Buying a vacation rental property in Mammoth Lakes can be a great investment. With recent boosts to the market — the sale of Mammoth Mountain to Alterra Mountain Company, thriving year-round tourist visitation, and ever-increasing public interest in mountain vacations — it’s a great time to consider buying a vacation rental property.
Before you dive in, here’s what you need to think about:
Consider Your Ideal Location & Budget
Properties that are closer to Mammoth Mountain access points (lodges and lifts) usually have higher asking prices. That said, you can also charge more for a vacation rental if you can boast that it’s a ski-in, ski-out property or if it has direct access to the gondola or chairlifts. Access to the local bus system can also be a selling point when renting to vacationers.
Determine Your Priorities & Bang for Your Buck
Interestingly, in the last few years smaller properties have reflected a higher return on investment. For example, a one-bedroom condo at The Village at Mammoth costs roughly $125,000 less than a two-bedroom condo, but the one-bedroom grosses nearly the same amount of rental revenue. If you are flexible on size, smaller is better. Of course this all depends on if rental income is your priority.
Check the Zoning Regulations in Neighborhoods You’re Considering
While Mammoth Lakes is a resort community, some areas in town don’t allow transient rentals (rentals for less than 30 days at a time). The majority of condos allow nightly rentals, while the majority of single family homes do not. Your real estate agent will be able to help you make sense of zoning regulations, but if you want to take a look for yourself, see the Town Zoning Map and Zoning Compliance Guide. When buying a vacation rental property, it’s essential that you understand where transient occupancy is allowed.
Do Market Research
If rental income is important to you, search vacation rentals in Mammoth Lakes to get an idea of what owners are charging for vacation rentals. If you have a type of investment property in mind, look for rates for a similar property. Look at rates in winter holiday periods (the most expensive) as well as in winter and summer in general. Check out the lower end of rates too — spring, fall and midweek stays. If you’re considering a long-term rental, ask your real estate agent for monthly rental rates for various property types.
Have a Calculator Handy to Factor in Hidden Costs
Managing a vacation rental isn’t as simple as the sale price and what you plan to charge per night. You’ll need to consider other hidden costs too: annual property tax, your monthly HOA fee, property insurance, costs of repairs and upgrades, utilities, a cleaning service between stays, snow removal and landscaping, etc.
Decide If You’ll Hire a Property Management Company or Do It Yourself
If the list of hidden costs leaves your head spinning or you’re short on time, I strongly suggest hiring a property management company to do the heavy lifting. Whether you live in Mammoth Lakes or are managing the property from afar, getting a call to fix a toilet in the middle of the night probably isn’t your idea of fun. There are several quality property management companies in Mammoth Lakes. Depending on where you buy and the level of service you need, your real estate agent should be able to provide a list for you to contact and a few questions to consider when talking with each company.
Make a Plan for Marketing
Unfortunately your vacation rental isn’t going to rent itself. If you have a property management company, they may handle the marketing for you. If not, come up with a plan before you jump into buying. Look into Airbnb, HomeAway and VRBO in addition to rental companies in town, each of which will offer different levels of service from online booking only to online advertising, cleaning and maintenance assistance. If you have other properties or a marketing background, you might decide to handle marketing on your own.
Get Familiar with Transient Occupancy Tax (TOT)
TOT is standard in resort destinations across the country. In Mammoth Lakes, this tax is 13% and is required to be paid by the guest to the owner when the stay is paid for. It’s then the owner’s responsibility to remit the TOT collected to the Town of Mammoth Lakes. A transient stay is any stay of less than 31 days. You’ll add the 13% tax on to the entire cost of each guest’s stay. If you hire a property management company, they’ll handle this for you. Learn more about TOT.
If You Plan to Use It, Make Sure You’re Excited About It
If the property will also be your vacation home, it’s more than just a monetary decision. You need to want to stay there yourself. And chances are, your renters will appreciate thing that you appreciate too. Things that make your life in Mammoth Lakes easier — underground parking, comfortable beds, a well-outfitted kitchen, access to public transportation — will make their vacations easier too.
Read more of our tips on buying and operating vacation rental properties. If you’re ready to buy, check out my Ultimate Home Buyer’s Guide. Give me a call if you’d like to talk: (760) 914-4664.