Second Home Considerations with Amy Nakos

Amy Nakos has been living and doing real estate in Summit for over 20 years.  In this episode she shares four key questions she asks clients that are looking for second homes.  If you're in the market for a second home, listen in for things you should be thinking about.  

She talks about:
- Budget insights
- Location vs. size considerations for the resorts
- Short Term Rentals and if you can even get a STR license
- How are you going to use it?

She walks you through the first things to consider when starting your search, and she identifies some of the unique things to consider in a mountain market that you don't have to think about with a primary home. 

She highlights how schlepping little kids in their gear (that's me!), schlepping laundry, or letting dogs out to go to the bathroom (that's me too!) are often factors to consider. And she shares her wisdom on what can cash flow and how resort markets hold their value.

Contact Amy at amynakos.com

#realestate #mountainrealestate #secondhomes #summitcountyco #yourcastlesummit #vacationhome

Transcript

Welcome to Mountain Real Estate. This is Candice De with your Castle Summit. 

We have a treat today as we get to talk with Amy Nakos, also of your Castle Summit. 

So welcome, Amy. 

Thanks Candice, thank you for having me. 

Yeah, So glad you're here. 

We're going to talk about a lot of things related to mountain real estate today. But why don't you give a little bit of background about yourself? 

Sure. I have been living in the mountains in Frisco, Co for 20 years. I've been a real estate broker since 2002, so 22 years. I'm also a licensed attorney, so I probably see things a little bit differently than other people. I am the managing broker of your Castle Summit and I work exclusively in Summit County and have done that for 20 years. So I look forward to chatting today with people about what they need to consider when they're looking for a second home or a vacation home. 

Yes, you have lots of wisdom to share over 20 years and you have the lawyer perspective, so let's just jump right into it. Well, first, what brought you to the mountains yourself? 

My husband and I were living in Chicago and decided that we wanted to live in mountains and it was really a lifestyle choice. So we picked our one year old up and said if we don't leave now, we're never going to leave Chicago. And we moved to Summit County. We moved to Copper Mountain into a little condo and have never looked back. We feel like it was the best decision we ever made. So that's what brought us here and we're still here. 

Yeah, everyone that I've talked to that lives here wants to whisper it because we don't want too many people to know. But it is a decision you don't look back on. Let's jump into real estate. 

You've been doing this for a long time, so why don't you tell us a little bit about what second homeowners need to consider when they're looking at real estate? 

Yes. So pretty much second homeowners usually have a first home, so they're used to purchasing first homes. Second home ownership and vacation ownership come into people's lives when they're at a financial state where they can afford another home and they can afford that lifestyle. So generally I'm working with people who are already experienced in purchasing homes or have already owned a home. People already have primary homes. They know what it's like to purchase a primary home, and the considerations for that are different than a second home. People know how many bedrooms they need, how many bathrooms they need. Do they need a Home Office? They needed two or three car garage. Are they gardeners? Do they need a yard? Do they want solar? All of the things that people think about in their primary home are necessary to their daily life. But when we're talking about getting a vacation or a second home, most people run into budget constraints where they're not going to be able to purchase the same type of home they have in their primary residence. And that's because we are a resort market and resort markets are very expensive. So not just here in the mountains, but literally any resort market in the country where you have beautiful space, highly amenitized resort areas, the real estate is really expensive. 

So when we're talking about considerations, really, the first thing we talk about is your budget. What is your budget? What can you afford? And that puts you in a box, that puts you in a category of properties that we have available in our market. So that's the first place we start. From there we can say, all right, well, your budget allows you to have a studio. Or your budget allows for a single family home and so that's number one: What's your budget? 

The 2nd consideration with that is the location vs. size conversation. So within a resort market and within the mountains, for sure there's going to be better locations than others and your most premium locations are going to be ski and ski out. You are in a building or a home or a property, when you look out the window and you see a lift, you're paying the most money for that. You're also paying more money if you're on the water. We don't have a ton of water up here, but we have some water. So if you have a home on Lake Dillon or that is along Lake Dillon, or there are some homes in Frisco and Water Dance, they're premium because they're on the water. You're also going to be paying more for that. And then condos in Dillon that have the water views you'll pay a premium for that. So if you want to be in a resort close to a lift you'll get a property that could be the same price as the property twice as big with a garage, for instance, and in a private home where you're 10 miles out and have to drive. So then we talk about location, size. When you when you think about that, that that starts to get people thinking like, gosh, we have 5 kids, we need the size. 

Or another consideration that a lot of people think about is short term rentals. Now, Candice, you and I probably have to do a whole podcast on short term rentals, right. 

We’ll have to redo it because they've changed since my last podcast. 

But we're going to keep this relatively short just for considerations in a mountain property. But if somebody wants to short term rent their property, short term rental is defined as 30 days or less. So if you want to short term rent your property that would be listing it on Airbnb or VRBO, then you have to have a license in Summit County and you cannot necessarily get a license everywhere. So this is a parameter that in the last probably 18 months has changed a lot. We've been working really hard for people and helping guide them because we have to navigate where you can get a license and where you cannot. If an STR (short term rental) is a requirement for you, then that is also going to put you in a box, right? We're only going to look at these properties. 

The next consideration that I like to give to people is: How are you going to use it? And this is what really gets their wheel spinning, right? Because maybe they've never had a second home before and they have the dream. You know many, many of my clients are Denver metro people. But yeah, we have clients who come from Texas, Illinois, Florida, Nebraska, Iowa, all over. And it's their dream to have a place to ski or to visit and maybe not sit on I-70. It's a factor. Sure, it's a factor and I always feel like when there's a backup that we should just be out there handing Flyers out. Right. So. That's the dream, right? But nobody thinks about how am I going to use that property. They'll come to me and say. Well, we think we need a four bedroom? Like, well, why do you think you need a four bedroom? Well, because our kids might come visit over Christmas, right? So in the four bedroom category, we're now maybe over $2,000,000. Do you really need 4 bedrooms? When your kids come to visit can we get a neighboring property and rent it for them? That could be an option.  I also like to talk with people about are they big skiers? I tend to find that my ski in and ski out people have little kids that they want to start skiing. Because if any of you have had little kids listening to this, it is a schlepp fest to ski, right? It's so hard. And you think about, you know, loading all their stuff and driving. And so for the for the families and for the people who can, who have the financial wherewithal to do it, the ski in ski out is great for little kids. So that's something to think about. 

Storage, Storage is huge. Are you big cyclists? You know places have bike racks where you can lock your bike, but I promise you that my husband would never lock his bike on the bike. It must be locked inside a room that's probably temperature controlled with no dust, right? So do you have bikes? Do you need to have storage for that bike?  Next is a garage. This is a big conversation for people because we get a lot of snow here, right? And so if you don’t want to have to clear snow off your car, you're probably going to have to look for a place that has a garage or underground parking or covered parking. So, conversations that normally don't come up in a primary market because they're already shopping for the things that would be nice.

But so many times we have this conversation with people, and they're like, “we're gonna have to talk about this.” And then they come back to me and they tell me where they land on it. 

Another interesting element I've run into this with dozens and dozens of clients is a washer and dryer. So when you have never shopped for a second home or a vacation home before, it is your assumption that a unit comes with a washer and dryer. Doesn't everything come with a washer and dryer? And the answer is no. We have giant buildings that were literally built as ski condos. And they don't all have a washer and dryer, so you have to think about, well, if I'm going to just be visiting for the weekend and using it just on weekends because that's what my lifestyle is, I probably don't need a washer and dryer. I can include properties in my search that don't have laundry but that have a common laundry room.  For instance, if you say, well, I'm, I planning on spending the entire summer there. Like I'm working with a teacher now and she's like my son and I are going to be here all summer. Well, that's different then you're not going to be schlepping your laundry home. You really want to place to do your laundry. So that would be something to think about. 

And all of these things when we discussed them with people, help us to narrow the search. So we can hone in on the right property and not waste anybody's time. 

Yeah, awesome. There's so much good information in there. When you think about that second home, it's easy to think it will be easy. I know we were living in Denver and we were kind of like, well, we had the little kids and we've done the schlepping, and we don't want to do that aymore. And so we were kind of considering… Well, maybe a second home and investment property would work.  And then we did not think about any of those things and we started looking and learning all of that along the way. So that's why it's valuable to work with realtors like Amy who have been doing this a long time and can help along the way. They make sure that your search is honed in at the beginning rather than starting really big and then scaling things back and not really realizing what you're missing. 

I always tell people this is a process, it's not an event, because you do have to figure it out. You know you're not going to just come up one weekend and know unless you've been shopping yourself for a long time you know and going through the process online. 

Another thing that I sometimes see happen with buyers is they might be just a Copper buyer for instance. We want Copper and we want nothing else. We love Copper Mountain. Our kids are on ski team and ski team trains at Copper a lot. So, Copper is our tiniest market. It is our smallest geographical area with the smallest amount of properties and so if you are a Copper buyer for instance, there might not be anything on the market. And you're on a search and you're just waiting for it to hit or, you know, Candice and I are calling other Copper people we know and we’re like “Is anybody selling anything?” This looking also sometimes puts people into a category. You know, if you if you love Keystone and you say I only want to be in the village, well then we have a smaller parameter of search area. 

I will say one other thing that people don't think about that often dictates where we're looking is a pet. So for instance, the entire River Run in Keystone Village does not allow pets, not even for owners. Most condos or most projects will allow for owners to have pets but not renters to have pets and that's a liability conversation for the HOA. But when we have this entire village that doesn't allow for pets but somebody says we're bringing our pets then we rule River Run out. You know that that's just that's out of the equation. Also, I have a lot of clients who are used to just letting their dog out their back door and they say, “Oh my gosh, if I'm in a condo building and I have to walk up and down stairs with my dog or I have to get in and out of the elevator to let my dog out, that's the thing I don't want to have to do.” So pets are also a big consideration when shopping for second home. 

Yeah, that's a great point. I think sure, people have seen it during rentals, but it’s a factor when purchasing also. I was just talking to Narendra the other day saying we should start a pet watching business in our backyard because all of our friends come up and they don't know what to do with their dogs so often they just bring them here! So yeah, it's definitely a factor for renting, but also for buying if you're going to be up here. 

So Amy, I want to touch on two more surprise things for you. One is new builds, so which of your clients do you steer towards new builds versus existing inventory? 

That's a great question. We have had more new builds in the last 5-7 years than Summit County has ever seen. So I've been up here 20 years and we really haven't had the option of new builds until recently, which is fantastic. So what new builds get you is you're paying, you're paying the price. You're paying a premium, but you're getting brand new. You're not going to have as many problems. There's no deferred maintenance. You've got a one year punch list, new appliances, new everything. So I can't really put into a category like a demographic, but it is the type of people who like the very nice and who are ok with a smaller space. Because for the new builds, because you're paying more, the budget constraint is you know, you'll get less with a new build because we're at least $1000 – 1200 per square foot. We do have a lot of good new build options in Frisco. Beautiful bigger units, three and four bedrooms. But you're above the $2,000,000 price point. And so just so that just doesn't work for a lot of people. The new builds in Silverthorne and Keystone are about, for a two-bedroom, you know you're at least a million up to maybe $1.3-$1.4. So if you're in that price point and you want beautifully finished with the amenities then, I mean new construction is a great option for you, but I don't know what are you seeing? 

Yeah, I think the same. I think if you want that turnkey really good condition and you want to furnish it, it’s a good option. The furnishings are a factor. They have to think about what the price of existing versus new build is and timing is the other piece. So I just had one close yesterday, but we waited two years for it. I think that's something to think about. She paid the price of two years ago, it was better price, but she didn't have it for two ski season. So yeah, I think there's different factors, but I also agree that increasing our supply has been helpful. 

And some of the new builds in Keystone and Silverthorne allow short term rentals which is sometimes that hot commodity. Absolutely. 

So, yes. And I also think that the new builds for consumers aren’t always listed out there. So if you're starting to look for a second home and you're maybe fishing around on Zillow or realtor.com, Redfin, wherever, whatever platform people use. Not all of the new construction is on there. I don't feel like it's easily digestible. You know, so you'll have a developer who might not put on all of the units that are available. Kindred's a great example right now. You know, they've got some on the market, but some are still not on the market. So it does take somebody who's experienced, like working with a local realtor like you or I, to just understand, Yep, here's the project, here's what's on the MLS. Here's what's showing up on your Zillow app, but. there's these other units or there's there's more to it. 

Absolutely. If you've got new construction, you're going to want representation. You laid out a lot of really good things to think about for second home owners as you're embarking on this journey. 

Once they start looking, what does the process look like when they work with you? Sure. So generally it's a phone call because when you're looking for a second home, you don't live here. So people don't just show up and say, oh, let's just meet and talk. We've usually been in communication online. I have set them up on an auto search, so they have been watching the properties, and we've probably even had a few phone calls about what is interesting to them. What do they need? 

Another thing that comes up a lot is HOA fees. So when you're in a condo product, there might be expensive HOA fees and as we start to dig into the expenses of what it's going to cost every month, sometimes the budget has to shift to accommodate for the HOA fees. So like I said before, I say it all the time, this is a process, it is not an event. So how it looks is we've been in communication online and we've been having conversations. And then there's a day where they're going to come up and look at properties and we're going to set the showings and we're going to get into the properties. And that's when I'm with them or my assistant, Jennifer's with them, or somebody from my team is with them and we are talking through it in person. This is how far away we are from the lifts. Here's a bus stop. This is How does this neighborhood feel for you? Do you like that we're on the river here, We're paying more for it. Do you like this more wooded area that's 10 miles out of town? Every time, I am done with buyers who are up here for the first time, I try to set up a pretty varied tour. But I asked them every time, “was this helpful?” And they were like, “this was so helpful.” So it takes you from sitting behind a computer screen and dreaming to be feet on the ground and in it. Now you know, where do we like to be and what can we really afford? Most of the time people don't buy the first time out and that's understandable. So then we just continue on with the relationship and hone in. And then what I like to do is if I if I know what they're looking for and I see it and I see it come across my screen because I see everything property that comes on the market, I will text them or I'll pick up the phone and I'll say, Oh my gosh, did you guys see this? This, this one is 1 we need to check out. If they can't make it up, you know, if they can't drive up, let's say they live in Texas. We'll go take a video. 

Yeah, that's awesome. And I think that you really hit the nail on the head of the feeling. I think the feeling matters anywhere you're buying real estate, but up here it's so important, especially if you haven't been here and you don't know the vibe of the different areas. I had a client that was looking for a house. They live in the Midwest and they wanted a house for their kids and grandkids to be together. And they found an awesome place in Wildernest. And then my husband actually got ahold of him and was like, no, you guys want to be in Frisco. And really, ultimately it came down to like the feeling when they hung out in Frisco. We walked to the park with the kids, we walked to Main Street and that like walkability and the feel of Frisco really changed their perspective on what they wanted, so it is so important to see it in real life. 

It absolutely is, because we are not just one location here, we've got five or six different options, and they're different. Different in terms of the feel, walkability, accessibility to restaurants, shopping, amenities, accessibility to hiking because you might be in one neighborhood like Wildernest where you are in the Eagles Nest Trail system which is pretty remarkable out your back door, but we don't have any restaurants or anything out there, so maybe you value that more. You may value the quiet and having access to the hiking and then other people are going to want to be on Main Street in Breck, which is completely different.  It's a completely different conversation and a different experience, but that's our job to help, to help guide that. 

All right. I have one final surprise question and then we can wrap it up. You touched a little bit on budget at the beginning, You touched a little bit on HOA fees. And how do you guide your clients in a very expensive market with like a very wide variety of financial backgrounds looking? 

Yeah. It's touchy, you know. Because I'll just come out at the beginning and say what's your budget and I think that that's a really fair question. And then I ask, do you plan on getting a loan? And for anybody listening to this, I am not trying to dig into your finances. I'm trying to figure out how I can best help you. Because if you tell me you want a four bedroom, but then you tell me your budget $700,000, I'm going to be like, we can't, we're not going to hit that. So I’ve got to know all of this information to be able to best represent you and to help guide you into the best place for you. So I guess it's not touchy. I said it's touchy in the beginning. I don't want it to be touchy because I’m not trying to dig up all your financial information. I'm really just looking at how much do you want to spend and how are you going to finance that. And knowing those two things gives me the information because if we're let's just say if you say I have a loan and my lender is out of Ohio and we're looking at mountain condos, we're going to need to talk about getting a local lender. We have a lot of lending wrinkles in resort markets and we just need to work with somebody local. We can't work with a a bank that doesn't know how to loan on resort properties. So all those things at the outset are to help guide me. On that I will say that I get a lot a lot of buyer leads and these buyer leads would like to buy a property up here, put 20% down, get a loan and have the short term rental income have them break even or make money. And that's an equation that does not work, so. You know this, right, Candace, I mean. The equation doesn't work. You will make some money if you put 100% cash down. There is a loan to value and it's somewhere between 60 to 70%, meaning you put down 60 to 70% cash, the rest is a loan where you're going to be close to breaking even and that just depends on rentability and HOA fees and stuff like that. So I get a lot of those inquiries and they don't, they don't transact. 

And that's good message I think, because a lot of people think it's going to be an income generator, but it's hard to make that work. 

Yeah, it is. And there's other things we can talk about with that that's probably another podcast about you know how do you increase your short term rental income. But the important part to helping guide people in a very expensive market is that initial conversation of what's their budget, what they can afford and what their expectations are. If they do want to short term what are their expectations of ROI because there is going to be a number. If you're getting a loan, you're going to be subsidizing this property. Can you afford $1000 a month, $2000 a month, $3000 a month, $4000 a month, and if you can, then we can, we can find a place that's going to work for you. People ask, why would I do that? Well, that's because the prize is you get to use this place. And you're gaining appreciation in the end because we are a resort market that has historically held its value extremely well with very limited inventory. 

Yeah, that is such good insight. Amy thank you so much for joining us. I really appreciate all the insights for all of the potential second home owners out there. 

Feel free to reach out with questions to me or Amy (AmyNakos.com).  There's a lot of history and knowledge and experience here ready to help. So thanks so much for being here, Amy. You bet. Thanks for the opportunity. All right this is Candice De with Mountain Real estate.