A Guide to Investing in Park City & Deer Valley Real Estate

Learn About Investing in Park City, Utah, Real Estate

Investing in Park City, Ut, real estate is one of the oldest and most popular asset classes for the wealthy and wise. Most new investors in Park City have multiple properties in different areas of the United States or the World and rent them on a short-term basis with light personal use. It is common for investors and developers in other areas of the united states to purchase properties in Park City.

Below we will discuss the different types of real estate investments, and you'll learn more about Park City real estate investing.

The Best Short-Term Rentals Areas in Park City

Searching for Park City investment properties usually starts around Park City Mountain Resort (Old Town), Deer Valley Resort Area, and The Canyons Village. Many of these areas allow for short-term rentals, also known as nightly rentals, and the best chance for the highest return on investment via rental income.

There is a premium when purchasing and renting ski-in-ski-out properties, allowing investors to maximize profits during the peak ski season. Old Town also allows property owners to receive higher rents during the Sundance Film Festival. In my experience, many of the owners in Deer Valley do not rent their properties on a short-term or long-term basis. Still, sometimes they may offset some of their ownership costs by renting their property during the peak times of Christmas, New Year, and Presidents Day.

Long-Term vs. Short-Term Rentals in Park City, Utah

For the past decade, Park City has been in need of long-term rentals. The most significant long-term benefit to leasing your property is that you'll receive a tax break and possibly less wear and tear. We have had clients rent their property for six months while staying in the property, typically in the winter and spending the summer months in Park City.

Every scenario will always be a little different, but your returns should be pretty even when comparing long-term rentals to short-term rentals. As a Park City investment property owner, you will have more management company options for short-term rentals.

Park City Investment Realtors

Investment properties in Park City, Utah, aren't about cash flow. Instead, the typical goal is to use the property two to six weeks a year and have the nightly rentals cover the cost of ownership.

I just closed on a property in Deer Valley that's a single-family residence. It's one of the few single families allowing nightly rentals, but it was odd. Odd enough for me to go back and check last year's sales. In the past year, I realized I have closed on the lowest-priced single-family home in Deer Valley Ski Resort Area. The clients have great vision and will remodel in a fantastic location about two minutes from the Deer Valley Resort Area base.

By pulling the stats for the past year, I know that most brokers aren't excited about this, but I am excited about helping clients get great deals on all properties. I realized that now I have helped the lowest-priced home buyer and lowest-priced condo buyer, for a 3+ bedroom condo, in all of Deer Valley. I'm posting before and after remodel photos of a kitchen in a condo in Upper Deer Valley.

My real estate strategies work great for buying investment properties in All of Park City. Every deal is different; sometimes, it's about getting the best value, while in others, it's about getting the deal on a property.

Park City and Deer Valley are challenging real estate markets with plenty of agents trying to compete for your business. I don't care if it's on an entry-level or luxury property. The advice an agent offers is essential. It can be the difference between saving thousands of dollars or, in a hot real estate market, it could mean getting the deal or going home empty-handed. I try to advise my clients as I would a family member but also ensure that I have the best tools and resources.

If you don't like the property, we move on, but if you want the property, I have all the resources to remove any excuse for not buying. We can come in aggressive on the price; I have a great contractor and designer I work with that will make it easy for you. I've used them, so I know how giving a few Pinterest photos will help; we work with the best property management companies in Park City.

I aim to ensure you are comfortable during the search for your new Park City property and when we are under contract. I want to earn your business for a lifetime and help everyone you know to buy and sell real estate in Park City. You'll quickly see you are in the best hands when buying or selling real estate in Park City, Utah.

Do Park City Investment Properties Cash Flow?

The truth is, rental properties in Park City, Utah, tend to be cash flow neutral when you pay cash. I generally tell people that if there is no financing for a nightly rental property, you typically cover the expenses at the end of the year. Unfortunately, with the current demand for real estate in Park City, it feels as though the rental market hasn't kept up with property values. Yes, rental rates are increasing, but they are often a lagging indicator because rentals may have been booked twelve months ago. In the past, most investors have used projections balanced with historical numbers to develop their cash flow projections.

The typical buyer is searching for real estate which can be used for two to six weeks of the year and has a full-time property management company take care of the rest. Every year hundreds of buyers purchase properties in Park City that break even, and over time the rental numbers increase, and the property appreciates.

In a previous comment on this blog, Ron asked, "When you say "cover all bills" does that include the mortgage?"  To answer the question, the break-even does not include the cost of covering the mortgage. Recently, a client asked me to research rental numbers on several properties, and we could not find a property to cover the cost of a mortgage with 20% down. In addition, unless you know your mortgage rate, we won't be able to calculate the mortgage cost.

Ski-in-ski-out properties at Park City Mountain, The Canyons, and Deer Valley tend to offer 120 to 150 peak days a year of peak days for the rental market. Many factors play into the rentability of a property in a resort town.

Non-Traditional Ways to Invest in Park City Real Estate

There are two additional ways to invest in Park City real estate. First, the New Construction and Spec Home Strategy could offer more upside, but the risk could also be higher.

The First Option:  We have a few new construction projects coming online in the next few years. Over the years, many Park City real estate investors have been successful, being one of the first buyers into a project and selling the property upon completion.

When purchasing a condo, the upside to this strategy is that you may be able to hold the property for up to two years without mortgage payments, property taxes, or HOA fees. This new construction strategy allows you to leverage your buying power and hold 80% of the property with only 20% down. (numbers can vary)

The downside to being one of the first ones in is if the market flattens or dips, you could have to come to the closing with additional money out of your pocket because the property won't appraise. So there's always risk vs. reward - I'd have to think every investor using this strategy since 2012 has made a healthy profit. Unfortunately, that wasn't the case in 2008. At that time, buyers with $100,000+ of non-refundable earnest money walked away and didn't recover their down payment because it made more financial sense to walk away from the deal.

The Second Option:  Building homes on speculation. Building a home in the Park City Area can be very rewarding financially. However, a spec home typically requires much more work than the first option because you need to find the land, architect, builder, designer, and all the other pieces along the way. I have all those contacts for you to work with as you buy the land or after the purchase.

The upside to this investing strategy is that you may not only be able to find arbitrage in the market but also catch the sails of the upward-trending real estate market. The downside is it's more work, typically more capital intensive & it takes time to plan the home. Also, if the market turns, you could sit on the property until the market returns to where you thought it might be when you started building.

If buying or building new construction, you also need to consider the risk of the banks changing loan programs, inherent builder risk, market risk, etc.

Check out when the best time of year is to buy a condo in Park City!

The Different Types of Investment and Rental Properties in Deer Valley and Park City, Ut

The Park City MLS allows properties to be classified in seven ways, as seen below. The best way to search for properties is by using the Map Search or neighborhood page. The map search allows you to use filters to select your price point, type of property, and many other features, such as area or nightly rentals. Read more about Why Park City and Deer Valley Are the Best Places to Invest in Luxury Real Estate.

The general rule of thumb for finding a great investment property is that the closer you are to the resorts, the higher your gross rental revenue. However, as Park City has grown, it is worthwhile to consider the Jordanelle area as an investment property. The areas around the Jordanelle may be a little more restrictive for nightly rentals, but with Mayflower Mountain Resort, there is an upside for appreciation.

The nightly rental number is only as accurate as the listing agent puts the information into the MLS - search all properties, and if you have any questions, feel free to contact me to discuss the options.

Homes: When investing in Park City homes, it should be noted that they may or may not allow for short-term rentals. The location and proximity to the ski resort will play a significant role in the property value and rental possibilities. If you would like to double-check if a home can be rented for nightly rentals, here's a map for Park City Nightly Rentals.

Condos: Condos for sale can be found throughout Park City. The homeowner association fees start at around $350 per month and increase to over $50,000 per year. The HOA fees will be subtracted from your gross revenue, so paying attention to the fees when considering purchasing a Park City condo is essential. The HOA can also add value to the property by keeping it in good condition and providing additional amenities, making renting easier.

Townhouse: Townhomes can stand alone in your real estate search but are pulled in within the condo search. Townhomes tend to be larger than condos and possibly live more like single-family homes.

Vacant Land: If you are considering purchasing land for sale in Park City, you will be looking for appreciation. This speculative play may reap significant rewards, but you will not have rental income during your time of ownership. There is also a possibility that the land has HOA fees, typically lower than a property with a home, but HOA fees are worth considering.

Commercial:  Commercial real estate in Park City tends to be office buildings. In Park City, commercial real estate is marketed much like our luxury properties. Many of the properties for sale will be on the Park City MLS and this website. I strictly work in residential real estate, but with several commercial real estate agents that can help provide the real estate expertise you're looking for when buying commercial property.

Fractional: Fractional ownership is structured much like a timeshare, but you own the property, not a piece of paper. While some investors prefer fractional ownership, I tend to shy away from the property type because of its lack of liquidity and weak appreciation. Instead, I'd rather have full ownership rights of a smaller condo and more control over when I'm able to rent or use the property.

Multi-Unit:  This is a new property type in the Park City MLS, which allows you to search by "stacked product." Multi-unit means multiple residences on multiple floors. This is not to be confused with multi-family properties like a duplex or triplex. Contact me if you're searching for a multi-family property in Park City, as the search can be pretty complicated.

Management Companies for Your Park City Investment Property

Most buyers looking for rental properties in Park City are interested in short-term rentals. Local property management companies charge 25% to 50% of the gross rental income. I tend to shy away from the higher-priced property managers because some great companies charge less, improving your bottom line. Most of my clients pay 25% for full service and are entirely hands-off with management. We sell assets, not liabilities.

5 Ways to Value Investment Properties in Park City, Utah

Items to Consider When Buying Park City Investment Properties

Much of my business is from second homeowners and investors. Park City investors are looking for a turn-key vacation rental where they can own it from another state and not worry about issues that may arise.

When you work with me, you'll have all the tools you need for an easy remodel, designers, property management, and a complete overview of the Park City real estate market. Discover How to Value Investment Properties in Park City & Deer Valley.

Derrik Carlson has owned, managed, and raised financing for many of his personal investment properties. Naturally, therefore, this information is reliable, but it is not, in any way, shape, or form, investment advice.

Editor's Note: Originally by Derrik Carlson on Sunday, March 29, 2020. The most recent update was on December 28, 2022.

*Disclaimer: Real estate investments involve risks, including the possible loss of principal. The information provided on properties and investments is not guaranteed to be accurate or complete and should not be relied upon as such. A client's investment decision should be based solely on their independent research and analysis. Real estate agents are not financial advisors, tax professionals, or attorneys; their advice should not be construed as legal or financial advice. Any client who requires such advice should consult a qualified professional. Investing in real estate can involve significant financial risks and should only be undertaken by those with the financial means and expertise to bear such risks. Real estate agents cannot guarantee any returns on investments or the future value of any properties. Before investing in real estate property, clients should carefully consider their investment objectives, risk tolerance, and financial situation.

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