Rental place in the mountains - Dream now on hold

High interest rates and high prices killing the idea for now

Ever since my parents took our family to the mountains skiing I have loved it. Love it in the summer for the beauty, water falls and hiking. Love it in the winter for the beauty and the skiing. So much so that I became a ski bum at Jackson Hole right out of high school for that one ski season. I became a ski instructor here in Minneapolis at local hill, got certified and did become a better skier. But I never jumped to light speed and moved permanently to the mountains. Like most people; I chased a career, found my sweetheart, raised a family, bought a house, etc…

I never did lose the dream of living or having a second home in the mountains so one year (when I had some money) we bought property in the Teton Valley of Idaho. (Just over the pass from Jackson Hole) The idea was that when I made some more money we would build a vacation home and maybe move there permanently some day. I never did make a bunch more money, so it just didn’t make sense economically to build another home. We sat on that beautiful lot year after year and watched its value plummet after the crash of 2007-2008. Finally, in 2021 the real estate market boomed in Teton Valley and we sold the lot. It was great to have that build/don’t build decision removed but of course it was sad to see my mountain home dream die.

About the time we sold the lot I came with a ski bum plan B. Upgrade our camping trailer to something a bit larger and better able to accommodate winter weather. I have gone on some epic trips with the camper but it misses the mark as my regular diet of mountain ski trips. It’s cold, it’s pretty small for me and a buddy, and my wife won’t partake after this disastrous maiden winter trip with her, son Ryan and our two dogs.

So I turned my attention back to the idea of owning a mountain home in Teton Valley. What if this time I scaled it back to a condo and made it more of a VRBO/AirBnb business? Pay 20% down, get a mortgage and rent it out except for a few weeks a year we use it? I read a book, watched some YouTube videos and listened to a few podcasts. They all said I can earn 10-20% on my invested money. Who wouldn’t do this? So I summoned my courage and broached the subject with my wife. She didn’t say no, so I got the approval to at least research the market and the numbers.

This is where the real learning happened. Turns out that heated up market in Teton Valley (and every other nice mountain town near a ski area) is still heated up. I also got a rude surprise when I finally inquired what current mortgage rates are. For those who don’t know, they are north of 7%. What do you suppose happens to the pro-forma business models of a buying a short term rental condo at a high price with a 20% down payment and 7% interest on a 30 year fixed rate mortgage. I can tell you what happens; not only do you not make 10-20% on your money; you likely lose money.

So now it is time to put this idea aside until the real estate market crashes and or mortgage interest rates go back to 3%. Until then it is back to renting that VRBO that was likely purchased 10 years ago and an occasional camper outing hanging out in the ski area parking lot.