A few years ago, my wife and I took the leap, bought a lot in Estes Park and built our dream home in Windcliff.
If you are contemplating doing the same, here are some numbers to start your analysis with.
The prices below are irrespective of (do NOT include) the cost of the lot. You can make your own analysis of that cost based on which lot you plan to purchase – the current list is posted on our real estate pages for available lots and land for sale in Estes Park.
What does it cost, roughly, to build a home in Estes Park?
Of course, no two homes cost the same to build. But as a rough rule of thumb, we are seeing most homes cost approximately $450-$850/heated square foot to build. Now add the cost of the lot. Finally, take a swag at what it will cost to decorate and furnish the home.
We were able to stay at the bottom end of that scale when we built our home. We were VERY conservative with some finish-out materials. First of all, we had a relatively simple, clean design to work with thanks to our architect who was worth EVERY PENNY. We used modestly priced exterior sidings, used industrial/construction materials instead of exotic hardwood finish details, eliminated almost all expensive steel sub-structures, used lower-priced engineered wood flooring, used painted concrete instead of expensive flooring downstairs, used formica countertops instead of granite (saved us nearly $7,000 from the builder’s original budget!), melamine cabinets instead of exotic hardwood, and modest appliances all contributed to a slightly lower build-out than most home builders would probably shoot for these days.
Now, to be fair we also splurged a little: the fireplace, the amount of decking, the size of the garage, the standing seam roof w/gutters, the flatwork, additional insulation options, higher capacity HVAC boiler, relatively expensive tile work in the bathrooms, high-design plumbing fixtures, and some late change orders.
But we did it: AscentEstesPark.com turned out looking like a much higher cost home than it actually cost us.
Budgeting your Estes Park Home Build
I would advise those building in Estes in the near future to consider the following (more) accurate budget expenses, however:
- Appliances – $20,000 minimum – I just can’t see how you can equip a house with reasonable quality appliances for $6,000 any more!
- Fireplaces – they’re expensive. Ours was “only” $5,000! Most in the showroom were FAR more expensive. Budget accordingly.
- Garage Doors – $130 per linear foot – So if a single 16’ door, budget $2,000. If three 8’ doors, budget $3,120. Yes, ours were insulated and had window panels w/electric openers. Don’t most?
- Landscaping – not included in budget – really needs to be. We have probably added $60,000 in landscaping since building the home. So when budgeting the initial build, we would recommend you line item at least $10,000 for landscaping.
- Permits – I’m not sure how the budget was built for permits ($4,146), but the total for permits and additional tap fees (the prepaid taps are ONLY for 24 “fixture units” – that’s not “fixtures”!) which ended up exceeding $17,000! Ouch! Credit: Upper Thompson Sanitation District for their very expensive tap fee structure in the Estes Valley!
- Surveys & Copies – same story. Budget was only $1,500. But the total of my invoices to Van Horn exceeded $3,300 by the time the project was complete. Adjust accordingly in the future.
- Structural Engineer – Budget $5,000 minimum. Yes, our house design had some unique challenges, but Larimer is demanding. Budget accordingly.
- Trash, Toilet & Final cleaning – Budget was only $1,300 but actual costs exceeded $4,000.
Also be sure to budget $50,000-$95,000 for window coverings, decor and furnishings to finish the project.
Will these estimates be 100% accurate for all projects? No. Not at all. Again, these are rules of thumb. But they tend to give you a pretty good IDEA of what you’re getting into.
Our last piece of advice to anyone considering building in Windcliff: JUST DO IT! No one has ever said, “we wish we didn’t build that home in Windcliff.” Ever.
For the sake of story telling, let’s consider a recent project in Windcliff.
The stunning lodge-style mountain home, just steps away from Rocky Mountain National Park boasted stunning panoramic views, wood and stone accents, massive living room rock fireplace, 2 upstairs decks, master suite with 2nd wood fireplace, elegant bath with soaking tub, steam shower, sauna, and elegant master bath with dual vanities. The home rented for $430/night in Prime season, was a Top 5 rental in the Windcliff Vacation Rentals program, and was bringing its owners about $35,000/year after commissions and rental expenses.
The home sold to new owners for $830,000 and a complete interior remodel began immediately. The buyers ended up putting about $470,000 into the wall-to-wall complete remodel. The home is a top performer in the Windcliff Vacation Rental program, rents for $950/night in Prime Season and brings its new owners more than $60,000/year after commissions and rental expenses.
Depending on down payment, financing terms, financing costs, and a multitude of other variables specific to every individual buyer, we can only estimate using typical current rates etc. that a 30-year mortgage w/20% LTV on a home like this might run in the neighborhood of $3,000-$3,500/mo. HOA dues, taxes, utilities and maintenance costs for a similar home in Windcliff typically run in the neighborhood of an additional $1,250-$1,450/mo.
Home Purchase $830,000 Remodel Expense $470,000 80% LTV Down Payment $260,000
Possible Costs Monthly Annual 30-year Mortgage $5,425 $65,100 Taxes $359 $4,304 Insurance $150 $1,800 HOA Dues $300 $3,600 Utilities $250 $3,000 i/HD $189 $2,268 Maint/Repair $200 $2,400 Total Expenses w/Mortgage $6,873 $82,472 Vacation Rental Income net of Net of Management Costs & Rental Expenses $5,000 $60,000 Possible Net Cost $1,873 $22,472 Possible 30 yr Outlay (incl. down pmt & up-front) $934,160
So, in this scenario, no only are you paying $0.72 on the dollar for the home, remember, you are spending 2019 dollars over 30 years in this scenario.
Update: post-COVID market factors have already driven the market value of this home close to $2.0 million! This means the owner of this incredible home will take 30 years to pay $934,160 (in 2019 dollars) for a home that is likely to be worth even more over time!
In this assumptive scenario, vacation rental income has more than fully offset the mortgage interest costs and we’ve completely neglected any potentially favorable tax opportunities a second home might possibly provide. You’ll have to talk to your tax advisor, but most of you probably already know of a few fair, legal and significant tax advantages to owning a second home using today’s tax laws.
Now, let me give you a “fair warning” from first hand experience: Unless you are particularly young, the likelihood of you not making this home your primary residence before the 30 year note expires are EXTREMELY unlikely. So go ahead and plug in here that at some point (which for some of us, came much sooner than later) you will forgo the offsetting rental income for fulfilling the dream of living in Windcliff full time. But you’re likely also selling a primary home when you do so, so you’ll be bringing equity from its sale to the mountains along with you. Could it perhaps be enough to pay off your Windcliff home mortgage early!?
Obviously, it’s terribly difficult to generalize projects like this so the standard common sense disclaimers apply.
While these numbers are based on an actual home in Windcliff, actual results will vary depending on innumerable decisions and variables.
But nonetheless, you can see how vacation rental income can perhaps offset a significant amount of the annual cost of ownership of an investment like this by as much as 65% or 70% in good rental years like we’ve had in 2017 and 2018 without even considering any potential tax benefits that might exist for your particular situation.
So if you’ve ever considered buying a Windcliff home, “when the timing is right,” I strongly suggest you consider perhaps adjusting your timing to be right now! Browse our Estes Park real estate listings today.
UPDATE for 2020 — We hope you find this blog useful and informative as you plan your vacation to Estes Park.
Currently, Windcliff does not offer any vacation rental homes that allow pets during your stay.
However, we have offered dog-friendly rental homes in the past and may do so again in the future. If you have any questions, please contact us online or call us at 970-586-2181.
What you should know about bringing your dogs to Estes Park
Before you load the entire crew (including the pooches) and head out, you should be aware of some key points when it comes to vacationing with your dogs in Estes Park.
First, you will encounter pet rules in Rocky Mountain National Park, which is right in Windcliff’s backyard. The biggest rule: pets are prohibited on ALL Rocky Mountain National Park trails, tundra, and meadows, according to the official site. National parks aren’t always the best (or safest) place for your pets. However, leashed pets are allowed in designated areas such as established campgrounds and picnic areas – and you’ll generally be able to hike with your dog — again as long as they are leashed — in Roosevelt National Forest. You can review the rules on the National Park Service website before you go.
In addition to the specific rules at the national park, keep in mind that while your dog may have wild roots (don’t we all?) that they are still a domesticated pet. They might not be able to control those wild urges that suddenly take them over when met with the beauty, mystery, and overwhelmingly interesting smells to be found in a national park! If your dog isn’t leashed, they might just run off into the woods or chase the wildlife around! This may happen even if they are just perfect at home. So, you’ll want to plan to keep close watch on your pet, as well as keep them leashed. Be careful when hiking or exploring on any dog-friendly trails, too.
Activities for you and your dog in Estes Park
Aside from hiking and enjoying nature – of course assuming the rules are followed! – make sure to visit nearby town of Estes Park (internal link to guide). There are pet friendly restaurants in Estes Park for you and your companion to grab a bite of food. Many establishments even leave out water dishes for families walking their dogs and window shopping in town. Estes Park, overall, is known for being dog friendly!
In addition, leashed dogs can often be seen on the beautiful Estes Park Riverwalk. There’s even the Estes Valley Dog Park. Provided by the Town of Estes Park, the facility features lake access and an agility course.
There are many other businesses in the Estes Park, CO area that you may want to take note of. The Estes Park Pet Supply Company offers supplies you may need while you’re out, including food, toys, and more. If you forgot anything your dogs need, check them out! In the event of an emergency, you can contact the Animal Hospital of the Rockies or the Animal Medical Center of Estes Park.
Here at Windcliff, folks ask us all the time while planning their Colorado mountain vacation: should I rent an affordable riverside cabin or a majestic mountainside home? Well, our feeling is: why not have the best of both worlds? Windcliff’s Estes Park duplex condos, detached condos, and triplex condos offer you majestic million dollar views at rates more comparable with riverside cabins. Here are some things to consider when you’re deciding what to rent!
How’s the view?
In our experience, typical riverside cabins tend to be “fenced-in” by tall trees. This limits your views of the beautiful countryside, sometimes to mere feet in front of your toes. Condos in Windcliff are not only affordable, they offer endless million-dollar views of the snow capped Continental Divide and the Colorado Rocky Mountains. In fact, our “cabins” also offer the same — and in some cases BETTER — views than some of the largest luxury homes in Estes Park.
What do you hear?
Here again, this likely comes down to preferences, but remember this: the river NEVER takes a break. A riverside cabin in Estes Park will be flooded with the sounds of running water 24x7x365. At Windcliff, our goal is zero: zero sound = zero stress. A mountain condo at Windcliff can offer you the sound of almost nothing but the wind in the trees and the thoughts in your heart.
What amenities are available in Estes Park condos?
Another item you should consider when deciding on lodging for your mountain escape: the amenities that available. Each Estes Park condo at Windcliff provides a luxury experience. We have many condo rentals with a hot tub, such as Breiding, Cedar Upper, Cedar Lower, Jordan and Tranquil! We also have a dog friendly rental home, the Macmillan home, and a dog friendly condo, the Wanderlust home.
Putting the luxury back into your luxury vacation rental!
Keep in mind that a “rustic” experience doesn’t have to be without luxury. Take a look at Garland’s Alpine Lodge, Divine, or Serenity Estes Park condos. Each one of these gorgeous rental homes preserves the classic, warm, secluded feel of a mountain vacationing and living space without compromising on comfort and amenities.
Maximizing the budget
Finally, just because the budget is driving your selection, that doesn’t mean you’ll have to limit your views. Take a look at the Adams, Alleman North, Griffin, Destiny or Werlein condos. Each one of these vacation rental condos offers viewing opportunities that well surpass your typical rental cabin: unmatched panoramic views from high atop Rams Horn Mountain. In other words, million dollar views on a limited budget! It simply doesn’t get any better than this.
But remember: if nothing other than a log home will do, have a look at the Armstrong Estes Park cabin at Windcliff.
The bottom line is this: Windcliff offers a dream vacation for everyone on every budget without sacrificing views and luxury! If you’re ready to get started, view all of our available Estes Park vacation rentals to find the one that speaks to you.
The Homeowner’s Perspective
While your second home is just that – a second home – and can can be legally and properly covered by a homeowners’ policy, there are additional benefits to insuring a second home that is being rented out for short-term vacation rentals under a commercial policy.
Now, granted, a commercial policy can sometimes be as much as twice as expensive as a simple homeowners’ policy, but here in Colorado, depending on the Insurer/Underwriter, can also provide very valuable additional coverages including coverage(s) for lost revenue and increased, standard liability coverage.
Some of our homes in Windcliff are generating their owners $3,000-$5,000 of additional income each month. In the event of a catastrophic loss event, the missing income stream can have a significant impact on the homeowners family finances. Commercial loss of revenue coverage helps bridge the recovery.
While most homeowners’ 2nd home policies include a suitable level of liability coverage, some simply do not. Or in the case where the home is owned by a separate LLC, a simple homeowners policy may not provide suitable coverage. Commercial policies typically start at $1,000,000 of liability coverage and can be increased for a modest additional premium.
So many of our homeowners in Windcliff cover their homes with a commercial policy for these additional benefits and peace of mind.
Interested in owning a home at Windcliff? Browse our available Estes Park real estate!
The Guest Perspective
But what about the guest? An accidental damage insurance policy is added to every Windcliff vacation rental which provides $10,000 of contents coverage to not only the guest, but also the homeowner and Windcliff Homes, LLC as “additional insureds.” This coverage gives all three parties the peace of mind that any damage to contents of the home will be fully covered and easily reimbursed without debate, difficulty or judgement. Accidents happen. That’s why there’s insurance.
Most guests are covered for liability by their personal homeowners policies. Should there be a medical or structural incident in the home as a result of the guest using/renting the home, that guest’s homeowner’s policy is their primary insurance coverage so that policy will cover that guest for any losses and claims.
However, what if that guest doesn’t own a primary home and therefore doesn’t possess a primary homeowners’ policy to protect them? That’s where the guest damage insurance policy kicks into “second gear.” Windcliff’s damage insurance policy also provides $500,000 of liability coverage to not only the guest, but also the homeowner and Windcliff Homes, LLC as “additional insureds.” Once again, this provides EVERY guest and EVERY homeowner the peace of mind that a guest who isn’t owthersie covered by a homeowners insurance policy will be protected against the financial and personal stress of an undesirable medical event or structural damage to the vacation rental home.
Either Way – You’re Covered – So Enjoy Your Windcliff Vacation!
So in short, Windcliff’s got you covered: guest and homeowner can rest assured the right coverages are being provided in the event the worst happens. And when the worst doesn’t happen, you enjoy your mountain vacation in ultimate peace of mind. If you’re ready to enjoy the view, see all our available Estes Park vacation rentals.
The Town of Estes Park treats water from two separate sources. As part of the Colorado-Big Thompson Project, our Marys Lake plant receives source water from the upper Colorado River after it has been stored in Grand Lake and transported 13.1 miles to the East Slope via the Alva B. Adams tunnel into Marys Lake. This plant can obtain water directly from the tunnel or the lake.
Our second source, Glacier Creek, is a tributary to the Big Thompson River which begins at an elevation of 11,300 feet in Rocky Mountain National Park. It is treated at the Glacier Creek Plant, located on the eastern boundary of the Park.
We are fortunate in that our source water is virtually uncontaminated by introduced toxins such as industrial waste, petroleum by-products, or agricultural run off. Our treatment process is primarily an effort to eliminate naturally occur-ring substances and to adjust the chemical characteristics of the water to allow the treatment steps to take place.
The Colorado Department of Public Health and Environment (CDPHE) has provided us with a Source Water Assessment Report for our water supply. The assessment is used to determine the susceptibility of the public water system to possi-ble contamination. This report provides a screening-level evaluation of the likelihood that a potential contamination problem could occur rather than an indication that a problem has or will occur. We can use this information to evaluate the need to improve our current water treatment capabilities and prepare for future contamination threats.
For general information or to obtain a copy of the report, please visit the Town website at www.estes.org/sourcewater or the CDPHE website at www.wqcdcompliance.com/ccr. The report is located under “Source Water As-sessment Reports”, and then “Find Your County’s Water Report”. Select LARIMER County and find 135257; ESTES PARK, TOWN OF. You may also request a copy by calling Chris Eshelman, Water Superintendent, at 970.577.3608.
The Windcliff Property Owners Association maintains 3 reservoirs in Windcliff. Reservoir No. 1 is at the “Blue Line” (line above which the Town of Estes Park cannot guarantee water pressure/delivery) and arrives by town water pressure. Windcliff then pumps water uphill to Reservoir No. 2.
Reservoir No. 2 is on the north end of St. Moritz and includes a 100,000 gallon underground concrete tank. Windcliff then pumps water uphill to Reservoir No. 3. Reservoir No. 3 gives Windcliff residents a reserve of water for peak use and firefighting.
All domestic water delivery is gravity fed to individual homes which have wireless meters read regularly by WPOA Operations Staff. Each home has a backflow prevention valve, pressure regulator and meter. Each home also has a Curb Stop Valve to shsut off water outside their home.
Windcliff Property owners pay for water at the WPOA’s bulk rate cost. The WPOA assesses a “base” water fee annually to each property owner (total water consumption divided by number of properties in Windcliff). Then, each year, each property owners’ annual assessment is adjusted (trued-up) for actual usage (over or under based on actual wireless meter readings in each home).
The WPOA also conducts periodic water testing to state standards with oversight by the State Water Authority.
There is no Tap Fee for constructing a new home in Windcliff but construction cost to connect is at the owner’s expense under the WPOA’s supervision.
Windcliff is lucky to have one of the most advanced, most reliable and highest-quality water systems in the Estes Valley!
The article “What to Consider Before You Buy a Vacation Home” recently appeared in The Wall Street Journal. In it, writer Jeff Brown, writer in Livingston, MT highlighted both the pluses and minuses of owning a vacation/rental home. Here is his article, edited to be most relevant to owning a home in Windcliff with personal comments inserted by Rich Chiappe of Windcliff Homes.
Chiappe first rented a Windcliff vacation rental home with his family and another in 2007, became enamored with Windcliff, purchased a 3-bedroom condo exclusively for vacation rental (investment) in 2011, sold it in 2014, purchased a lot in 2014 and completed a 4-bedroom custom home in 2015. Chiappe is now owner of Windcliff Vacation Rentals in Estes Park, Colorado.
Brown: It’s that time of year, when legions of vacationers decide they want to take the plunge and buy a second home. And this year, perhaps, it may be especially true: The economy is firming up, interest rates are still relatively low and investment accounts are brimming.
So consider this a reality check. Whether people are looking for a spot to enjoy themselves, rent to others or resell for a big profit, there are many mistakes that could bring them big headaches or cost them a lot of money.
Experts and homeowners warn newbies, for instance, that they may end up putting in a lot more work than they expect—and taking on a lot of frustration—to keep renters happy. They can easily run afoul of rules laid down by local governments or homeowners’ association, or find themselves facing unexpected costs. And there’s no guarantee the rental or resale market will stay strong enough to justify the expense.
Chiappe: Brown makes keen observations here. Windcliff owners still have to work to keep their homes maintained and renter-friendly, but in many ways, the Windcliff staff does most of the heavy lifting alleviating much of the frustration. But Brown’s last sentence is worth restating: “there’s no guarantee the rental or resale market will stay strong enough to justify the expense.”
Brown: “Costs of owning and renting a vacation home can be very high,” cautions longtime real-estate investor Todd Huettner, owner of Huettner Capital, a Denver real estate lender.
“The hassles and costs of short-term vacation rentals are higher than most people expect….People are way too optimistic about rent rates, vacancies, management fees, maintenance costs and home-value increases.” Owners who live far away can also be surprised by climate-related issues like damaging snow loads in the mountains or corrosion from salt air at the beach, he says.
Chiappe: Absolutely true on all points (my family also owns a beach home on the Texas coast). It is often very bewhildering when Windcliff charges an owner account for snow plowing when a) there were no renters in or scheduled to be in the home during or after the snow, and b) it’s 72º and sunny at home in Texas. Believe me, I get it. But there are very specific, good reasons why a drive must get plowed in Windcliff whether or not a guest or owner stay is involved.
Brown: Caveats aside, many people have already sealed a deal. After slumping in the years after the financial crisis, prices of vacation properties are back where they were in 2006, a National Association of Realtors survey found. The median sales price of a vacation home rose by 4.2% in 2016 to $200,000, following a 28% gain as the housing recovery gathered steam in 2015.
Chiappe: I’m not sure where the vacation homes referenced are located, but they certainly aren’t representative of Windcliff (or Estes Park) where the median price of condos now exceeds $750,000 and detached homes over $1,200,000.
Brown: And, of course, bad experiences aren’t universal. Many who work hard enough at managing their vacation properties can’t say enough good things about it.
“I bought a vacation home because Lake Tahoe was either too expensive to book for a last-minute weekend or I couldn’t find any vacancies,” says Sabrina Robinson of Santa Cruz, Calif., four hours from Tahoe. She says she rents her vacation condo to tourists year round, devotes about two hours a week to managing the property, mostly to deal with cleaners and renter inquiries, and covers her mortgage and utilities with about $20,000 in annual rental income. The homeowners’ association does outside chores.
Chiappe: Bingo! As Windcliff’s resident real estate broker, the first question I will ask a prospective home buyer is, “why?” What is motivating you to make this investment? Availability of a known (and beloved) second homesite is the most appropriate answer followed closely by, “we want a place we can use a few weeks a year while we are still working that we can some day live in full-time when we retire.” These are “good answers.”
Brown: But even those who are successful have to put in a lot of effort to make it work—starting with careful thinking and planning before they take the plunge. Here are things potential buyers should consider, whether they are buying for pleasure, renting or as an investment.
Buy it for the right reason. The Realtors association surveys find that the primary motivation for a vacation-home purchase is vacationing. And many experts think that’s the best way to approach the deal. Rental income is so unpredictable it should be viewed as gravy, they say, and buyers certainly shouldn’t rely on it to cover their mortgage and other expenses. And the market is too unpredictable to expect to profit on a sale.
Chiappe: True on all fronts. Although the macro trends in the Estes Park area should provide additional confidence that the investment is more sound than it might be in other markets, it important to also note that, A) Rocky Mountain National Park is not going away any time soon, B) visitor trends to the Park are UP, and C) Estes Park has yet to be “discovered” by the “big money” that has infiltrated most tourist-centered mountain communities south and west of Estes Park.
But Brown’s first point is absolutely key: “Buy it for the right reason.” That reason is typically a family’s desire to establish a family legacy in a beloved part of the Rockies that will serve as a REGULAR destination for family vacations and gatherings year-round.
Brown: The approach with the fewest risks, many experts say, is for buyers to pick a place they will enjoy and focus on that as their priority.
“Our buyers today are buying for a number of reasons, with the No. 1 reason being lifestyle and use,” says Nick Cassini, senior vice president of sales and marketing for Four Seasons Private Residences in Anguilla.
John Banczak, executive chairman of Turnkey Vacation Rentals, a booking website, says that people who buy as a lifestyle choice “are the people that realize they love spending time in one place, may even retire there, have done the research and made the decision a second home is for them. Getting additional revenue through rentals is the icing on the cake.”
Chiappe: Huh? What did you just say? That’s right, “Getting additional revenue through rentals is the icing on the cake.” Yes, by all means, I will personally help you plug-in comparable historical rental information about the home you are buying or building into the spreadsheet ALL prospective Windcliff buyers create as part of their planning and due diligence. But Brown is right: a smart planner appreciates the assistance vacation rental revenues provides but is not financially dependent on them. Seriously.
Brown: Is buying a vacation rental a good idea? It can mean putting a lot of money at risk, more work than many buyers anticipate and headaches with renters.
Pick a location that’s good for business. Although rental income shouldn’t be the top priority, it’s still going to be crucial for many buyers. So as with all real estate, location is key…
…“The owners that are most displeased are ones that rush the purchase decision because they are blinded by their dream,” says David Angotti, co-founder of SmokyMountains.com, a vacation-rental listing site in Tennessee. “For example, they fail to understand location, view, features and other amenities are critical to the overall revenue, and just want a vacation home.”
Chiappe: While this may be true even in the Estes Park area, Windcliff owners enjoy the immediate benefit of unmatched, snow-capped, front range views that will NEVER change. Sure the YMCA of the Rockies may add a few buildings to their campus across the Aspen Brook Valley, but by and large, it is reasonable to assume the Rocky Mountain National Park bordering Windcliff to the West and South and Roosevelt National Forest to the East ensure Windcliff’s choice location in perpetuity. That is in so much as anything can be assured when it comes to federally protected lands.
Brown: Another aspect of location to consider: how far the spot is from the owners. The National Association of Realtors says 57% of vacation properties are at the beach or lake, with the median distance 200 miles from home—far enough to require spending money for a manager and caretaker. Little chores an owner would do himself or herself at home can thus get costly.
“In our experience, living close is really helpful if something goes wrong, but there are a huge number of services out there to hold keys, offer concierge services or otherwise help if you live further away,” says Laura Hall, communications director for Kid & Coe, a vacation-rental website. “So anything is possible if you’re willing to pay for it.”
Chiappe: And this is where Windcliff Homes comes in. My wife and I would NEVER have purchased a home in Windcliff from 850+ miles away if we did not have confidence in and ultimately, dependence on the staff at Windcliff to look after our home. Accessing our Colorado home from Texas has its challenges, but Windcliff’s staff was ALWAYS near-by and available. That gave us the peace of mind we needed to make our investment in Windcliff.
Is Windcliff’s management expensive? Well, compared to what? As a percentage of rental income for commissions, compared to other property managers in the Estes Valley, Windcliff is on-par. But being owned by a full-time Windcliff resident and staffed by Estes Park locals year-round, there is also a great premium to be gained from Windcliff Homes’ management of your Windcliff home.
It goes far beyond just keys and coordinating maintenance vendors. Windcliff Homes’ staff not only becomes your eyes and ears on the mountain, but is also a long-running successful rental generator for its owners. Windcliff’s 47-years of continuous operations and closely held proprietary former guest list are key assets that provide a relatively consistent stream of rentals (and rents) for its homeowners.
Brown: Don’t delude yourself about costs and profits. Even if rental income is only a secondary goal of buying, pros urge a clear-eyed analysis of the expenses involved.
Among the common rookie mistakes are focusing on purchase price, rental rates and recent market trends, and counting on more renters than are likely. Doing that means missing out on other crucial considerations that can eat away at earnings, such as costs for cleaning, management, routine maintenance and repairs…
…Then there are real estate taxes, insurance costs, utilities and perhaps state sales tax on rental income.
The same holds true for buying a property with the intent to sell it. Experts warn that only a reckless buyer expects a vibrant market every year. From the end of 2007 through 2012, primary-home prices dropped by 14.8%, vacation properties by 23%, the Realtors’ group says. Sales of vacation homes dropped in 2016 to 721,000, off 21.6% from the 920,000 in 2015. Cassini says there are fewer speculators in today’s market compared with the prerecession boom.
Chiappe: Don’t forget to throw-in the occasional “500-year flood” as the Estes Valley experience in September of 2013 or “Global Pandemic” as experienced in Spring, 2020. Windcliff not only lost nearly all of its booked rentals after the flood, but vacationers unfortunately avoided Estes Park in 2014 assuming (incorrectly) that Estes Park was “wiped off the map.” It took the Estes Park CVB and DMO an extra year to convince the market that Estes Park was fully recovered and running full speed. Vacation rental incomes were severely hampered during that recovery period. The Coronavirus was kinder to us — having occurred during our slowest period. But we lost 30% of our booked reservations for the rest of the year which provided our homeowners just a fraction of the total rental income they had become accustomed to receiving.
Brown: …Don’t get tripped up by local rules. Local ordinances and homeowners-association rules can reduce the pool of potential renters. The association, for example, might ban pickups, motorcycles and pets, or mandate how much or how little time a property can be used for rental.
Chiappe: All true. However, once again, that’s where Windcliff Homes comes in. Our policies and rules are all published at Windcliff.com and anyone wishing to buy or build and become a part of the vacation rental program at Windcliff should be intimately familiar with these ordinances long before considering the purchase of a Windcliff home. Larimer County has taken a much stronger regulatory stance with vacation rentals in the Estes Valley and while those regulations have had a minimal impact on Windcliff operations, frankly, Windcliff Homes was prepared for it and assisted (and will assist) all of its owners in navigating the new regulatory waters.
Brown: Then there are government regulations that may limit an owner’s flexibility. Will owners be able to ban college students planning to party on spring break? Chiappe: When Windcliff Homes manages your home, ABSOLUTELY!!! Brown: But antidiscrimination laws limit whom they can say no to, forcing them to rent to guests they don’t want, like people with rambunctious toddlers that can boost cleaning costs or annoy neighbors. Chiappe: Not completely true. Windcliff Homes can legally deny ANYONE from renting your Windcliff home. And we often do just that. We heavily vet new renters on the phone, and provided they honestly answer our direct questions, Windcliff Homes has an excellent track record in keeping undesirable behavior out of Windcliff. The occasional “snuck one past us” not withstanding (and luckily – RARE!).
Brown: Have a plan for getting renters. Chiappe: Yes, in other words, leave it up to Windclff Homes as we again, have an excellent track record in doing just that! Brown: Finding, vetting and negotiating with renters is more work than many owners are willing to take on. Chiappe: That’s why Windcliff Homes handles all of that for you! Brown: So, many use a service to bring in business. But it’s important that owners understand what these services involve before they sign up… Chiappe: Windcliff Homes’ commission is 40% of rent. Owner stays and Guest of Owner stays are not charged rent, however, there are typically cleaning fees (actual cost to clean the home after the owners’ departure). Brown: They provide damage insurance and bar renters who have posed problems for other owners.
Brown: These days, many owners use online services like Airbnb, HomeAway and TripAdvisor, … Chiappe: and FlipKey all of which are now charging guests and an ADDITIONAL 5-12% “convenience fee” for the “convenience” of finding their rental home using their web sites’ search engines. However, Windcliff guests can avoid paying that fee simply by visiting Windcliff.com , checking availability and amenities, selecting a home and CALLING Windcliff to make the reservation directly! Consumers are smart and it won’t be long before the “800 lbs. gorillas” of vacation rental home search realize they can’t make guest pay 5-12% more for something they are entirely capable of finding online themselves and booking directly with us.
Brown: …Watch out for tax traps. Federal tax rules offer deductions for mortgage interest, property tax, insurance premiums and many other expenses on second homes. But the rules are complex, and the biggest breaks generally go to owners who use the property no more than 14 days a year themselves, reducing benefits for owners who want to use their property heavily. And when it comes time to sell a rental, profits are likely to be taxed as long-term capital gains—and not sheltered like profits from a primary home—although many owners avoid that by converting a rental to a primary residence in retirement.
Your renters may do more vacationing than you. Business and pleasure don’t always mix, experienced landlords say. For maximum rental income, owners have to offer their properties during the peak summer or winter season, which may be when they want to use it themselves.
Chiappe: In fact, Windcliff Homes’ contract with its owners REQUIRES all owners to make a minimum of 50% of the Prime and Fall seasons available to Windcliff Homes to book to vacation renters. Without 50% of the Prime and Fall seasons, we cannot generate enough income to justify the year-round expense of managing the home for its owner.
Brown: “If you’re going to essentially be competing with people interested in renting your home, then you aren’t…going to have much success,” says Adham Sbeih, CEO of Socotra Capital, a real-estate investment and lending firm based in Sacramento. “Even if you’re only trying to use your home for a week or so out of every summer month, that can create enough conflicts that it significantly reduces your ability to consistently rent the property out.”
Brace yourself for tenant demands. Renters expect perfection and won’t tolerate little annoyances that homeowners come to live with, like a balky ice maker or sticky door, and renters have no long-term stake in the property.
“Expect all the unexpected that arises when multiple people are rotating through the property and treat the property from the ‘I’m on vacation’ mind-set,” says Victoria Shtainer, an agent at the Compass real-estate firm in New York City who specializes in the Hamptons.
Chiappe: All true! While an owner (me for instance!) might tolerate a sticky door or a flickering pantry light, guests will not only “complain” (errr…”point it out”) but may occasionally even make the remark in an online review which is never desirable to say the least. We insist that all of our homes in Windcliff are 100% functional and tend to “jump” when a guest “points out” any discrepancy in maintenance or function of the home.
Brown: There’s also the question of guests who do things owners aren’t anticipating. Gail Lynne Goodwin, owner of two luxury rentals in and near Montana’s Glacier National Park, warns about things like “having a noisy guest that disturbs your neighbors, having a larger cleaning bill than anticipated, having a guest from Florida that wants to set the heat at 80 degrees, etc.”
Chiappe: Also occasionally (if not rarely) true. If you cannot handle the temporary emotions of knowing someone illegally smoked something in your home against all rules and posted prohibitions or broke something in the home or left with the keys requiring a complete rekey of the home (at the guests’ expense, naturally), then perhaps vacation rental home ownership is not for you.
Brown: And when owners use the property themselves, they may end up spending a lot of time with tenants on the brain. They may have to end their own visits emptying drawers, changing sheets, storing family photos and making trips to a storage unit with items they don’t want renters to use, like bikes, kayaks or the family silver.
So is buying a vacation rental a good idea? It can mean putting a lot of money at risk, more work than many buyers anticipate and headaches with renters. But those who have picked good properties in hot locations and have an ability to roll with the punches say they’re happy.
“Having a second home has been a dream come true and has also paid for itself,” says Robinson, owner of the California vacation home.
Chiappe: My wife and I must echo the latter. Vacation rental income and Windcliff’s professional management gave us the additional boost of confidence we needed to put us over the top on our decision to build a home in Windcliff. And things worked out well for us. We now live in our dream home in our dream location. We wouldn’t be here if it wasn’t for Windcliff and the “icing on the cake” (income from vacation rentals) they provided our family during our years of vacation rental operations. It was worth every penny of the 40% commission we paid Windcliff for their services.
Ready to buy a vacation rental home, or curious about the options? Browse our Estes Park real estate.
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.
Buying a Lot or Land in Windcliff
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 no 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.
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 in Windcliff
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 in Estes Park
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 $650-$850/sf to build depending on finishes and design.
So we would expect a buyer of a $375,000 lot to target building a 3,500 square foot 3-4 bedroom home ($2,275,000 home building budget) and have just over $2,650,000 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).
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.
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 $725,000-$950,000 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 it the right time for you to buy land or a home in Windcliff?
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 future?
- 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. If you’re ready to start, browse our Estes Park real estate today!