To Buy or Not To Buy

As ski season approaches, we ask: When does it make sense to invest in a high-country home?

September 8 2014, 11:00 AM

—Image courtesy of Shutterstock

As we fork over yet another deposit on a Vail rental condo after years of lugging gear up I-70, we begin to wonder if maybe we shouldn’t consider investing in something a little more permanent, like a second home in the mountains. After all, between gas, hotels, and food, we’re spending thousands every season. So when is it worth it to buy a dream home base in the hills? The answer, of course, depends on several factors, but if you have to pull out the calculator and massage the numbers to make it work with your budget, the answer is probably no.

If you do have some extra income lying around, you may be able to jump into the real estate market if (and only if) you’ve taken care of a few other things first. If you’ve met your retirement and kids’ education goals and still have a fat wad left over, then you can wade into the fresh powder of a second home purchase, says Mark Brown, managing partner at Denver’s Brown & Tedstrom Wealth Management. A second home becomes an even more viable option if you plan to retire in it, too, but only if the extra mortgage payment doesn’t put you in danger of overextending your finances now. Just be aware: In the most popular resort towns, you’re going to need about $300,000 just to get into a condo (see “A Pile Of Money"). Single-family homes can run into the millions.

If your roll can’t cover something like that, you could consider fractional ownership, such as at Breckenridge’s Grand Lodge on Peak 7, where a smaller investment (for winter, starting at $25,000 plus $500- $800 annually for homeowner’s fees) nets you weeklong block in fancy ski condos for life. The tradeoff is that you only get it for that week—not a day here and there throughout the ski season, so it’s not ideal for regular weekend powder hounds.

For most of us, renting probably remains a better option, says Brown, a fixture on the Financial Times’ and Barron’s lists of top financial advisers. The basic math: Even if you’re renting 30 times each winter at $200 a night, that’s only $6,000 for the season. Many people spend that on a week’s vacation, but you’re getting a full month of enjoyment, memories, and healthy activity for the same price. Six Gs doesn’t seem so bad now, does it?

For more insight into how Coloradans earn, spend, and save their dough, check out “Mile High Money” in our September issue.