested Butte at this time given the market prices, the seasonality of our rental market (Winter and Summer with some light Fall tourism) and the rental rates. However, for some people having rental income is a nice way to offset some of the costs when they are not using their home. A third aspect to consider though is that properties in Crested Butte at current prices are still considered by many to be good long-term investments. Expecting to quickly buy and then sell a vacation home, however, can be quite risky, and is not recommended. When comparing other similar markets like Aspen, Vail, Telluride, and Beaver Creek buyers conclude that the Crested Butte area is nearly half the cost per square foot, is less congested, has great options, and has the amenities they desire in skiing, the Arts, fine dining choices, air transportation, recreation options, and is a unique area dubbed “the last great ski town”.
Whenever you purchase a home, whether it is your first or your twenty-fifth, remember the key to good second home real estate purchase regardless of the price point is Location, Quality, and Vision of how you will use your home in the Summer and Winter (see post “if the Shoe fits“). Trust your real estate agent to advise you on areas where you are not familiar, and make sure your investment is in a sound location that works for your family now and in the years to come.
Depending on your area of interest, you may be able to find a great deal on a condo or home while mortgage rates are still low. Current low interest rates can provide for a more desirable property without increasing your budgeted amount, and depending on your situation, can be advisable to paying cash. Qualifying for a second home loan can be tricky, though, and if you intend to use the home as an investment, you will need to evaluate that the “numbers” make sense. There are many local banks that understand this market and can be good options. Some business owners, or entrepreneurs find it tough in this lending market to get financing without a massive amount of documentation and personal guarantees and opt to leverage a line-of credit via their investment portfolio as a simpler solution. There are still a large inventory of properties in the Crested Butte Real Estate Market to choose from at all price points – so depending on your desires, and what works for you financially there are lost of choices.
Owning a Second Home – the Numbers
Some of those numbers, aside from any mortgage payment, include insurance, taxes, and maintenance costs. If you plan on using the home as a rental, you will most likely need to plan on increased insurance and furniture costs, too. Maintenance will be higher than just a simple garden and pool service, too, as cleaning and repairs will be required after each tenant. If you will not be living in the home, it is wise to hire a general caretaker to oversee the property – handling routine maintenance, snow removal, thermostat regulation…etc.
Prior to buying a second home you also need to consult with professionals who work with estates, taxes, and finances to make sure owning a second home is the right decision for you, and whether you will create an entity to purchase the home – an LLC, Family Limited Partnership or Trust, and if you can realize tax-benefits with expenses or depreciation. Your tax professional should be consulted to fully explain current tax regulations on owning investment property. Either way, armed with the correct information and the right real estate agent, you can explore the options of owning a second home in the Crested Butte area.