Pricing of
Summit County, Colorado real estate is almost always derived from the same two
basic financial elements: a well-defined down payment (usually in the range of 20 to 25%),
and what is called the annual "cost to carry," which is calculated after any possible short
term rental income offsets. This is true whether looking at a simple two-bedroom, $400,000
entry-level condominium near all of the desired public transit and other local resources,
or much more elaborate $3,000,000 home in the ski village. Unfortunately, only substantial
down payments can create "break even" or "cash flow neutral" properties.
The
following Project Cost of Ownership examples for Summit County and Breckenridge Colorado
real estate are meant to help explain and illuminate the importance of each of these
financial variables. Different locations and price points are used to provide a fuller
picture of the overall situation.
While these case
studies are based on actual Summit County, Colorado real estate, it's important to
remember that they may not represent actual "for sale" properties that are currently on
the market. The effects of a maximum leverage purchase model, in conjunction with any short
term rental income offsets, are well illustrated by these best of breed examples, and they
help to provide financial guidelines when examining the real estate market.
|
Cost of Ownership
| Beds + Baths |
3 + 3 |
| List Price |
$950,000 |
| Square Feet |
1,544 |
| Price per Square Foot |
$615 |
| Downpayment 25% |
$237,500 |
| Financing 75% |
$712,500 |
| Mortgage 6.375% (10 Yr I/O) |
($45,422) |
| Association Dues |
($4,440) |
| Property Taxes |
($2,460) |
| Annual Cost |
($53,321) |
| Net Rental |
$35,000 |
| Yearly Expense |
($17,321) |
| Monthly Expense |
($1,443) |
| Net Income / List Price |
3.68% |
|
Although our examples are financial in nature, we can compare qualitative issues in an
easy-to-use spreadsheet format. To our knowledge, Summit Property Brokerage is the only
company offering Summit County, Colorado real estate and Breckenridge, Colorado real estate
with this unique approach toward the decision making process. For your own customized Summit
County, Colorado real estate property report, please
contact us today.
Making a "smart" real estate decision — one that stands above the average — is largely a function of undertaking a comprehensive financial analysis and thoroughly understanding the marketplace.
estate decision apart from the average.
"Value" is usually measured in three ways:
1) Comparison of price point to overall offerings in the field.
2) Using price-per-square foot in order to make properties of varying sizes more comparable.
3) Measuring negative cash flow to arrive at the monthly "cost of carry."
The fact that not even equally priced properties are the "same" makes shopping for and
attempting to price property without using a solid form of spreadsheet analysis a very
difficult, if not impossible task. In the world of Summit County, Colorado real estate,
the unique personality of each residence is directly tied to its floor plan, square
footage, location, property management, square footage and the amount of short term rental
income it may or may not be able to generate. As a result, net income can be used as a
great way to level a playing field that is filled with a wide range of different properties.
The market prices set during high tourist seasons (represented by income) is a good
reflection of both the good and the bad variables for each individual
property.
In order to qualify as "best buy" recommendations,
properties must score strongly on each of these three indicators of value. This means
demonstrating best price point value (when compared to available inventory), having the
lowest possible cost per square foot and suffering the least amount of negative cash
flow.
Our spreadsheet analysis is uniquely capable of
finding those properties which are truly worthy of serious consideration. It allows us to
take into account all of the critical variables into a format that is both simple to use
and comprehensive, and one which allows you to quickly identify the players in Summit
County, Colorado real estate. Furthermore, "short listed" properties are compared against
past sales records in order to determine their true market
value.
Sellers in Summit County, Colorado can seriously
benefit from using this same methodology when listing their real estate. Taking the buyer's
perspective into account when packaging a "to be sold" home can help to accelerate the
sale. Using this process can reduce or even eliminate the pricing errors and presentation
flaws that often stand between a seller and maximizing the financial potential of their
property.
If our tried, tested and true approach to the
unique challenges posed by buying and selling real estate have caught your attention,
please
contact us. We are the only Summit County, Colorado real
estate consulting and advisory service company, and we offer unbiased counsel and
information that is designed to make sure you remain in control of your real estate
purchasing process from start to finish.
Making a "smart" real estate decision — one that stands above the average — is largely a function of undertaking a comprehensive financial analysis and thoroughly understanding the marketplace.
estate decision apart from the average.
