Tips for Investing in Aspen Real Estate

Real estate can be a valuable investment, especially if investors choose appreciating properties in highly desirable areas like Aspen. Mostly known for its prime ski destination, Aspen is a great Colorado town sought out year-round for its stunning nature views and luxury amenities. To help you with an Aspen investment property, here are some tips to follow before starting the process.

Each local market follows its own trends and demands, affected by the types of buyers and economic forces in the area. Before investing, be sure to research Aspen’s market, as well as its market trends. Understanding things like the average home values and average rental rates for the property type you’re looking for can help you judge whether your investment is likely to pay itself off.

Those looking for an Aspen investment property can expect to pay around $9.25 million for a single-family home as of September 2022. Condo and townhome property types average a little lower, at $5.4 million. Although prices and demand have always been high in Aspen, the previous year’s low inventory has caused a sharp increase in prices in the area. Investors can expect their home purchases to be well worth it, as appreciation rates for properties in the area are in the top 30% across the country. The average market rent is also high, at about $3,148 a month.

When you’re sure about your Aspen investment, research the property types in the area, and decide which one works best for your goals. There are several ways to invest in different properties. For example, you can purchase properties like condos, townhomes, or homes, to rent out to visitors or residents in the area. If you plan on using the property and renting it out, be sure to establish how frequently you plan on personally using the property, as well as review funding rules and rental regulations in Aspen.

Popular property types in Aspen include townhouses, cabins, mountain homes, and condos. Investments like townhouses and condos are ideal for investors who aren’t interested in competing with high prices for larger properties and for those who are interested in short-term renting for visitors during ski season or on summer vacation. Properties like cabins, Aspen mountain homes, and single-family homes, are great choices for investors looking to build equity on a property or appeal to upscale renters interested in luxury amenities and stunning nature views.

Take the time to internally reflect on your motivations for investing, and be sure that buying an investment property is the correct move for you. Not knowing why you’re investing can lead to poor property choices. As they’re investment properties, avoid falling in love with a home or condo, as its primary purpose is to generate cash flow. Letting emotion cloud your judgment can lead to buying a property that’s a money pit, overpriced, or lacking something compared to similar properties.

Not understanding your motivations can also cause investors to have unrealistic expectations for a property. If you choose a property that needs work, be sure you understand the reality behind investing in the repairs. Properties that are lower risk are better for first-time investors, as they’re more likely to generate revenue with less stress, then sell with less hassle when investors are ready.

When investing in real estate in Aspen, it’s important to review the costs involved in the investment. Plan for upfront costs like a down payment, a mortgage, and more. Before investing, consider using an LLC, or a limited liability company, to help you manage the risks for your property. An LLC assumes ownership over a property, so if something happens, you’re not personally responsible. This also helps with other factors that may be affected by your investment, such as a retirement account.

Once you’ve purchased the property, consider costs like possible repairs, maintenance, cleaning services between renters, utilities, and homeowner’s insurance. Also factor in unexpected maintenance that comes with everyday use or natural elements like rain, snow, and wind.

Before investing, look up the rules and regulations for real estate investment in the area. In Aspen, regulations for short-term rentals were recently changed and will be actively enforced. Not following regulations can disqualify you from renting, which can be a serious obstacle to your investment property.

For investors in Aspen, be sure to review the three different short term rental permit types, as well as research any limits for the number of rental properties in the area, if you plan on renting out your investment.  In certain zones, short-term rentals are limited to 75% of permits in the area. When investing in renovations or additional buildings, research any community and property regulations or laws before beginning.

Once you’ve invested in Aspen real estate, to have long-lasting positive returns, it’s important to manage the property well. This may mean reorganizing your schedule to manage the property yourself or hiring a property manager to do the job for you. Be sure you’re efficiently and adequately attending to renters’ needs, keeping up with maintenance, and paying property and utility fees on time.

 

Additionally, try to maximize the value of your property. Start with practical fixes first, as the property needs to be functional. Then, consider upgrades that renters and eventual buyers would be interested in. For Aspen properties, outdoor decks and kitchens may be a good investment, as they provide an area to enjoy nature views and mild summer weather. Kitchen and luxury bath renovations will also appeal to the buyers in the area.

Investing in real estate can have large gains if you do so correctly. Make sure to research the market and demand in the area before choosing a property type, then think about costs, management, and logistics.  If you need help searching for Aspen homes for sale, contact experienced Aspen luxury real estate agents Simon & Susan to guide you through the process. This is a leading team in Aspen real estate, and they would love to help you find a new home!

_{*Header photo courtesy of Unsplash}