Buying a Ski Condo in Colorado: Real Numbers You Need to Know

In this episode of Mountain Real Estate, Candice De and Amy Nakos dive into what it really costs to own a property in Summit County, Colorado—specifically a two-bedroom, three-bath condo in Keystone. They break down four financial scenarios using cash or a loan, with and without a property manager. You'll hear about monthly costs, rental income projections, tax benefits, and long-term appreciation potential. Whether you're buying for lifestyle, investment, or both, this episode gives you a clear picture of real numbers in today's mountain market.

Transcript

June 2025 – How much does it cost to own a mountain property?

Welcome to Mountain Real Estate, where we bring you the latest insights on real estate from Denver to Summit County, Colorado. I'm your host, Candice De, a realtor, investor, engineer, mom, and Colorado native. 

Hey everyone, it's Amy Nakos and Candice Day. We're with the Amy Nakos group in Summit County, Colorado. Okay, today we are going to walk you through what does it cost to own a Summit County property?  So we get asked this question a lot, as you might imagine, and we have many people who are inquiring about getting a condo in the mountains, a ski condo. So today we're going to walk you through what does it cost to own a two bedroom, three bath, condo in Keystone, Colorado. But first, we're going to start with, I want to give you a sense of what we have on the market right now and put this in perspective. So we work in the Summit County Market, Breckenridge, Copper Mountain, Dillon, Keystone, Silverthorn, and Frisco. It is June 2025. Currently on the market, we have 778 properties, more than we've had in a while. That's a lot. Yeah. In price range, they go from $155,000 for a mobile home all the way up to $21 million for an 8,000 square foot home that sits on the ski run in Breckenridge.  So that's the range of what we have available up here.  328 properties are under a million dollars.  449 are over a million dollars. So that'll give you a sense of where our market lands. Today, our focus is going to be on  a $990,000 condo. It's a two-bedroom, three-bath, and expedition station in Keystone.  I'm going to share my screen, and we're going to start to share information about what does it actually cost to own that condo. So here we go. 

All right, we're screen sharing. What we have right here is our short term rental scenario document. But first, I want to take you to the MLS listing of this property. OK, well, we think we're sharing the actual listing, the MLS listing. Address here is 135 Dercum Drive, unit 8634 in Keystone. Expedition Station is a building that was built in 1998 as part of the River Run development. bedrooms, three bath, 963 square feet. This is going to be a larger two bedroom. While we have this unit as active on here, it actually closed and it closed for the list price. So the numbers we're going to be talking about today are going to be real based upon the actual sale price of this, not just the active price. So where I want to start with  is we're going talk about lifestyle a little bit. Why do people buy these properties? Candice, why do people buy mountain properties? 

Well, they like skiing. They like to be in the mountains. Some people like to escape the heat.  And everything you like to do is outside of your door. 

Exactly. We have people who are buying these properties to enjoy with their families, friends, create memories, and to have a place in the mountains. We are a resort community. So these are resort properties. Many of them are second, third homes. So what I want to start with today is we're just going to talk about If you come into the marketplace and you're looking to purchase this $990,000 condo, how much is it going to cost you?  So the first assumption, we're in a document right now.  We call this one the quadrant. This is our quadrant document. I'll tell you more about it in a minute, but we're going to start with how much would it cost if you just paid cash for the property? And you weren't renting it. Okay. This, this document right here shows rental income. I'm deleting it. If you buy a $990,000 property, our monthly HOA fees, 1308. And then here's some other expenses we have in here. 3,500 for taxes. We're estimating a thousand dollars for insurance. Incidentals a thousand and your HOA fees annually are 15,696. Your annual cost. is $21,290. You paid 100 % cash. $21,000. Every month, you're carrying the property for $1,700. So that's what it looks like if you you just pay straight up cash. 

Just one thing, the HOA is a little bit higher, but you see the utilities are zero. So in these condo properties, you're paying higher HOAs for some of those amenities that you can see, and these are annual costs. You're paying lower insurance because the HOA covers insurance and you have lower incidentals because you're really just focused on the interior. So there's a balance here where the HOA feels higher than single family homes that would be in urban areas. But a lot of those other costs are incorporated into the HOA dues. 

Exactly. Now we're going to talk about getting a loan.  calculated in this scenario 20 % down. So a second home, pretty much the same terms. as you get when you are buying your primary home, it's 20 % down. And we're looking at a 7 % interest rate on our example. We have a monthly mortgage of $5,269. So we're gonna  move to this box of the quadrant, loan purchase. It says no property manager. We're gonna get to rentals in just a minute. But if you were to purchase this property,  not put it in a rentable, you're not renting it at all. This is just for you. It's for your exclusive use. Your annual cost is going to be $84,520 or $7,000 a month to own this condo. Anything to add there? No. No. All right. Now I'm going to create a little bit of magic with  rental income. We have a rental projection. I'm going to move to the rental projection quick for this exact property. And it is telling us that we should get 58,000 annual gross revenue. So we're going to plug that into this document. And I'm going to have Candace, oh, not that document, this document. And we're going to talk about what that means for the quadrants. So this is going to change all four scenarios that we have here. Purchasing with cash,  purchasing with a loan,  using a property manager,  not using a property manager. We're going to get four different numbers. Candice is going to run you through this. We're going to put 58,000 in here.  And ta-da!  Ta-da! All right. 

All right. So  So we talked about this is really a lifestyle investment and we have a lot of clients that say, I don't want to rent it, I just want to use it. And then we have other clients that say, well, how much can I offset my costs? And there's a balance here that 58,000 is our annual rental projection. So that's  renting it out at those peak times, but also renting it out throughout the year. We have  some owners that like really only want to use it during the off-peak times and that this is reflected in there. And so this is the offsetting the most costs by the highest rental income. If there's more use, of that rental income can go down because a lot of people are purchasing for the lifestyle and the ability to use it. 

So as we look at offsetting those costs, if you're doing a cash purchase, so 100 % cash and you're not using a property manager for those rentals, you're making around $58,000. Your expenses are still around $21,000 per year. So you're netting around $36,000 or $3,000 per month. So you're making money when you do a cash purchase without a property manager. A lot of our clients want to be a little bit more hands-off, and so they want to hire a property manager. Our property managers take around 30 % plus or minus. And so if we go down to that bottom left quadrant, our cash purchase with a property manager, we take out that property management fee, which is about 30 % of your gross income, which still leaves you with about $20,000 of profit. So if you're a cash purchase and you want to be completely hands off, you can still make around $19,000, $20,000 per year. So that's with no financing. Now we're going to go to the right side of the quadrants and we'll start at the top. Going back to those clients that are really hands-on and don't hire a property manager, maybe they just handle the cleaning fees themselves or the cleaners themselves and the maintenance themselves. So now we've reintroduced that mortgage payment of $5,000 per month or around a little over $60,000 per year. So you're making $58,000, your mortgage is around $61,000, and then you still have that $21,000 of expenses. So your annual Cash flow is  negative 26,000. So you're putting in $26,000 per year to have this lifestyle investment.  And that's with a loan, so you're 20 % down and you have a little bit more sweat  in the property by not using a property manager. Now we'll go to the bottom right.  this is kind of our, if you're purchasing with a loan, so you're only bringing 20 % down and you want to be hands-off. but you still get those lifestyle benefits. So you still want this, but you don't really want to have to deal with it and you don't have the full cash. So this is what a lot of people kind of come in thinking they're going to start with. Yep. So you make around 58,000, you have your 21,000 in expenses, your 63,000 in mortgage expense still, and then you have that $17,000 property management fee. So that leads to an annual  cashflow of negative round 44,000. So you're supplementing your investment, your lifestyle investment, about $3,600 per month. What else do you to add? 

I don't think we need to add anything on here. What this quadrant does is it gives buyers and it gives our clients a snapshot of what those upfront costs are going to look like when they start with their purchase. But we have holding time on these. We have appreciation. We have the ability for some tax benefits. So that moves us into our second document that we use. 

So we're going to move from our quadrant to what we call our APOD. APOD stands for annual property operating data. And we've got the same property in here. All right, here we go. This is a document that was created with the CCIM Institute, so certified commercial investment member.  And we have tweaked it to be a residential investment spreadsheet. But  we love this. I will tell you we are happy to share the template of this document so you guys can use it for yourself. This is pretty much the same numbers. Yeah, we've just,  they should be the same numbers. If they're different, it means we didn't update them correctly before. We didn't quite get them updated right before this call, but it should be the same that we saw in the quadrant. What this document does, however, is it's going to show you hold time. potential appreciation along with tax benefits. So this first page, $42,899, it should be very similar to our $43,920 here. So it's about the same. We might have a few numbers that are a little bit off, but we have $43,000 here in expenses. This is assuming you have a loan. This is assuming you are using a property manager. So $43,000, but here's where kind of the magic happens. We're going to move to cash flows. And now, With the cash flow cage, we're assuming a 10-year hold. See, the numbers go to 10. And we have some assumptions in here that your rent's going to go up, your appreciation is going to go up. And you can see what it would be like to, if I hold it for 10 years, what might the numbers look like? But from an immediate perspective, we want to share a few things about cost recovery, number one,  and mortgage. interest deduction. Yeah. Yeah. Do you want to talk about that a little bit? Sure. So we have a lot of clients when we look at those quadrants, those are your raw numbers. So investors in places like Denver or other urban areas really look at cashflow, like how much am I spending and how much am I making? There's this backend of tax benefits that's not in  those upfront calculations. And so that's what we're going to cover here. So we have a lot of those same  numbers that you saw in the quadrant spreadsheet. And our net operating income, again, this assumes a loan. So our net operating income is still around that $20,000 per year. And then you can see our mortgage interest, which is $55,000, which sounds like a lot. So that mortgage interest can be written off on your taxes as an expense. really most of these, even if you're cash flowing positive, most of these provide  a taxable offset. So your taxable income can be offset with these negative losses. I'm not going to quite get into active versus passive.  We're not CPAs. We are not CPAs.  We look at a lot of numbers, but talk to your tax professional.  But what we can say is that these second homes provide some tax savings. So when you write off some of these losses, they can offset some of your income.  And we can, there's  rabbit holes we can go down about. whether you write it off earlier in the process or later down the line. But ultimately, something to know is on this property, you can write off $22,000 of taxes. If you're eligible for the tax for the mortgage interest deductions, that means you do not have loans up to $750,000. And this loan that is $750,000, the entire amount is being qualified for it. So you would not have to have a different loan somewhere else. anyway, up to $22,000 on that. What that does in a snapshot is you can see that originally we were paying $42,899 annually to hold this property. When we take that $22,128 out, because that's what we saved on taxes, we're now only looking at $20,722. And that's is less than $2,000 a month. Which feels a lot better. Feels a lot better, doesn't it? that's what this document shows you. If we get even further, like Candice is saying, down the rabbit hole, we can move into, what if the property appreciated 2%, 4%, or 6 % a year? And when we get to that number, we can see that our returns can be 8.3. This is cash on cash. or this is our internal rate of return, sorry, 8.3, 9.62, 2.86, 4.7. This is based on a cap rate of 4, 6, and 7, or negative 4.2, negative 1.53. This is getting really, really, like I want to say, down the rabbit hole. But if you're interested in this, you can play with this spreadsheet, and you also can see what it would mean for you to hold the property longer. I think, does that cover our? Yeah, there's one more that we're going to kind of touch on at a very high level and that's depreciation.  right now  it's that cost recovery improvements line.  So  most  second homes can be depreciated around like 27 and a half years. So basically they take some of the cost basis of the improvements and they depreciate it over a linear scale. 

So that's another piece  of  the puzzle that is a tax write-off. It looks like an expense on your tax return. There are ways to front load that depreciation if you want a little bit more write off in certain years. But in general, it's an expense that then catches up with you when you go to sell. It lowers your basis. So you might pay more capital gains when you go to sell. And you should contact a CPA. Well, I like spreadsheets, but I'm far from the CPA. Anyway, great  tax benefits in only real estate. But I think the greatest benefit, as we wrap this up, is really having a place where you,  your family, your friends, your colleagues can enjoy time in the mountains  and can be in a resort community doing really fun activities.  And we would love to help you with your Summit County Colorado Purchase. Yeah. Yeah, reach out. We can  happily walk people through these spreadsheets to help run.  realistic numbers on any of the  properties. But there's some hidden benefits in here in diving into the numbers that help make the numbers work out so that you can afford that lifestyle investment. You can find more information on our website, amynacos.com backslash invest, where you can find these spreadsheets and you should also be able to find them in the links below. Thank you. Thanks.  See you next time. Bye.  Thanks for joining us today on Mountain Real Estate. I'm Candice De. If the mountains are calling you, reach out to me.  See you next time.