From: "Don Zimmerman" 
Newsgroups: misc.invest.real-estate
Subject: Re: Investing in ski resort condo
Date: Sun, 29 Feb 2004 01:34:26 GMT

"Mike"  wrote in message
news:c1r3t60sdq@drn.newsguy.com...

> Thanks in advance for any input.
> My wife and I own our own home, have a mortgage of about $180k.  The house
is
> valued at approx $420k.
> We visit a ski resort in the California Sierras 2-5 times a year and have
> recently thought of purchasing a condo in this town.  We would be
expecting to
> pay about $150k.  This does not include monthly mgmt fees, prpty tax etc.
> It would rent well during winter months and so-so during the other 3
seasons -
> there are many lakes for trout fishing, hunting etc for
spring,summer,fall.
> Assuming we can afford the mortgage and fees and that we'd still probably
have
> somewhat of a negative cash flow, would it make sense to do the following:
> Refi our current home and take out about $75K for a down payment on the
rental?
> Does this make sense on any level?

The people selling the condo will give you an inflated estimate of the
rental income. Figure on something less than what they say. My wife and I
bought a condo in a resort area on the east coast in 1987, and the rental
income was about $150 per month less than the expenses. But we sold it 5
years lter for 150% of what we paid for it, and since our down payment was
small and the mortgage was large, we profited to the tune of about 300% or
more. If we hadn't been foolish and sold too soon, we could have done
better. Buying rental property in a resort area is risky, but no more so
than buying tech stocks or a poor-performing mutual fund.