Many of our condo buyers ask us what is the rental income potential of the condo they would like to buy. It’s a very common question and totally understandable. You want to have your own piece of mountain paradise, but you also know that you won’t be here all the time.
So to optimize your return, the obvious solution is to rent it on a nightly basis to other Steamboat visitors when you’re not here and make some extra money.
What makes this question hard to answer is because there are many unknowns in renting your place. Sometimes the condo you choose is going to have rental history numbers. This is a good number to look at so you know the future potential for rentals. But obviously it is not guaranteed that it will produce the same income in the future.
What if it’s a worse winter than last year? If Steamboat has no snow, the skiers are less likely to visit. Or it may be a better year, who knows? When will you be using your condo? If you’re using your condo during peak periods such as Christmas and New Year and spring break, your property won’t make as much in rental income.
Another reason why it’s hard to say what your rental income will be is because you have tens if not hundreds of choices when it comes to management companies. Most association management companies will also provide nightly rental services to owners, and most owners will go with those companies to save on the hassle of employing a different firm.
While some condo complexes in Steamboat do not allow the owners to hire an outside management company for nightly rentals, at most properties you do have a choice.
Recently, I was showing two bedroom two bath condos to a couple who wanted to stay at their property in the summer, and rent during the winter season. They wanted to maximize their income during their winter rental period and had asked me about rental numbers.
The unit we looked at had rental history from the management company that also managed the HOA. To have a thorough comparison, we also looked at the rental history for 2 other similar condos in the same complex. One was managed by a different management company and the other was managed by an owner through VRBO®.
The differences in the rental income were staggering: 26K for one company, 51K for another, and the vrbo property reported over 80K in gross income!
Finally, you have to know what the management fees are for the company you’re hiring to rent your condo. You may think that the gross numbers are great, but then you find out that the company charges 45% for the service, and you’re left with just a little over 1/2 of the gross rentals. Not as great as you thought, huh?
So when you ask us for the rental income history for condos, please don’t be surprised when we say “it depends”!