We have used this spreadsheet in the past and we updated it with current listings and current interest rates.
This spreadsheet takes into consideration mortgage tax deduction and appreciation to show the benefits of purchasing a mountain property.
We have been number crunching at Amy Nakos real estate world headquarters and have created this spreadsheet that we think you might really like!
New buyers in the Summit County Colorado resort market want to own a mountain property that they can use for skiing, hiking, biking, and doing all the things that people enjoy in the mountains. When they aren’t using it, they want to short term rent it (STR) to generate income to cover the costs of ownership. Most people who come to me want to put down 20%, get an 80% loan, and then use the STR income to cover the costs of the mortgage, HOA, taxes, insurance, incidentals, etc. In other words, they want to own a mountain property for free.
Well, that’s tough. I’ve been working here for 20 years and even when the prices and interest rates were lower, it was still virtually impossible to own a self-sustaining investment property but putting down only 20%.
But savvy investors also know that there are additional considerations that make investment properties worthwhile – tax write offs and appreciation! This chart assumes tax deductions for interest expenses at a 35% tax rate. (Please note that this is simple math and just calculates 35% profit of the total interest paid – your individual circumstances, if you have additional real estate loans, may mean this number is lower). We are also assuming a 4% annual appreciation as profit at the bottom of the chart. When you figure in tax benefits and appreciation, then a mountain real estate investment starts to make sense.
Please let me know if you have any questions or if you would like to discuss this further!