For the last couple of days, we have been talking about how to buy a successful vacation home rental income property in Estes Park that will generate the most amount of income possible.

Here are 4 common mistakes buyers make in the process of buying a vacation home rental property:

1. They Forget the Cost of furniture. - The cost to furnish the property after you buy it can be expensive. Be careful you don’t buy a lot of furniture on credit while you are trying to qualify for a mortgage. An easy way around this is to look for properties that include furniture in the sale.
2. They underestimate the work necessary to operate a successful rental property. - There is a lot of work involved in managing a property including cleaning, marketing, answering rental inquiries, and more.
3. They don’t check the Covenants, Rules and Regulations. - Double check the association documentation and meeting minutes for restrictions on rentals. Some single family neighborhoods and condominium developments do not allow short term rentals.
4. They don’t know about the Municipal Code Restrictions regarding vacation homes. - Any vacation home rental property within the Estes Valley Zoning district is subject to the municipal code restrictions. Highlights of the code include needing to buy a business license and restrictions on the total number of people that can rent out a property at one time. For more information, here is the municipal code specifying the rules and regulations regarding vacation rental properties (downloaded November 2010).

Are there any experienced vacation home buyer’s out there who would like to share a mistake they made that I might have missed?

Yesterday, I brought up the subject of how to have someone else pay for your vacation home in the mountains by utilizing vacation home rental income. Sounds great, right? So how do you go about finding the best homes with the most potential to generate income?

Here are a few things to look for:

• Location - The best locations have big views, river front views or complete privacy in the woods.
• Outdoor spaces - Properties where it is easy to enjoy the outdoors are in high demand (even with condos). This is most likely why the renter wants to come to Estes Park in the first place!
• Recent construction - New and flashy trumps history and character when looking strictly at income.
• Privacy - Nobody wants to go on vacation and be right on top of the neighbors. Be extra careful with this when considering condominiums especially with outdoor spaces.
• Bedroom bath ratio - The best case scenario is a bathroom for every bath.
• Multiple bedrooms - More bedrooms equals higher income per night.

The best way to evaluate whether a specific home has what it takes to be a successful vacation home rental is to ask yourself “Would I want to stay here while on vacation?”

Can you think of any major features I missed on this list?

Buying a vacation home in a small town in the mountains like Estes Park, Colorado is a dream shared by many people. The problem is, real estate in the mountains has a tendency to be expensive. Utilizing vacation home rental income can make that dream easier to achieve. Why not take advantage of the millions of people (yes, millions) who come through Estes Park every year on their way to Rocky Mountain National Park? Many property owners in Estes Park are already catering to these tourists by offering their homes for rent on a short term basis. The rental income generated helps pay the mortgage or provide extra income if you aren’t planning on having a mortgage. You may also choose to buy a more expensive house than you were originally planning because of the extra income. The best part about vacation home rental income is it still allows you to use the property from time to time!

While vacation home rentals don’t typically generate enough income to pay for themselves, they can come close if you do your homework ahead of time.

Over the next few days, I’ll be posting more information regarding how to make short term rentals work for you. Stay tuned to hear more about:

• What makes a successful vacation home rental property in Estes Park?
• 4 biggest mistakes buyers make when buying a vacation home rental property
• 5 Tips to maximize vacation home rental income

Do you have any questions regarding vacation home rentals for sale in Estes Park?

In my opinion as a real estate agent, Zillow.com can be a helpful tool for consumers for ball-park property valuation but should not be relied upon to provide exact opinions of value. Read the small print on Zillow.com and they will tell you the same thing. Check out their FAQ page.

The reason zillow is unreliable for property valuation is that no algorithms or mathematical formula can accurately predict a property’s value especially in a mountain community such as Estes Park where properties can vary tremendously. For instance, it is impossible to compensate consistently for many factors that influence property value including quality of construction, quality of materials used, views, privacy, neighbor quality, neighbors pets, nieghbors recreation habits, paint color, sun exposure, bright or dark interiors, smells, future events, room flow, landscaping, pests, and more.

Zillow.com discloses these variances on their website in specific markets. Unfortunately, they do not disclose the variance for communities as small as Estes Park, Colorado. In Denver, in a location where the majority of homes are in subdivisions with consistent values, the zestimate (zillow’s estimate of value) was off more than 10% of the actual selling price more than 55% of the time. Over all, zestimates have a history of having an 11.6% margin of error in Denver. See this page on zillow.com talking about accuracy.

As a real estate agent, I wouldn’t be in business very long if I estimated property values with an 11.6 percent average margin of error. Do yourself a favor and get the opinion of a local real estate agent or appraiser to establish market value. Otherwise, you run the risk of making very important decisions based on inaccurate data.

In a real estate market where demand for home sales has slowed considerably and inventory is rising, selling your home can be an emotionally exhausting experience. It is easy to blame others for why your home is not selling and most times, that blame falls on the real estate agent.

In the current Estes Park Real Estate market, I have seen many listings sit and wait for months with no action. Some listings expire, a few are withdrawn, and some drop their prices to try to gain more attention.

Many of these listings change hands from one agent to the next assuming the next agent will be more effective at selling their home.

There are two ways to look at this change in real estate agents. Getting a fresh agent to represent you and your property can sometimes be a positive change in scenery. New pictures, an updated content description and fresh excitement from the new realtor’s attitude sometimes results in the property selling soon after the change.

On the flip side, all the hard work and effort the first realtor put into the listing will go down the drain. There is nothing worse for a real estate agent than to see their expired listing come back on the market with another realtor at a price they recommended to the seller in the first place.

If you are going to switch real estate agents be sure that you are doing so for the right reasons. I’ve heard stories of agents being dropped because the seller just needed a “change of scenery.” Be sure to look at things objectively to find out if the problem may be outside of the agent’s control. Also be cautious of unreasonable promises from other agents trying to gain your business. If it sounds too good to be true, it probably is. Selling real estate in this market is a tough business, especially in Estes Park, Colorado.

1. Cash will most likely help you negotiate a lower price, however, just because you have cash does not mean you will be able to walk away with a property for 75% of its value
2. Seek out the best locations. The Estes Park Real Estate market places high value on mountain views and river property.
3. If you see a property that looks like a good deal, act quickly because someone else is thinking the same thing. Even when the average time on the market is 4-6 months in Estes Park, properties that are priced extremely well may disappear in a matter of days with multiple offers.
4. When evaluating properties, know your limits. Everyone knows the more work you can do yourself, the more money you’ll save. However, when you plan on re-selling the property, only high-quality work results in the highest resale value.
5. Trust your local advisors. They are in the trenches on a daily basis and they will save you money. Your cousin who “knows a guy” doesn’t know what he is talking about.

A new addition has been placed in the sidebar to the right that connects you to my Facebook Fan Page for Real Estate in Estes Park.

Click on the facebook button in the sidebar on my blog. Otherwise you can get there just as easy by going to HomesInEstes.com Facebook Page. On the page, be sure to click the “Become a Fan” link!

This new page on Facebook will allow you to get an inside look into Estes Park Real Estate right in your Facebook News Feed. On the page, you can interact with me and other fans sharing stories, asking questions, and following along with interesting tidbits about Real Estate in Estes Park and the reasons people choose to live here.

I hope to see you on Facebook soon!

Real Estate jargon can be confusing to the average real estate buyer purchasing a property in today’s real estate market. Fortunately, Estes Park has relatively few distressed properties compared to the rest of the nation. However, we are not exempt from troubled properties and it is good for buyers and sellers to understand the real estate terms associated with these troubled properties.

Many buyers and sellers (and even some real estate agents) have trouble differentiating between a short sale, REO property and the different stages of the foreclosure process.

Short Sale

A Short Sale occurs when the seller of a property owes more than the property’s market value. A short sale requires bank approval to forgive the difference between the purchase price and the loan balance. Typically, short sales are not approved without proof of hardship to the seller causing the sale of the property. Bank approval for a short sale can take anywhere from 2 to 6 months to process.

Short Payoff

A Short Payoff occurs when the purchase price of a property is less than what is owed, however, the difference is not forgiven. A settlement is arranged for the seller to make up the difference to the bank through an unsecured loan.

Foreclosure

The foreclosure process is the process by which a bank takes title to the property as a result of non-payment of debt on the part of the property owner. The process begins when the bank serves the property owner with a Notice of Election and Demand. The bank then schedules a public auction to take place 110-125 days after recording the Notice of Election and Demand. Check out this web site for more information on the foreclosure process in Colorado.

REO Property

REO stands for “Real Estate Owned” and is the same thing as a bank owned property. The foreclosure process has run its course and the bank now owns the property.


Are you looking to purchase a distressed property in Estes Park? Contact me for an up to date “Distressed list” of bank owned homes, short sale properties and fixer uppers.


Photo Credit: Jeff Turner

Here are the 5 Myths:

1. Sellers today are desperate
2. Don’t buy before prices have bottomed
3. You can’t buy a home unless you have 20% down
4. Now’s the absolute worst time to sell
5. Before you refinance, shop around

Does this apply to real estate in Estes Park?

I am definitely seeing these myths permeating the attitudes of buyers and sellers the local Estes Park real estate market.

1. The majority of sellers in Estes Park are not desperate. In the video, Barbara Corcoran mentions the ratio that 1 in 10 Sellers are “desperate.” However, I would venture to say the ratio is more like 1 in 20 (or more) Sellers in Estes Park because of the large presence of 2nd home and vacation home owners. These people are usually financially capable of waiting for their price. Of course, there are properties available that are more desperate than others. (As a side note, I do keep a running list of distressed homes for sale. Contact me for more details.)
2. Prices in Estes Park are not declining as you can see in my market statistics commentary on this blog. In Estes Park, we are seeing a decrease in demand because people are fearful of prices dropping due to all the negative hype in other markets. I believe there is a lot of pent up demand waiting to buy property. As soon as demand starts to pick up again, I think we are going to see a huge jump in the number of homes sold in the next couple of years.
3. This is also true for Estes Park. While you may get the most favorable terms with 20% down, having less to put down does not eliminate you from buying a home. My recommendation is to talk to a mortgage broker and/or your bank about what programs you may qualify for before ruling out a home purchase.
4. While it may be difficult to sell a property in Estes Park right now, it is not impossible. Buyers are still buying property but they are only looking at property where they know they are “getting a good deal.” The most important thing in this market is to be a better value than your competition. In other words, price your property correctly or you may be waiting a very long time to sell. You need to be the most attractive home at the best price to get any attention from buyers.
5. My opinion is to go ahead and shop around but don’t forget about your current bank when considering a refinance. Be sure to weigh all costs involved including closing costs and other fees. Also be careful about how many inquiries you make that may count against your credit score.

Thanks to Ines Hegedus-Garcia of Miamism.com and Agent Genius Fame for the video. See her original post here.

Establishing market value of real estate in Estes Park, Colorado is not an easy task. I’ve talked about this matter before in The Art of Pricing Your Home To Sell. Market Value is defined by what a willing and informed buyer and a willing and informed seller agree upon. There are many factors that influence true market value and unfortunately, homeowners can easily be swayed into thinking their house is worth more than it is.

Remember, true market value is NOT influenced by:

• Previous Sale Price
• How much you owe against a property
• The number of visiters coming to Estes Park each summer and how much they spend
• Time on the market
• County assessed value
• Number of elk or deer that frequent your yard
• The amount of money spent making improvements
• The stock market
• Gas prices
• Your Texas cousin’s opinion (even if they are a real estate professional)

If you are looking to see what the market value of your property in Estes Park is, read this blog post and then contact me and I’ll walk you through it.