Your mountain home dream. What are you waiting for?

Call me an eternal optimist, but there could quite possibly be no better time to buy or build your mountain home dream than right now.

Land

The old adage that land doesn’t get any cheaper applies.  Granted, land in Windcliff isn’t “cheap.” In fact, it’s very expensive.  But where else can you invest in something that is only getting BETTER with time?  Remember, the land to the West and South of Windcliff is the Rocky Mountain National Park.  The land to the East is the Roosevelt National Forest.   The land to the North is largely in conservancy.  The views you acquire TODAY in Windcliff are going to be the same views your great grandkids can enjoy with almost not changes.  Where else in the country is that true?

As I look up and down Windcliff, I see twelve lots currently available from between $175,000 and $525,000.  Activity has been moderate on these lots and lot listings tend to sell more quickly recently than they have in the recent past.

The Setting

If you’re reading this, you probably already know what Windcliff is about but at the risk of restating the obvious, “it’s about the views (, stupid ; ).” But it’s also about the community, the neighbors and the mountain we share.  Windcliff is more than a cabin in the woods.  It’s secluded and private, but it’s a community of like-minded, like-hearted neighbors who wave when they pass, plan gatherings together and share something in common which is rare even in the Estes Valley.  The Windcliff Homeowners Association maintains high standards that protect our shared interests and provide us some of the best maintained roads in the Rockies.  We enjoy first-use water in our own reservoir system that was a design ahead of its time in the mountains.  We benefit from the healthy infrastructure of the Upper Thompson Sanitary District.  Our neighborhood sits arm-in-arm with the YMCA of the Rockies and all its amenities.  It’s only a 9-minute drive to downtown Estes Park and the Rocky Mountain National Park and Roosevelt National Forest are literally just steps away from every home in Windcliff.

Buying a Home

I tend to analyze the new home building scenario, but it is also worth noting that many of my neighbors in Windcliff have recently found great success buying an existing home and remodeling.  A number of homes are available at the time of this posting ranging in prices from $650,000 to over $1M.  But since remodels are tricky to apply rules-of-thumb thinking to, allow me to focus the numeric portion of this discussion on new construction.

Building a Home

As I mentioned in my previous post, your mileage WILL vary, but we typically see a few rules of thumb in Windcliff.  The lot tends to be 25-30% of the total property value.  And homes are running $225-$250/sf to build depending on finishes and design.

So we would expect a buyer of a $175,000 lot to target building a 2,700 square foot 3-4 bedroom home ($635,000 home building budget) and have just over $800,000 invested in the project by completion.

Obviously, the sky is the upper limit but even the largest and most elaborate home building projects tend to cost below $2M in Windcliff these days.

Vacation Rental Income

The Town of Estes Park and Larimer County are in the throes of increasing regulations on Vacation Rentals, but assuming the regulations continue to be sensible and vacation rental permits are easily obtainable for new vacation rentals in the Estes Valley, new vacation rental homes, appointed well for renting and available to paying rental guests during the bulk of the peak seasons are typically bringing their owners between $35,000 and $60,000 in net annual rental income (after management commissions and guest operations expenses are deducted from gross revenues between $60,000 – $100,000/year).

Again, the usual “consult your tax advisor” and “your mileage will vary” caveats apply, but the cost of utilities, maintenance, taxes and financing a 3-4 bedroom, 2,700 square foot home could run around $5,000/month or $60,000/year (typical).  So if the home is a strong performer in vacation rentals, the vast majority of the costs can be offset by vacation rental income (tax scenarios not considered – could be favorable or unfavorable – consult your favorite tax advisor).

Financing

I’m not a market analyst and do not play one on TV, but even with recent and projected upward pressure on lending rates, it’s still an excellent time to hold paper on an appreciating asset.  The sins of 2008 have made it increasing frustrating to get through the process and have extended our timelines, but all in all, good rates appear here to stay for the time being and it may very well be as good a time as any to lock-in the gifts of the present.

Cash

Depending on your approach, clearly you’ll need a wad of available cash to make this dream come true.  Given the scenarios above and making a ton of assumptions (the lot is paid for with cash, but the value of the land is applied toward a 25% down payment of the  permanent financing), allowance for construction financing costs plus a budget of $60,000 for window coverings, outfitting, decor and furnishings, it would probably be best to have at least $275,000-$350,000 cash available to work with to feed the project – more if you’re self-financing the construction (obviously).  And of course, as is always the case with cash, more is better (and begets more peaceful sleeping habits throughout the project).

Is this the Right time for You and Your Family to do This?

And finally, the million dollar question:  Is this the right time for you?  Only you can answer that for sure.  But let me throw out some quips to consider:

  • Do you think you will ever see land cost less and mortgage interest rates much lower in the furture?
  • Can you gather your family around your stock portfolio a couple times a year to come together and get back to nature?
  • Are you ready to stop the vacation pin-ball effect bouncing from destination to destination with the family in tow and ready to vacation in YOUR home TOGETHER on a REGULAR basis?

Owning a vacation home may not outperform the best equities you hold, but it can easily be the most VALUABLE asset in your portfolio when it brings your family together – eye-to-eye & heart-to-heart with nature (The Estes Park community, The Rocky Mountain National Park, The Roosevelt National Forest, etc.).  And it is likely to give your family blessings beyond the measure of any economic barometer.