Thinking about investing in vacation property or specialty real estate, perhaps for occasional personal use or maybe to capitalize on incredibly lucrative seasonal rates? There were more than 51 million skiers in the U.S. during the 2019/2020 season, which creates quite the demand when people are flying in from all over the country.
Vacation houses are becoming an increasingly popular alternative to staying in a hotel, allowing all guests to comfortably gather under one roof, many times in unique accommodations. If you've started your research, you may have come across the concept of a chalet, a traditional-style cabin from the Alpine region of Europe. Chalets fit the ski-resort vacation rental model impeccably and can be a great investment if purchased right. Read on to find out exactly what a chalet-style cabin is and how you can invest in one.
What is a chalet?
A chalet house, in its most basic form, is a wooden house in the mountains. These homes originated in the French Alps and Swiss mountains as herdsman's huts, to which they would bring their flocks in the summer months for lush grazing land.
The modern chalet, though, has taken on a whole new meaning and now represents a luxury villa most frequently used during ski season or for a holiday getaway. A mountain chalet offers a lot of amenities that people seek for their ski holiday. The picturesque-cabin look, with a snow-covered roof and hot tub on the balcony, is perfect after a day on the slopes.
A chalet design differs from other mountain cabins, with several consistent architectural features. The hallmark of a Swiss chalet is that they all have a low, sloping roof that will collect snow and aid in insulating the cabin. Most rustic cabins utilize natural materials like wood and stone for the exterior, but chalet homes take it inside as well, so the interior is just as simplistic as the exterior. Don't think this means dark or cramped, though. Most chalets have high ceilings, ornate molding details, and multiple balconies.
Tips for investing in a chalet
A chalet-style house can make a great country house to enjoy in the off-season months while paying for much, if not all, of the associated expenses during the skiing season from high-dollar short-term rentals. The chalet's unique ambiance and architectural features make it an appealing rental unit that can charge high rental rates.
A chalet near Breckenridge, Colorado, can bring in between $110 and $900 a night during the high season. That equates to $3,300 to $27,000 a month, depending on amenities, size, location, and décor. For this reason, it's a good idea to target a country house near a desirable ski area to generate consistent high-dollar bookings.
Just remember that short-term rentals include a lot of additional costs such as cleaning services and booking or management fees. And if this will be an investment home or secondary home, it's likely you will have to put a minimum of 20% down to finance the property.
You'll also need a solid income to support the loan, a higher-than-average credit score, and a low debt-to-income ratio as a general rule of thumb. Insurance is also typically more expensive because you will need liability insurance in addition to homeowners insurance.
The Millionacres bottom line
Chalets have major rental income potential, but only if there's enough demand in the area. Highly sought-after ski chalet areas often have elevated real estate prices, which can make it difficult to buy the property at the right price to offset the additional expenses of renting the unit.
Try looking near some of the smaller or more remote but still desirable ski resorts so the competition isn't as fierce. There are nearly 500 ski resorts scattered across the country, which presents plenty of options when purchasing a ski chalet near one. You can also look for a fixer-upper, depending on your available cash on hand, as these will often go for below market value even with the expense of renovations. Just remember to do your due diligence, run the numbers, and consider the time perspective of owning a secondary residence before signing on the dotted line.