Category Archives: Real Estate Blog

Aspen partnership to acquire Mammoth Resorts

Big news in Mammoth today!

Word just came out this morning that Aspen Skiing Company and KSL Capital Partners, LLC, are purchasing Mammoth Resorts for an undisclosed amount.  Click Here to view an article from the Denver Post.  This has definitely created a buzz here in Mammoth (and outside of Mammoth).

What will this mean for the MVP season pass and for overall pricing for resort products?  what will it do for the Mammoth Mountain Ski Area brand?  We remember the disappointing feeling that Mammoth was getting ‘corporatized’ when Starwood Capital bought MMSA from Intrawest and Dave McCoy in 2005.  But they seemed to be able to keep the boutique feel of an independent ski resort (mainly by keeping key people in place, the veteran employees who have been here over 30 years), but also innovate and improve operations and marketing.  And when Mammoth (with June) bought Big Bear and Snow Summit, it seemed like a logical next move.  Does this now seem like the next logical move, to be acquired by Aspen?  Rusty Gregory, CEO of MMSA seems to think so, according to his resort’s press release this morning.  But he also states that Mammoth will “continue to operate on a standalone basis but coordinate closely with our new partner resorts.”  Rusty also disclosed that he will continue to own part of thew new company.

We have experienced (and are continuing to experience) an amazing winter here in Mammoth and, given this news, it should be an interesting spring for our real estate market.  With an already low inventory and healthy demand, there may be more confidence among buyers that a name like Aspen will just add more stability to operating a world class ski resort, restaurants, mountain bike park and partnerships with our local airport.  We would also anticipate that with new ownership we may see new capital improvements on Mammoth Mountain that have been put on hold for years.  Stay tuned.  Your comments are welcome!

-Tara P. & Dennis C.

Inventory Plummets as Mammoth Mtn gets ready for Opening Day!

Wow!!…As of today (11/8), we only have 108 condos listed for sale here in Mammoth!  This is the lowest that this number has been in 2 1/2 years.  As mentioned in our last newsletter, it is typical for the inventory to drop this time of year.  It is a combination of (1) buyers purchasing places before the ski season and holidays, and (2) sellers pulling their condos off the market to use them for one more season (or rent them).  But this number is LOW!  Should be an interesting winter in the real estate market here in Mammoth.

Opening Day for Mammoth Mountain is just TWO days away!!!  I was up at Main Lodge late yesterday and the Mountain is looking majestic.  If you like to ski the top, it looks like there’s some decent snow up there, especially for this time of year.  They are planning on running Chair 1, Chair 3, both upper and lower gondolas and are expecting to open Broadway, Saddle Bowl, Center Bowl, West Bowl, Dave’s Run, Climax and Cornice.  Here is a photo from Instagram posted by Mammoth Mountain showing the back side of Chair 3…looks inviting!  Can’t wait to get out there and make some turns later this week!

backside-of-chair-3

– By Tara Peterson

Contracting

Looking for Contracting work? Here are a few helpful tips:

Do you want to remodel your kitchen, or maybe upgrade your bathroom? Well, it’s quite possible that you are in need of a Licensed Contractor. By California’s definition, a contractor is someone who does over $500 in labor and material improvements to your property.

What does it take to become a Licensed Contractor? Licensees must pass a state exam, carry a $15,000 bond, have four years of experience/ supervised work, and meet other requirements to acquire a license. Licensees must not only prove that they know their specific contracting skill(s) but also know contracting law. You can look up a licensee Here using their license # to see if any complaints have been filed and other info about their license.

There are 44 different contracting specialties from a General Contractor to a Solar Contractor. To see all the types of contractors Click Here. A general contractor is one who practices multiple skills and must use at least 2 unrelated skills on a job where a specialty contractor can focus on their expertise.

Looking to be an owner-builder? It is important to understand the risks involved. You need to know how to pull building permits, understand your responsibilities, and ultimately realize that the integrity of your project lies with you. Click Here to view more tips and warning for owner-builders. Also, the town of Mammoth requires you sign a Owner-Builder Declaration to ensure you assume the responsibilities.

Using a licensed contractor protects you against fraud, faulty construction, and protection if you are unsatisfied with the work. Also, if people are on your property who is liable if an injury occurs? It is up to the property owner to hire someone who they can hold accountable. To view other benefits of hiring a contractor visit http://www.cslb.ca.gov/.

California law states that property managers (i.e. for Mammoth condo complexes) are required to have a license if they are doing jobs over $500, even if it is just routine maintenance. Also, the closest enforcement agency is in Fresno. They rarely visit Mammoth to check out work sites. However, the best protection as a property owner is to look up a contractor yourself Here.

**Most of this information applies to both general and specialty contractors.

— Joel Turner

Vacasa

The New Kid In Town

Vacasa Vacation Rental Management

There are several very good local rental management companies to choose from, like Mammoth Rental by Owner, Mammoth Reservations, (and more here: www.MammothLakesResources.com).  Vacasa, with nine properties under management so far, is among the newest.

Vacasa provides the returns of listing your property on a site like VRBO.com or Airbnb.com, but with none of the hassle. They are a full service company that takes care of everything from bookings and housekeeping to making sure the propane tank on your BBQ remains filled.

What really sets Vacasa apart from other local property management companies is their financial guarantee.

“If another vacation rental firm currently manages your home, we guarantee that you will earn more during your first year with Vacasa. If you currently manage your home by yourself, we guarantee that you will earn at least as much with Vacasa managing your home, even after our management fee. If not, we will refund the difference, up to the full amount of our management fee”

A company that is so confident they can beat the competition that they will refund the difference if they don’t? I wanted to know how they could make such a claim. I spoke with local Vacasa Manager Emma Romo Haisten about it. She explained to me that Vacasa is able to beat the returns of other companies by utilizing new technology. They have an advanced algorithm and a ‘rates analysis team’ that help set the prices for each rental each night. This helps owners earn more by keeping their rental booked more often at the appropriate rate, similar to how a hotel room or an airline flight is booked. Prices rise or drop with demand.

Even though it is an international company that has won awards from the BBB, Vacasa hires a local team in each city it is in. They have a local manager, reservationist, handymen, and housekeepers. They say on their website, “We hire the best housekeepers in each destination, and we retain them by offering a year-round living wage and plenty of advancement opportunities in an industry known for its seasonal fluctuations.”

They also post all of their listings on VRBO.com as well as their own site, to attract new guests that may not have heard of Vacasa yet. Another neat feature- even if you don’t own property yet, you can request an income projection for the unit you’re interested in to give you an idea for how much money you could make by renting the property through Vacasa. Property management, welcome to the 21st century!

We here at The Dennis Cox + Tara Peterson Group are interested to see how Vacasa does in our local market. Right now they are only managing nine rentals in Mammoth and are working to build their team. How will they stack up against the well-established property management companies in our area?  Would you be willing to try a company that is new to our area?

Interested in learning more? You can check out vacasa.com or contact Emma directly at Emma.Haisten@vacasa.com

And check out their article in Forbes at: http://www.forbes.com/sites/brucerogers/2016/04/08/eric-breon-builds-vacasa-vacation-rental-service-into-high-growth-business/#1121a6776622
By Shelby Pracht

NEW WATER-CONSERVING FIXTURE LAW

NEW LAW AFFECTING ALL CALIF. HOMEOWNERS AS OF 1/1/2017

Requires Water-Conserving Plumbing Fixtures

 

There is a new law rushing at us that takes effect January 1, 2017 which requires all homeowners in California to have water conserving plumbing fixtures.  Did you catch that?  All homeowners.  Not just when you sell your home (i.e. “point of sale”), but simply if you own property as of 1/1/17.

If you own a single family residence in CA as of Jan 1st, you will be outside of the law if you have any of these non-compliant plumbing fixtures:

  • Any toilet manufactured to use more than 1.6 gallons of water per flush.
  • Any urinal manufactured to use more than one gallon of water per flush.
  • Any showerhead manufactured to have a flow capacity of more than 2.5 gallons of water per minute.
  • Any interior faucet that emits more than 2.2 gallons of water per minute.

Once I heard this, I rushed to my toilets and saw that they all use 1.6 gallons per flush…phew.  And I don’t know how many homes have urinals, but I have yet to hold a bucket under my showerhead with a stopwatch to calculate the gpm.

However, if you own a home that was built after 1/1/1992, your toilets are probably okay since California has required low-flow toilets for new construction since this date.  And the law actually only applies to homes built before 1/1/1994, so homes that are less than 23 years old are okay!

And get this…condos are exempt!  The law reads “single family residential property” and condominiums are not SFR’s!  Will the law be expanded to include condos?  I predict that they will.  In Mammoth Lakes, I count about 4,540 condominium units built before 1992…that’s a lot of toilets.  As an aside, the law states that multifamily and commercial properties do not need to comply until 1/1/19.

Policing: How will this law be policed?  I find it hard to believe that a state agency will be going door to door to measure your fixture flow rates.  Real Estate law currently requires that when you sell your home, you must disclose the presence of any water conserving plumbing fixtures.  (Realtors love it when they do this…effectively making us the police.)  The Real Estate Transfer Disclosure Statement form (“TDS”), which all sellers must fill out and provide to buyers during escrow, currently has a box to check if you have “Water-Conserving Plumbing Fixtures.”

An attorney from the California Association of Realtors believes that the Seller Property Questionnaire (SPQ) form will be revised by the end of 2016 to include a question that may be stated this way: “Are you (Seller) aware of any noncompliant plumbing fixtures?”  And if a Seller checks “Yes,” they are required to explain further.  So, if you remodeled a few of your bathrooms but still have one old bathroom with a high-flow toilet, you must disclose that it is non-compliant.

Then what?  Is the Seller required to upgrade the fixture(s) before the close of escrow?  Not necessarily.  The TDS pg 2 says, “Installation of a listed appliance, device, or amenity is not a precondition of sale or transfer of the dwelling.”  So, it will probably be left up to the Buyer and Seller to negotiate this.  If it is realized early, it can be built into the list price and disclosed in the listing that “Buyer shall be responsible for compliance with water-conserving plumbing fixture state law.”  Or, it could be asked for by Buyers after the home inspection – which brings up the question about how or even if home inspectors will test these fixtures.

The current corollary to this law is the requirement for all property owners to have carbon monoxide detectors in their dwelling.  If a property does not have them, Buyers or their lenders will often request that the Seller install them before close of escrow.  Sellers do not usually mind because these devices are not too expensive (sometimes we agents end up taking care of it out of our pockets).

If Buyers do ask for Seller to bring noncompliant fixtures into compliance before close of escrow, this is a much bigger ticket item, and even if a Seller did agree, the Seller will most likely install the cheapest fixtures available.  I predict that Buyers are going to ask for a credit so that they can upgrade the appliance to their liking after the close of escrow (and many Buyers may just pocket the money and not even make the modifications).

I called the Mammoth Community Water District to ask about enforcement and they do not currently have an enforcement program in place, nor do they know if they will even be responsible for enforcement.  They have called both the state and the Town of Mammoth Lakes but have not gotten any concrete info.  Sounds like this law is not on many people’s radar yet.

However, the MCWD does have a generous rebate program in place to help incentivize us to upgrade our toilets and showerheads (http://www.mcwd.dst.ca.us/rebates.html).

Other resources:

So for now, just be aware this law is coming at us quickly, but is not clear how it will be enforced.  It will be interesting to see how the real estate market reacts/adjusts to the latest ordinance affecting our largest asset(s).

– By Dennis Cox

Coffee in Mammoth

Where to Cozy Up with the Best Coffee this Fall

“Why yes, I’ll take the pumpkin spice everything, thank you.”

sawada-coffee-image-for-blog

Cool Temps and Warm Coffee

Fall is a beautiful time in the Eastern Sierra. The temperatures are dropping, the leaves are changing, and it just smells like autumn. Nothing can rival the fall color hikes and drives that the Eastside has to offer this time of year. Except maybe snuggling up with a warm cup of coffee afterward.

Drink Local

While I enjoy a pumpkin spice latte from Starbucks as much as the next guy, taking the time to seek out some local brews will be well worth your time. All coffee shops offer hi-speed wi-fi, so you can get some work done or lazily browse through some real estate listings! If your style is…..

Modern Industrial Chic

Check out the newest local coffee shop, Black Velvet Coffee. It’s located in the Mammoth Luxury outlets and they roast their own beans (which you can purchase to take home!) They also do wine tastings, and serve waffles. Yes, waffles; little scrumptious waffles that make the whole place smell delicious. The exposed metal and concrete design makes the place feel very hip and fun.

 

Eclectic and Colorful

Stellar Brew is for you. The bright blue building on Main St. is hard to miss. Now is the perfect time to sit out on their patio and enjoy the sunshine. The local artwork and jewelry displayed are not the only reason that Stellar Brew is the favorite hangout for local hikers and climbers- they offer an incredible array of breakfast and lunch options on top of the delicious drinks and smoothies. Their baked goods rival the best in town (the cinnamon rolls are to die for) and they offer lots of options for those with food allergies and sensitivities. Don’t miss their pumpkin pie chai this time of year!

 

Classic and Cozy

Looney Bean is always a good bet. With a location in Mammoth and in Bishop, you can’t go wrong snuggling up by the fireplace and feeling the Looney Love. Looney Bean also roasts their own coffee and the company has been around making friends in the coffee world since 1992. Worked up a sweat on your hike? Go with their cold brew coffee. Believe me, your taste buds will thank you.

Don’t worry if you are a creature of habit, Mammoth has two Starbucks locations (In the Village at Mammoth and the Minaret Mall next to Vons) where you can grab your usual. Cheers to leaf-peeping and delicious coffee – and keep an eye out for me snuggled in the corner with a book and a latte!

-Shelby Pracht

Market Update for May 2016 – Flat, but with some trends

How is the market in Mammoth? In a word…Flat.  Since when?…2014

The real estate market in Mammoth Lakes has been fairly flat.  It is neither a buyers’ market nor a sellers’ market.  Here are a few characteristics of our market…

Price per SqFt: We looked at $/sqft for condos and homes over the last few years and segmented them different ways (by location, age, price range) and some segments rose a tad, like newer homes (less than 25 years old) and non-Intrawest condos, and some segments dropped.  Overall, the $/sqft is fairly flat but trending slightly in the upwards direction.  Admittedly, $/sqft is not always the best indicator, as many factors are not always incorporated into $/sqft.  Let’s look at some other characteristics:

Price per sq ft condos + homes

 

Time to Sell: Homes are taking longer and condos are selling more quickly  Condos usually sell more quickly than homes, and right now they are selling a month and a half more quickly (97 days from listing date to contract date versus 141 days).  The difference can probably be explained by the difference in price points.  It takes longer to find a buyer for a $1.5M home versus a $200k condo (the pool of buyers is smaller)…

DOM2What is selling: 80% of the 120 condos sold in 2016 are below $465,000.  And you can barely find a house for less than this (only seven of the 30 homes sold in 2016 so far were below this mark).  In both segments, all cash financing are seen in a little over 1/3 of all transactions.

 

 

 

Inventory: Late spring is the time of year when sellers list (or re-list…or even sometimes pause their listing for 30 days to re-set the days on market to zero). In 2014, between the middle of May and the 4th of July, inventory shot up by 25%. In 2015, it shot up by 20% in the same span.  We expect to see a similar increase this spring.  Condos that were taken off the market in order to max out rental income will come back on the market. Homes and lots that emerge from the snow will also emerge on our active inventory.  On another note, our foreclosure inventory is basically non existent and we only have a few short sales.

 

Condo Sales Pace

Sales Pace: As you see in the graph, the pace of sales was strong in 2013 (the year after we bottomed out and had an uptick in the market), but then has been slightly slower since then.

 

 

Bright Spots: The bright spots in our market include the following:

(1) Lower-priced homes.  Half of the homes selling are considered ‘affordable’ in the under $599,000 range.  (The $700k-800k range has been struggling with only one sale so far this year).

(2) GrayBear: New development of single family homes along Sierra Star Golf Course with the rare ability to be rented out nightly.  These are priced $1M-$1.5M and the developer has been swamped with sales and construction activities along East Bear Lake Dr.

(3) Snowcreek Phase IV and Westin studios are among the most frequently purchase properties in 2016 so far.

Sellers who have had their properties on the market throughout the ski season without seeing them sell are really hoping the summer will bring them a buyer.  We do tend to see a new set of buyers during summer, as well as those winter enthusiasts who were not able to see many condos for sale because they were always rented during our recent successful ski season.

We believe that the drought has a lot to do with our sluggish market.  Buyers are skeptical (rightly so) that one good winter will lead to a trend of several good ski seasons in a row.  While Mammoth’s success definitely depends on the ski resort, our town has much more to offer and has been drawing tourists (and real estate buyers) for many other reasons.

Feel free to email us if you have any questions or comments!

-Dennis Cox & Tara Peterson

Biking in Mammoth

Mammoth is home to some of the best mountain biking and road biking in California. It offers excellent riding for all disciplines and skill levels. Year-round you will find both locals and visitors riding bikes, even through the winter at the lower elevations.

 

For cross country and downhill mountain bike rides, Mammoth Mountain offers over 80 miles of groomed single track. Whether pedaling the trails or taking the Scenic Gondola to the 11,053-foot peak to start your ride, you’ll enjoy world-class trails and breathtaking scenery.

 

Professional racers come up regularly to train and compete in Mammoth. The U.S. National Mountain Bike Championships will be held in Mammoth this July. Thousands of America’s top riders will come to compete in all disciplines of the sport.

 

Mammoth also offers miles of paved bike paths, including the Town Loop and the Lakes Basin Path which are friendly to all level of cyclists.

 

Road cycling in Mammoth is spectacular. The roads are well maintained and are ideal for altitude training. From Mammoth you can ride north or south on the wide shoulder of the 395, climb many iconic climbs such as Tioga Pass, or try a locals favorite like the Mammoth Scenic Loop or June Lake Loop.  And don’t forget about the annual Fall Century / Gran Fondo ride.

Bike rentals and maintenance shops can easily be found to support this industry (i.e. Footloose Sports, The Bike Maven, Brian’s Bicycles).  If you want some assistance going uphill, electric bikes are also available at the Pedego store.

Finally, when the ride is over, Mammoth offers a wide variety of restaurants, accommodations, and bike shops to help make Mammoth one of the top cycling destinations in California.

-By Joel Turner

Multi-Family Investing in Mammoth

Have you always wanted your own piece of Mammoth, but not sure if you can really afford it? There’s always the option of purchasing a condo and putting it on a rental program. The biggest downside to this is feeling like you need to rent the condo during all of those weekends and holidays that you might want to be using it yourself.  See our blog post about cashflow on Mammoth condos here.

 

Another great option can be investing in small multifamily housing. A duplex, triplex, or four-plex would allow you to own your own property, live or vacation in one unit, and rent out the rest. Often, the rental income from the other units can be enough to cover most or all of your mortgage payment for the entire property.

 

For instance, a triplex on Mono St. (three 2bedroom/1bath units) just sold in Mammoth this month for $620,000. The principal and interest on a mortgage payment would be around $2,300/month (assuming a 20% down payment and 3.5% interest rate).  Your other ownership expenses include common area utilities (exterior lighting / laundry room operation), snow removal, property taxes, and maintenance. 

 

If you reserved one unit for your personal use, each of the other units would only need to rent for $1150/month to cover your mortgage. Recently, 2 bedroom units in town have been renting for an average of $1200-1300/month. Viola! Living in Mammoth for (almost) free!

 

When considering multi-unit properties, you will want to become familiar with tenant rights and lease agreements, the best way to collect rent, how to advertise vacancies and whether or not to hire a property manager.

 

But don’t think that multifamily means sharing walls with your neighbors. There are a couple of options on the market currently that offer separate houses on the same lot. You can have the privacy of a single family home but still have rent money coming in each month.

 

Take a look at the current multi-family listings and see if any might be the path to ownership for you. View current multifamily listings here.

-By Shelby Pracht

Can I Get Positive Cash Flow on my Mammoth Rental Condo?

Possibly!

Buying a condo or townhome in Mammoth Lakes is a great way to get your family up to the mountains more often.  If you live in the 949, 310, 818, 858 or 805 and have a mountain getaway place to dream about while at your desk, chances are you will make plans to come up and use it more often than if you did not own one.

And instead of letting it sit vacant when not using it, you might put your condo on a nightly rental program.

Can the rental income produce a positive cashflow or at least cover our costs?  Possibly…when you pay all cash for the property.

Here’s how.  We keep track of rental income data whenever we run across it.  We have 931 data points with rental income for specific properties over the last decade.  Here is a simplified way to calculate cash flow:

Cash Flow = Gross Rental Income – Rental Commission – HOA Dues – Property Taxes. 

We are looking at fixed costs here, leaving out utility, maintenance and mortgage costs.  And since the bulk of insurance costs are included in HOA dues, let’s leave leaving out the smaller ‘contents policy’ that owners often purchase.

Example: A Grand Sierra Lodge 2-bedroom on the 4th floor

+ $49,453 rental income in 2014 (from 124 paid rental nights and zero owner use nights)

– $25,689 rental company commission (52%)

– $9,204 HOA dues

– $4,896 property taxes (1.1% of sales price of $445,000)

–  – – – – – – – –

+ $9,965 positive cash flow.

ROI: To calculate a Return on Investment, we divide the cash flow and by the purchase price (this condo sold in 2015 for $445,000 all cash):

ROI = $9,965 / $445,000 = 2.2%.  This example may represent one end of the spectrum, where the buyer paid all cash and did not use the condo for himself/herself.

 

But what if I cannot pay all cash and I want to use the condo myself?

Example of a mortgaged Snowcreek 1-bedroom condo:

A Snowcreek phase 1 one-bedroom condo sold this year for $255,000.  In 2014, the condo was rented out for 141 nights and the owners used it an additional 19 nights.  Gross income was $19,822 and rental commission is 47%.  After HOA dues of $436/mo and property taxes, the net income was approx $2,470 for the year, which is barely breakeven.  If the owners paid cash, that would be a return on a cash investment of 1%.

However, the owners got a loan for 80% of their purchase price.  If their interest rate for their 30-yr fixed loan was 3.75%, their monthly payments are approx $945/mo.  Including this expense into the above equation results in an ROI of -17% on their initial investment of $51,000 (20% down payment).

Their cashflow would be negative at -$8,870/year, but now they have a place of their own to come and stay and not have to rent anymore.  They will also build equity, have a possible tax write-off, and hopefully gain appreciation in our currently slowly rising market.  They also are going to do a bit of remodeling and take over the management of rentals themselves to see if they can increase their income and decrease costs.

 

Rental Income Caveat: The huge caveat is always that rental income depends largely on amount of owner use and timing of owner use.  If your Chamonix condo is not available to rent during Christmas, MLK wknd, Presidents’ wknd, 4th of July, etc., then you forego the chance to make top dollar during those high demand periods.  Rental income also depends on the quality of your property, amount of snowfall and tourist visitation (2012 was a bad year), and which rental company you choose (read more about this below).

How does your condo stack up?

See below for a chart of average annual cashflow for the various areas of Mammoth (using the cashflow equation above and not including mortgage costs)

 

Dec 2015 cashflow chart cropped

 

Golf course townhomes produce the largest cash flow because they typically are larger than the rest.  In addition, Golf, Village and Juniper Springs areas are heavily weighted with Intrawest-built properties, which are set up to be condo-hotels and are located close to amenities (skiing, golf and The Village).

 

A word about Rental company commission: Most of the big brick and mortar rental companies in Mammoth charge 38-45% commission (Mammoth Reservations, Mammoth Reservation Bureau, Mammoth Sierra Online, Central Reservations, Mammoth Premiere, etc.).  There are some smaller online companies that charge less, like Mammoth Front Desk and Mammoth Rental By Owner.  And then there is Mammoth Hospitality Management, which is operated by the ski area.  They charge 50% commission for managing condos at The Village, Juniper Springs Resort, and the like, and 55% at The Westin.

The legitimate rental companies will always include transient occupancy tax (14%), cleaning fees, operating costs and marketing fees within their commission.  We have links to the rental companies on one of our websites: www.MammothResources.com.

 

Rule of Thumb:  If you pay cash and rent out your condo somewhat aggressively and do not use your condo over holidays, then your net rental income can generally cover your HOA dues and property taxes.  And you might have some left over to pay for utilities as well.

 

A purchase in Mammoth is more of an investment in lifestyle and in your family than it is a purely financial investment.  Which is why pure investors do not buy rental property in Mammoth.  Every year we talk to a few investors who have never been to Mammoth and they rarely buy here because they require a higher return on investment than is currently available here.  Why?  Because you, the families from the above area codes, value the property more than an investor would.  It is less about numbers than it is about your family getaway spot and a launching pad for adventure.