Rental properties can be a great source of income and can give you a family getaway
all in one – if you are educated and prepared.
The question to ask yourself is, do you want to buy a residential long term lease type of property or a vacation rental?
Residential long term rental:
Great way to go in the Park City Market. Typically, there are a few factors that create the rental market to skyrocket. Demand grows when buyers are priced out of the market. Rental demand also grows in times like we have now where the ability to get a loan is very challenging. You have many families out there that have experienced a short sale, a foreclosure or simply are self-employed and cannot get a loan. These people have to live somewhere! Right now we have rental requests coming across our Realtor e-blasts like crazy.
Vacation property rentals:
Ideal if you wish to use the property and enjoy all Park City has to offer and get some cash to boot! While the market can wax and wane, there are many properties here in Park City that can produce a nice income. The prices are nice and low right now, so there is the upside of possible appreciation as the market grows and changes.
A few things to think about when purchasing a rental property:
Price is key!
A bargain now will help you to better withstand fluctuations in rental income and property value over time so you can profit if and when you eventually sell. You need to develop a deep understanding of the area in which you are buying. You can keep making low-ball offers and wait for the deal you want, but great bargains generally get snapped up and often times have multiple offers, so you need to be able to act quickly once your target’s in sight. Be ready. Get pre-qualified and do your homework. Prices are low here in Park City right now.
Choose the right area
Rental properties don’t always make good neighbors, but there are a few tricks to making it work. Overall, it’s important to find a community where your rental property will have a good chance of being accepted, and the ritziest corner of town may not be it. In Park City, it all depends on what your rental goal is. Nightly rental? Long term? The answer to that question will determine which area in which you should purchase.
Many Park City neighborhoods don't allow nightly rentals, and they are too far from the slopes to be in demand. Old Town, and Deer Valley's areas are in demand for nightly rentals. Long term rental areas are numerous here, and each so different. Pinebrook and Jeremy Ranch are ideal for families and for those that commute to Salt Lake City. Trailside rents almost immediately because of the proximity to the elementary school. Park Meadows is a good alternative for those that love to be close to Main Street.
Regardless of what neighborhood you choose, you never want your property to be the worst-looking one on the street, or complaints and possibly citations may follow. If you choose a property which visibly needs maintenance, you should budget to correct these issues within the first year, and ideally prior to renting it at all. This helps to show the township or city officials that you’re one of the good landlords, committed to keeping your property up, and can make a huge difference in your experiences over the life of the property.
Look for a Property that is easy to Maintain
That historic Old Town Miner's Cottage home you’ve been ogling may feature charm and character, but you’ll have difficulty making changes to this home and repairs can be never ending. And if the property is a single family home, you must consider snow removal. Does it have heat tape? Areas where snow could build up and create ice dams? In the Mountains you have more to consider. A house which has simple, solid construction, where everything’s easy to access and uses relatively standard materials, is generally the easiest and most inexpensive to maintain.
Complicated landscaping may be expensive to maintain as well; I recommend properties with a simple, small lawn, nice manageable planting bed, and ideally a large rock garden or patio. Pay special attention to the driveway. A steep, long driveway will be expensive to plow and add to your cost of maintenance.
Special considerations in Park City to think about
Basements are the norm here in Park City, but some are built in areas that can flood in high snow years. What will you do if your sump pump malfunctions? Are you able to deal with a flooded basement?
Make sure the home you buy does not have plumbing pipes on exterior walls .Frozen pipes are a headache you don't need with nightly or long term renters.
Snow removal can be costly and is absolutely necessary. Make sure you figure this in your budget.
Look out for safety issues
An excellent value for the money, a licensed home inspector can help to identify potential safety and maintenance issues and even provide ballpark estimates for correcting these. I always recommend to my buyers to have a property inspected, especially an investment property.
Radon, lead paint, asbestos and mold are four primary concerns, as they pose significant health risks and can be expensive problems, requiring specialists to remediate. Pay close attention to walkways - negligence can be costly. Heat or remove snow and ice daily to prevent accidents.
As a landlord, there are certain things you need to pay special attention to in order to prevent potential lawsuits. Some of these include:
Exterior stairways without handrails or where ice/snow/rain may cause a slip hazard
Steep steps
CO and smoke detectors (fire hazard)
Obstructed doorways or exits (fire hazard)
Broken windows/glass
Cracks or unevenness in sidewalks, driveways, or walkways (trip hazard)
Open electrical circuits, outlets or wires (electrocution hazard)
Unsecured hot tubs (drowning hazard)
Lack of GFI outlets near kitchen/bathroom water facilities (electrocution hazard)
As a rental property owner, you have an increased risk of lawsuits overall, so safety is a primary concern, but accidents still happen. Owners often choose to limit their personal liability risk by establishing each property as its own LLC. It is advisable to consult a lawyer to ensure that your other assets will be protected in the event of a lawsuit.
Who will manage this property?
Unless you are an expert at marketing, pricing and maintaining your rental property, you need a good property manager.
What would you do if your nightly renter calls late one night because he lost his key? How about the heat or water not working in a snowstorm? You need a property manager that has a staff of professionals they can call on that they trust to get the problem fixed.
One unfortunate landlord I know attempted to hold down a busy job in another part of the country while trying to manage his nightly rental property here in Park City's Old Town. He invested a chunk of money to fix up his properties, and everything seemed fine until pipe froze and burst, flooding his lower floor. It could have been prevented if he was here and was aware of the below freezing night we had. His renters were out of luck – he had to scramble to find them other accommodations and then try to fix problem. He didn’t have much luck with the local contractors he reached out to, and the rest of his winter skiers were out on their ears until he could get this problem fixed.
There are a million more things to consider, especially if you have never had a rental property before in a resort town. Call me to discuss your options and which properties
would fit your needs and make some cash!
