With all the options for a short-term rental property, is Vail Airbnb worth investing in? As a popular vacation spot, owning a rental property in Vail City, Colorado can prove to be a lucrative vacation rental business.
However, with the changing real estate market and varying Airbnb laws throughout the US, there are some things you should know before considering an investment property in Vail. Keep reading to find out whether or not you should invest in Vail Airbnb.
Table of Contents
- The Vail Housing Market
- Pros and Cons of Investing in Airbnb Vail
- Airbnb Vail Colorado Rules and Regulations
- How to Calculate the Investment Potential of Your Vail Airbnb
- The Bottom Line
Read on and see if it’s worth investing in Vail Airbnb.
The Vail Housing Market
Vail Colorado is known for being a world-class skiing destination that attracts both in-state and out-of-state tourists to the town. It is lined with high-end developments and amenities that make it the perfect getaway for any visitor. It is no surprise that the Vail real estate market is one of the most expensive in the state and arguably in the entire country.
According to Mashvisor’s estimates, the median price of a home in Vail is around $2,401,000. With a median price of $969,752 for the average Colorado investment property, Vail’s real estate market costs more than double the average state price. Compared to the national average, with most properties costing around $375,000, the town of Vail is certainly not a cheap place to invest in. However, its return on investment can justify the initial high purchase price.
Additionally, Eagle County, where Vail is located, is estimated to record a year-over-year price increase of around 38.9% this year. Taking the said estimate and Vail’s previous real estate market performance, Vail real estate investment properties do often appreciate over the years at an exponential rate. It means that while it is quite costly to buy a property in the town initially, you are more likely to see high returns based on its previous performance.
Key Considerations
If you do not have the biggest budget to play around with for your investment, Vail may not be the location for you. However, there are a few ways to minimize the initial costs when buying a property in Vail.
If you want to buy a property in Vail at a more affordable price range, many people suggest looking into properties down valley within the Eagle area of the town. It is a little farther from the main tourist attractions and where most locals live. Due to its distance from the city center and tourist attractions, you can often find a property that is a little below the city’s median price.
Overall, investing in Vail does require a larger financial investment than in other places, but it does offer greater potential for higher returns in the long run.
Related: Joshua Tree Airbnb: Should You Invest in 2022?
Pros and Cons of Investing in Airbnb Vail
Now that you know more about Vail’s general real estate market climate, it’s time to see if Vail Airbnb is worth the investment. While there are pros and cons to any vacation rental investment property, Airbnb in Vail Colorado comes with a few unique features that make it a ski tourist haven.
Pros of Airbnb Investments in Vail CO
Here are some of the reasons why you should consider investing in Vail Airbnb:
1. Thriving Winter Tourism
Though there are several industries in Vail city, its tourism and skiing attractions are definitely its main attraction. Home to the largest ski resort in the country, Vail is often listed as the top skiing destination across several travel and leisure sites. On average, the snow found in Vail span around 5,200 acres of land. Within the said expanse, tourists can choose from 40 different lifts and over 300 skiing trails during the winter season from November to April.
With impressive skiing trails and winter attractions, Vail sees 1.3 million tourists each year, with 650,000 visitors coming in the winter alone. The significant tourist figure is excellent news for investors considering investing in Vail Airbnb, as there is a consistently high demand for short-term rentals in the city.
With Airbnb rentals, investors will only generate an income when the property is occupied. It is why the high demand is crucial for vacation rentals. The more frequent your property is booked, the greater your potential rental income and cap rate will be. To calculate your potential cap rate, try using Mashvisor’s real estate investment property calculator.
2. Off-Season Tourism
Your Airbnb Vail investment property will definitely see a higher occupancy rate during the winter. However, it does not mean that it will be left vacant for the remainder of the year. When the snow is gone, Vail offers tourists amazing hiking trails and white-water activities throughout the summer. Alongside the luxurious amenities and picturesque views, Vail’s tourist off-season still brings in around 650,000 tourists to the area, still guaranteeing Airbnb income for investors and property owners.
You are likely to get guests staying in your Vail Colorado Airbnb year-round. While other tourist locations will often experience extended vacancy periods, potential investors in Vail are unlikely to face a similar problem. According to Mashvisor’s database, the average rental price per month of Vail Airbnb is $3,086, with a 49% occupancy rate. However, Airbnb rental price is dependent on multiple factors that can push the estimates higher or lower.
3. High Rental Price
While Vail’s median sale price is higher than the rest of the Colorado housing market, it is known to yield high rental prices. Though on average, the daily rate of Vail Airbnb is around $336 during the high season, villas and vacation rentals can go for up to $1,000 a night, depending on its amenities. If you decide to invest in prime property in Vail, chances are you will need to shell out a lot more initially, but you will see a significantly bigger return when it comes to Airbnb rental income.
Cons of Airbnb Investments in Vail CO
Along with the benefits, you should also take note of the following drawbacks when investing in Vail Airbnb:
1. High Initial Price
When it comes to Airbnb investments in Vail, its main drawback is the purchase price. Vail is a beautiful place that attracts tourists year-round. While it is a key factor in ensuring the success of any Airbnb investment, the area’s high-value real estate market does need to be factored in.
With the median price of Vail being almost 2.5x more expensive than anywhere else in the state, investing in it is a larger risk. Investors will need substantial funding and take out a large mortgage to even purchase a property.
For newer investors looking to start their portfolio, Vail Airbnb’s initial price may be too costly for them. Even for seasoned investors, Vail’s real estate market may cost too much upfront. If your goal as an investor is to diversify your portfolio rather than owning just one property, you wouldn’t want to spend too much in one place like Vail Airbnb.
2. Low Inventory of Properties
In connection to its high prices, Vail’s property inventory is pretty low. With very few options in Vail, its real estate market tends to be a seller’s market rather than a buyer’s market. It not only causes the prices to go up, but it can also harm your negotiating power when looking for a potential investment property. With a higher demand than supply for properties in Vail, buyers will need to outbid each other, with the seller taking the best price.
If you buy a property in Vail and the time to sell comes, it may work to your advantage. However, as an investor looking to purchase a property, the market is still working in the seller’s favor. While the potential rental income and return on investment in the future are promising, you must first navigate Vail’s real estate market to get the best deal.
Related: Is It a Buyer’s or Seller’s Market in Real Estate? How to Tell the Difference
Airbnb Vail Colorado Rules and Regulations
In addition to your calculations and estimates, you should know the specific rules and regulations in Vail City regarding short term rentals. There are very few restrictions when it comes to Airbnb Vail Colorado; however, there are still a few things you need to operate legally. To ensure that you are in accordance with the rules and regulations, it is best to speak with a real estate agent within the area. However, here are the basic rules that you should be aware of when it comes to running an Airbnb in Vail Colorado.
1. Registration for Short Term Rentals
Within the town of Vail, you need to secure a short-term rental registration number. The requirement applies to anyone who intends to rent out their place to guests planning to stay for less than 30 consecutive days. You will also need to show proof of ownership of your properties in accordance with the safety regulations governing the area.
Additionally, you must prove that you adhere to the regulations regarding garbage segregation, parking units, and noise pollution. Once you secure all the required proof, you will be given a registration number and can begin operating a short term rental investment as an Airbnb.
2. Advertisements and Listings
After you get your registration number for your Airbnb, the next step is to list it. Regardless of which site you list your property on, Vail Airbnb requires you to show the registration number on the property listing. If you choose to put up additional advertisements and promotional materials for your rental property, you also need to present your registration number on the ad itself.
3. Assigned Point Person
While you may own the rental property in Vail, you may not exactly be living within the area. Though you may be within driving distance of the town, Vail requires a point person within a 60-minute distance of the property to be available. If you live outside of the area, you need to assign a designated person who can be contacted about your property at any given time. It is required so that the city can ensure that all short term rentals adhere to the safety regulations and other rules at all times.
4. Filing of Tax Returns
As a business, you need to file your tax returns promptly. It includes filing for zero income returns. Whether or not your property generated income during the filing period, you must file a statement of returns.
5. HOA Rules and Building Regulations
The last thing you need to be aware of when running an Airbnb in Vail is its HOA rules and building regulations. HOA rules do vary, which also cover fees and maintenance costs. Additionally, if your Airbnb property is located within a building or apartment complex, you must abide by the building regulations set out by its management.
Related: The Best Tips for Real Estate Investors to Deal With HOA
How to Calculate the Investment Potential of Your Vail Airbnb
With the things mentioned regarding Vail Airbnb, it can be said that investing in the area is a very high-risk high-reward type of situation. Due to the high property prices in the area, investors will need to gather data and calculate to decide whether or not Vail is the best choice for their investment goals. To help both new and old investors, Mashvisor’s Airbnb calculator and real estate investment tools can provide the necessary data to guide your decision.
Mashvisor’s Airbnb Calculator provides the relevant data to help investors make an informed decision.
When it comes to Airbnb rental strategies for real estate investors, it is important to know the potential rental income, cash on cash return, cash flow, and cap rate. Additionally, investors should also know how the said data points compare to a traditional rental scheme. It will help you decide if Airbnb is the right strategy to use for your investment property in Vail. Using Mashvisor’s investment tools, here are the key data estimates you need to know for an Airbnb real estate investment in Vail CO this year:
- Airbnb Listings: 282
- Monthly Rental Income: $3,086
- Cash on Cash Return: 1.76%
- Daily Rate: $336
- Occupancy Rate: 49%
- Days on Market: 228
Related: What Is a Good Cash on Cash Return?
The Bottom Line
The Vail real estate market offers investors a chance to realize a lucrative return on investment if done right. When it comes to buying a Vail Airbnb, you need to calculate and compute whether or not the return on investment merits the initially high purchase price for your preferred investment strategy.
Using Mashvisor’s Airbnb calculator and other investment tools, both new and seasoned investors can easily see the breakdown of a property’s statistics. With Mashvisor’s comprehensive data, you will be able to easily determine if it fits your real estate investment portfolio and goals.
To start investing now, sign up for a 7-day free trial of Mashvisor, followed by a 15% discount on your quarterly or annual subscription.