Park City and Deer Valley are among some of the top vacation destinations in the US. All year long we have amazing amenities and attractions that bring a variety of tourists to our town.

As a result, the investment market in Park City is often a little bit different than what you may find in other US cities. We have a lot of investors in Park City either looking for second or third vacation homes or investment properties to rent out.

But how do you find an appropriate vacation/investment home?

In this post, we’re going to cover all the things you need to know about investing in a Park City vacation home.

What Is a Vacation Home?

Before we take a deep dive, we need to fully consider the true definition of a vacation home. Even if you feel the definition can be a bit fluid, the government certainly does not feel the same way. Owning a vacation home or a second home might result in different tax implications depending on your unique circumstances. You must talk to your CPA (Certified Public Accountant) to determine the best option for you.

Is Park City good for investors? Read this post to find out. 

How Do You Plan on Using the Property?

Once you’ve determined if your property qualifies as a vacation or second home, you should consider what you intend to do with the home. Do you want to rent it out full-time? Do you want to use it yourself? Do you want a hybrid option where you can use it and then rent it out when you’re not there?

How you answer these questions will inform the types of properties and neighborhoods we look at.

If You Plan to Rent it Out, What Kind of Renters Do You Want?

Drilling down further, if you hope to use your investment property as a full-time rental, you need to decide if you’re looking for a long-term tenant or a short-term guests.

Some areas in Park City and Deer Valley restrict short-term rentals, which is very important information to have before you buy a property to rent it out to vacationers.

Looking for more information about buying and selling vacation properties in Park City? Read these posts next:

• How to Buy a Second Home in Park City Remotely
• How to Find the Best Park City Real Estate Team to Sell Your Vacation Home
• How to Sell Your Vacation Home When You Can’t Be There in Person

What Are Your Expectations on the Return?

All investors are looking to make a return on their investment. Whether you’re investing in stocks or real estate, there has to be an ROI. The question here becomes, “what is your expectation?”

Are you hoping to use the property to offset property taxes or homeowner’s dues? Are you planning to get a loan for the property and want to use the income from the rental to offset loan costs? Are you looking for more than that?

Once you determine your financial expectations, we can help show you the types of properties that meet your criteria.

Are You Planning a 1031 Exchange?

A 1031 exchange is a tax break that investors can take advantage of. It involves selling an investment property and essentially swapping it out for another investment property in order to defer capital gains taxes.

As with any investment strategy, it’s important to consult with a CPA, a real estate lawyer, and an experienced Realtor® to help sort out the logistics and ensure the exchange is executed properly.

With a 1031 exchange, the timing of your sale and subsequent purchase is critical, which adds another layer of complexity to the transaction.

Do Any External Rules Apply to the Property?

Depending on the type of property you’re interested in, you might have to work together with a homeowner’s association. HOA rules are unique to the specific building or community you are buying in. The county can also impose specific rules and regulations that impact your property.

Just as you need to know about short-term rentals in your area, it’s important to educate yourself on HOA and county regulations.

Learn more about Park City HOAs in this post right here.

What Are Your ‘Hot Buttons’?

Whether you’re planning to also use your vacation property or you plan to use it entirely as a full-time rental, it’s important to know about the unique selling points of the property from a recreational standpoint.

For example, do you love socializing and need to be at the heart of the action? Perhaps a vacation condo in town close to restaurants is right for you.

Are you an avid skier? Consider a ski-in, ski-out property.

Do you crave privacy and exclusivity? A gated community with a private club might be the ticket.

The property you invest in will be heavily influenced by the amenities you and your guests want access to.

Are you curious about homes and amenities in Park City? Read these posts next:

• How to Buy a Ski-In, Ski-Out Home in Park City
• Park City’s Best Gated Communities
• Why Buy a Luxury Condo in Park City

What Are Your Long-Term Goals?

As an investor, it’s important to think about the long game. Consider your long-term and short-term strategies. Maybe you’re cashflow oriented and you’re counting on rental income to offset costs. Or maybe you have a 2-5 year plan to build your wealth through the equity your property generates.

It’s also a good idea to have an exit strategy and consider what you’ll do in those 2-5 years to either cash out of the investment or grow it even further.

Will You Hire a Property Manager?

Especially in cases where you are not on-site, working with a Park City property manager can offer you all the benefits of being a local real estate investor without some of the hassle that comes with managing rentals.

Depending on your criteria, needs, and goals, a property manager could be the right fit. When you work with a local Park City real estate team like CMFH, we can connect you to the most reputable property manager in the area based on the unique product you are offering.

Are you looking for help hiring a property manager in Park City? Read this post for everything you need to know.

Why Work with a Local Real Estate Team in Park City

The ins and outs of buying (and selling!) vacation properties can get complicated. For many investors, buying and selling is only something they do every few years. In that time, markets change and regulations can get updated.

It’s vital that you trust your investment to someone who can help you succeed. Here at CMFH, we’ve been working with investors and vacation property owners in Park City for over 30 years.

In addition to our intimate knowledge of the local market; we live, work, and play here, giving us the perfect insights on how to maximize your investment to its fullest potential.

Thinking about investing in a Park City vacation home? Give us a call at 435-647-8035 or email us at info@cmfhparkcity.com today!