Cost of Real Estate Ownership in Summit County Colorado
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.

Breckenridge – Mountain Thunder

Cost of Ownership
Unit Number 1208
Bedrooms + Bath 2 BD / 2 BA
List Price 625,000
Approximate Square Foot 1,142
Price per Square Foot 547
Downpayment ( 30% ) 187,500
Financing 437,500
Interest Rate - 30 Yr Fixed 4.750%
Mortgage Payment (27,386)
Assoc. Dues or Maint. Expense (8,340)
Taxes (3,644)
Utilities/Misc. - TBD 0
Total Annual Cost (39,371)
Projected Net Rental Income 27,000
Net Annual Income/(Expense) (12,371)
Monthly Income/(Expense) (1,031)
Net Income to List Price Ratio 4.32%
Projected Return on Down Payment
Purchase Price $ 625,000    
Downpayment $ 187,500    
Investment Timeline (Years)   10    
Compound Rate of Appreciation   3%   5%   8%
Projected Selling Price $ 839,948 $ 1,018,059 $ 1,349,328
Selling Expenses @7% $ (58,796) $ (71,264) $ (94,453)
Remaining Loan Balance $ (358,750) $ (358,750) $ (358,750)
Anticipated Improvements $ (50,000) $ (50,000) $ (50,000)
Negative Cash Flow Reimbursement $ (401,675) $ (401,675) $ (401,675)
Net Rental Income @ 3% Growth Rate $ 352,289 $ 352,289 $ 352,289
Net Resale Proceeds $ 323,015 $ 488,659 $ 796,739

Utilities, phone, cable, and insurance not included in PCO.

Average compounded appreciation rate has been 6.36% since 1991.

(1) Net Resale Proceeds divided by Investment Timeline (Years)
Weighted Value of Invested Capital – Downpayment (Yr 1 @ 100% of cost) +
Anticipated Improvements (Yr 3 @ 70% of cost) + Negative Cash Flow (@ 50% of outstanding balance)

Time value of money (IRR) is not calculated but the afore described weighted amount of Invested Capital is utilized for the purpose of recognizing the different time intervals for the three stated capital call items.

These projections are provided for informational reasons only. Summit Property Brokerage does not guarantee nor imply that the illustrated outcome will produce the stated return calculation(s).

Example Properties
Click Here to See Example Properties in the Summit Area
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.
The Evaluation Process
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.