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Vacation Rental Passive Income In Vail

A vacation home you can use whenever you want and make a profit? Vacation rental passive income in Vail sounds like a pipe dream, but like any investment, it’s all in the execution. By finding the right property at the right price and running it well, you can set yourself up for success.

Income Potential

Vail has an active summer and winter tourism season, and even the “off” seasons are busier than many towns’ peak tourist weeks. The average daily rate across all properties is $540 a night. These properties can be large or small, closer or farther from the slopes. Business travelers and temporary workers use vacation rental sites as well. Vacation rentals may also be referred to as “Short-term rentals” as they typically are qualified by rental periods under 30 days. 

Let’s take a 3 bedroom cabin in Vail at $555 a night, of which about $300 goes to the owner (the rest is cleaning fees, taxes, etc). Let’s say you rent the place for 20 nights a month, a net profit of $6000. If the property is $1.3 million, a 30 year mortgage with a 20% down payment and a 3.8% interest rate carries a mortgage of $4850 a month. You’re earning $14,000 a year, you own a $1.3 million property, and that’s leaving you 120 nights of free vacation per year. Assuming you’d have to spend $555 a night to vacation in Vail, you’ve scored yourself $66,600 worth of vacation a year. Want that vacation time in cash instead? Rent it 25 nights a month instead of 20 and you’ve earned $32,000 instead of $14,000. There are a few other things to consider (like insurance), and these numbers are just rough examples, but you see how this shakes out very favorably.

Time and Cash Commitment

Now for the downside. Rental properties have a higher down payment requirement, so for the property above, you’d have to kick out $260,000 up front. Furthermore, running a short term vacation rental isn’t quite as passive as you might hope. First, you have to research the property because not every offering is a good one, and some attract higher returns than others per dollar invested. Then, you have to learn to list a property well which includes professional photography, good writing, and a number of other subtleties. You’ll also want to list it across multiple platforms (Airbnb, HomeAway, VRBO, etc) and sync the reservations with each other. Respond quickly to reservation requests, make sure you have a good housekeeper, make sure the property is safe and secure and well maintained. Then there are collecting and remitting taxes. Finally, Vail requires that you have a local agent within an hour of the property able to respond to complaints at all times. Failing to meet this rule carries significant fines!

DIY Vs Managed

If you own 10 or more properties or live in Vail and don’t mind doing the work yourself, it’s probably worth it to build your own systems for management. If you only want one or two properties, and especially if you don’t live in Vail, we’d suggest using a short term rental management company. There are several worth considering, though obviously Away Agents is the best. Are we supposed to say that? Oh well, we already did.Contact scott@awayagents.com for more information!

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