Why Do People Buy in the Village at Blue Mountain?
Second in a four-part series
In my own experience, people who buy condo units in the Village at Blue are looking for one or all of four things:
1. They want to use and enjoy a unit themselves while using rental revenue to offset expenses and carrying costs
2. They want to be “where it is at’ and have access to the lifestyle offered by being right on-site in the Village within strolling distance of the slopes, bars and restaurants
3. They are buying as an investment with the hopes of future appreciation in real estate values
4. They are counting on losses which they can in turn use to write-off against taxes making their own vacations tax deductible.
Although it is not necessarily required, it is assumed that most people buying a unit in the Village will place their units in the rental pool OR program. In the rental pool, rental revenues are pooled each day and shared among all suites not in use at the time by owners. So everyday you’re not using your suite, you collect rental revenue, whether your particular suite is rented or not. The golf course townhome properties such as Rivergrass and Snowbridge as well as the legacy units run differently with a rental program based on the actual rental of your particular home, it’s not a pooled program.
In order to keep the rental pool fair and functional, there is requirement that at least 80% (90% in the Westin) of the units in the Village be in the rental pool but experience has shown that 97-98% of owners in the Village stay in the rental pool while about 50% of owners in golf course units utilize a rental program. There are also personal use limitations ( 10 days per month in village units, 6 days per month in the Westin and 15 days per month in all other units) which also are impacted by an owner’s status as an HST registrant or not. If you are an HST registrant, you are limited to 36 days per year (10% of annual days) of personal usage in order to claim full input tax credits.
It is important to understand that at the present time, no unit will generate a positive cash flow if it is fully financed. At best, it may offset some or all of the operating costs such as taxes, condo fees, insurance, etc. It would not cover, in most cases, the cost of carrying financing as well.
When you have a unit enrolled in one of the rental programs at Blue, revenues are collected by the program, expenses are deducted and owners then receive a monthly statement and cheque. In addition to rental program management fees, expenses are deducted for phone, departure cleanings, annual deep cleaning and other specific fees such as credit card fees, travel agent and call centre fees. From the net revenue owners receive, they still need to pay their own condo fees, realty taxes, insurance and Village Association dues. In the Village, hydro, sewer, water and cable are included in the condo fee and in other areas, owners pay these themselves.
In the last few years, occupancy rates have been very low; especially as conference business plummeted with the economy however, they have been rising again this year. Summer has been steadily increasing and winter week-ends easily run at 100% occupancy now. Contrary to what some may think, weather does not play a big role any more since Blue Mountain has snow-making equipment. Conference business is also on the rise with the expanded conference centre and improving economy making mid-week activity increase.
Part 3: Financing your purchase
Read Part 1: Buying A Condo at Blue Mountain