Real Estate in Montana December 12, 2019

Is it a good idea to own a vacation rental?


I suppose the answer to this is complicated and really depends on one’s goals with the vacation rental, how much work one wants to put into the rental process and the cost / benefit analysis of purchase price and rental income.


I will use my vacation rental as an example.  We own a vacation rental on the Big Island of Hawaii at the upscale Mauna Lani resort.  We purchased it in 2014 when prices were still somewhat depressed from the great recession.  We put down 30% and have a second home mortgage with rate less than 4% for the rest.  We have large HOA (about 1400 per month)due to the fact that in Hawaii the HOA takes care of all exterior elements including landscaping, exterior paint, roofing, common areas such as fitness center, pool, beach club etc.  But considering we are not on island for 10 months of the year, we are happy to pay someone to manage all of that for us.

We advertise our home on Vrbo and Airbnb.  Those websites have changed a lot over the years and charge the renter more than they used to but people are still using them.  I have seen a huge shift in the past few years away from Vrbo and much more to Airbnb.  A general rule of thumb is that foreigners will use Airbnb as will younger (millennials and younger) Americans but baby boomers and some genX will use Vrbo.    It has been fascinating to watch this evolution.  We also do have quite a few return renters that will just contact me directly after their first year.


The big question that one has to answer which will directly affect if you lose money on the vacation rental itself or break even (assuming you have a mortgage), is how involved do you want to be with the management of your rental?  First thing you need to look at is the IRS code – and then discuss with your accountant.  You must take the rules of this very seriously.  There are a few more issues to discuss with your accountant as enumerated here:  How much you can write off on your taxes and the passive activity loss is directly affected by your activity.


So what that means is that for the best tax benefit, you need to actively manage your vacation rental – that means taking the bookings, communicating with guests, keeping maintenance log, and doing as much of the work yourself at least to get up to the 750 hours per year.  If you have a booking agency deal with your guests, you are not actively managing your property and while you may have some tax advantage, it is no where near where it would be if you did it yourself.


Another large factor is just income vs expenses.   Before purchasing a vacation rental, I would check occupancy rates pretty carefully.  Can the home be rented all year long?   Are there seasonal adjustments in rates and what are the rates?  Does the number of nights rented per year times rate cover your expected expenses? What about the weather?  We picked our location on the Big Island partly because of its very strong rental history and the consistent weather.  It is always in demand as there is no rainy season, no mud season etc.  We are also rarely affected by flight delays as there is no snow coming this way.  As a result, we enjoy high rates of occupancy.


But to be in demand as a vacation rental, one has to maintain your home carefully.  Things cannot be broken, everything should be sparkling clean, it should be well equipped.  We regularly upgrade and repair elements in our home so it is pristine.  As someone who manages her own rental, I watch the reviews carefully and strive for perfect reviews every time.  The only way to achieve that is pay attention and make sure you visit your place.  In my opinion, anyone who is self managing needs to visit once a quarter at least.


Let’s take money out of the equation though.  What do you get for a vacation rental?  For us, we are happy to meet up with our family members who live apart from us in a place that has years of happy memories.  Even though we enjoy travelling to new places too, there is something special about everyone knowing we are going to favorite place that is stress free – knowing what to expect has a lot to do with the lack of stress.


In the end, everyone needs to take a look at the cost benefit analysis and weigh the work against financial impact versus your happiness that you get from enjoying your second home.

Check out this website for more vacation rental purchase information!


Living in Montana December 11, 2019

5 Tips for Best Family Photos!

Tis the season…for family photos!

Whether you have an adult family or have young ones, read on for tips to get the best photos in the least amount of time with the least amount of stress.


  1. If you can, engage a photographer. If your budget is more generous, look for community referrals and then examine the photographer’s work on his or her website, checking to make sure that he or she captured the vibe that you want.  If your budget is not so generous, check out a local university or even high school for expert hobbyists.  Make sure to discuss with the photographer, time of day, mood, lighting etc that you would like.
  2. Decide on a mood or vibe for your photos. Do you want casual, almost spontaneous shots or a bit more posed?  Do you want an outdoor, natural setting or maybe something against a textured background – old brick walls, barnwood siding etc make great backgrounds.  Discuss what you would like with your photographer as well as your thoughts on close ups vs whole body shots.
  3. The mood you decide on will then help out with outfit selection. Clothing will be influenced by season of course.  It is nice to have coordinating outfits but not strictly matching, unless maybe if it is a Christmas PJ picture!  Examples of coordination can be everyone in a shade of white top with khaki bottoms or for winter, a few of the party in a plaid shirt of coordinating colors, maybe a few more people with a solid color top in one of the colors in the plaid and then maybe a scarf or two in a different plaid that uses the same colors.  On the bottom, keep it simple with blue jeans.  Denim photographs really well.  I would also bring a few accessories like jackets to change up the look to give you more options.  Sometimes you will be surprised by what you like better.  All of that being said, don’t leave the outfit selection until the last minute.  Try them on, take a few selfies and make sure you like the look!
  4. Make sure the time you select takes everyone’s schedule into account. To make sure kids are at their best, the time should be after naps and after some food.  Maybe even a glass of wine and snack for the adults so everyone is loose and in a good mood.
  5. Lastly, try to have fun at the photo shoot and let it flow naturally. The best photos are usually the ones that are the least canned.  Don’t be afraid to move around, try different poses, and different arrangements of people.  Ultimately, you want a natural feeling photo that captures the love that you have for each other, so just relax!

Living in Montana December 4, 2019

4 Top Experience Gifts!

Experience Gift Giving Guide

Do you and your family have enough “Stuff”?  Are you at an impasse as to what to give your family as gifts?  Perhaps consider experiences as gifts instead of things.  Living in such a beautiful place with access to tons of outdoor fun, it is easy to come up with gifts along the experiential lines if you are so inclined that will provide memories for years to come.


My top 4 experiences:


  1. Montana Dinner Yurt. How fun does this sound?  Your group is transported on snowcats through the Big Sky backcountry to the Yurt location.  There you are met with a bonfire and a torch lit sledding run outside and a candlelit cozy yurt inside.  Musicians play while you socialize or play until the dinner bell is rung.  Dinner is a gourmet feast of French onion soup, filet mignon and chocolate fondue for dessert.  After dinner, there is time for gathering around the bonfire, taking pictures, sledding etc.


  1. Back Country Snowmobiling. There are quite a few places that one can rent snowmobiles from and go snowmobiling on your own.  However, if you are new to the sport, best to go with a guide the first few times.  Canyon adventures in Big Sky has snowmobiles for rent as well as guides and can take you into the back country.  Views of the Spanish Peaks, Taylor Peaks, Lone Peak and the Sphinx Mountains are all included!  Bring your camera on this adventure!


  1. Winter Yellowstone Tour. There are several different options as to how to do this. I recommend the bombardier coach tour for a fun old school experience.  If your group is large enough (5-8), consider renting the entire coach for a more cozy, personal experience.  Alternately, one can try a snowmobile tour.  This is fun but keep in mind that the format is all snow mobiles in a line following the guide and then stopping at sights – no antics in the snow with the machines.


  1. Explore Paradise Valley. Paradise Valley is stunning during the winter and provides for beautiful photography.  One could start off with cross country skiing either in Yellowstone National Park or one of the forest service areas in the valley.   Then head to one of the hot springs in the area to relax and warm up. Chico Hot Springs  or Yellowstone Hot Springs.   Then one could eat at the Dining Room at Chico  or head up to Sage Lodge.  If you really wanted to make a full day, Sage Lodge and Chico provide accommodations as well.


I am out to explore and find some more unique experiences.  Look for a follow up post soon!


Real Estate in Montana December 2, 2019

Is the Big Sky real estate market too hot?

Today I am looking at pricing and real estate market trends in Big Sky Montana.  This should serve to round out one’s perspective on real estate in southwest Montana – check my blogs on November 15 and 25th for more information on Belgrade and Bozeman. The four graphs below represent single family homes, condos and townhomes in 4 different price categories.  In the first graph, we see sold prices of homes below $295K.  You might think this looks like good news for buyers but if you factor in actually how many homes have actually sold and are on the market, you see that there are 2 single family homes listed and 9 condos.

In the next category seen below, we have homes from 295K to 512K.  In this category, pricing looks pretty flat in 2019.  But factor in that there are no single family homes and only 20 condos on the market currently.

In the next category seen below, we have home from 512K – 1.1M.  Things get a little interesting here as we see median prices for single family at 947K and condos at 752K.  Townhomes and Single family homes especially reflect pretty large increases this year which is, of course, a function of little supply and big demand.  As we sit today, there are 3 single family homes on the market right now and no townhomes but there are 24 condos in this price category available.

In the last category, we see everything over 1.1M.  And we see increasing prices this year in the single family and condo categories.  There are currently 56 single family homes on the market and 58 condos.  Clearly, this is where the developers and builders are concentrating and where they perceive the demand to be.

The Big Sky market is different than our other SW Montana housing markets as it is primarily made up of second homes.  The second homes are owned by mostly outsiders or non Montanans.  Their money has come from the booming economy and record stock market that we have seen in the past few years.  I think that as long as that continues, all will be good in Big Sky as it is a beautiful place with many amenities.  However, all economics are cyclical and at some point, we will have some kind of slow down in the US and world economy.  At that point we will see this Big Sky market slow as well and like most second home markets, it will probably take a bigger hit than primary home markets and take longer to recover.   All home buyers need to weigh the risk against their financial situation to evaluate whether a second home purchase in a place like Big Sky is a good decision.

These numbers reflect sold pricing.  Remember that Montana is a non disclosure state so only licensed real estate professionals can access accurate data.  If you would like to dive deeper into market trends, please reach out and let’s have a conversation!  I hope you found this helpful – please pass it on!!