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Vail is a strong market for passive income, both in the long and short term rental spaces. The fact that it’s a year-round destination (with both summer and winter seasons about even for the number of visitors at 1.5 million each) makes is particularly appealing compared to more seasonal destinations. Plus, the average daily rate of $461 more than offsets higher median house prices. Assuming you are able to afford the down payment, you should be set up for success. Here is what you need to know to navigate the Vail STR market.

Financials

Let’s start with a $985,000 property. After putting down a 10% down payment, your mortgage is $886,500. If we assume a 4.3% interest rate and 0.5% PMI, you’ll pay $5,467.33 a month. Note that Colorado has some of the lowest property tax rates in the country, so we’ll assume 40% more for taxes, insurance, and maintenance. That’s $7653.80 a month.

The short term rental rate is $461 a night. If you’re booked 70% of the time, which is not unreasonable, you’re at $9,681 a month. That’s $2,028 in passive income. And after 71 months, you can get rid of the PMI and net another $370 a month. That’s $2400 per month in passive income. Aside from some limited housekeeping and listing fees, that money is yours to keep.

Competition

You’re not the only one playing this game. Airbnb and VRBO have a number of active listings in Vail, often with amenities like hot tubs or ski slope access. But these platforms are democratic in that even the little guy can put together a pretty good listing. By getting quality photographs, optimizing the text on your listing, and staying responsive to emails, you’ll get the bookings. Remember, some people doing short term rentals are looking for a more personalized experience, which is something big hotels can’t offer. Show some local character!

Local agent requirement

Here’s one wrinkle with Vail short term rentals in particular. The city understands the importance of the hospitality industry, but also the risks of subpar housing and an itinerant population. So they’ve put the burden on rental owners to take care of things. Vail has a licensing requirement which is, for the most part, simple—avoid noise violations, etc. Where it get tricky is that they require a local agent within 60 minutes of the property available to take calls 24/7. Will a SWAT Team show up at your door the first time you violate this? Yes.

Ok, no. But you need to have that local presence. If that is not something you’re able to commit to, we offer local representation for Vail property owners. We also manage your listing, take the bookings, handle cleaning, and basically do everything that makes passive income truly PASSIVE. If you are interested, give us a call.

Short term rental passive income is a beautiful thing. If you can master the Vail market you’ll be well on your way to financial freedom.