When investing in real estate there are a myriad of factors to consider. Should one of the factors be death rates? Ironically, I’m not talking about crime statistics.
There was a recent article in a Ski town newspaper (Steamboat Pilot) highlighting the number of deaths at each ski resort. Why is this critical information to any real estate investor? I had always thought that ski town deaths were random events; this is not the case at all. Is there a correlation to a particular location/resort. Looking at the table I quickly changed my thinking. One county jumped off the page. Summit county had the largest number of deaths; almost twice any other county in Colorado. This isn’t all that surprising since they are the busiest resort in Colorado. What really stood out was that they also had one of the highest percentage of deaths of skier visits in Colorado. One ski area had five times the likelihood of death compared to other popular ski areas in the state. This information is definitely left out of the resort marketing materials!
This brings up an interesting question. Should this information impact your real estate investing decision? A prudent investor when evaluating a property/market should not only consider what is happening in the market today but also where the market is heading (future trends). In a ski town market the largest economic driver is obviously skiing tourism. Although summer tourism is increasing, it is still only a small share of the revenue generated from skiing.
With skiing the largest revenue driver in many of the resort towns, the next question is will consumer habits change as a result of information on deaths? Will consumers choose alternate locations to spend their disposable income? Will vacations now be spent at the beach or on a cruise where consumers feel “safer”? For example, as a father of two, if I knew that there was one resort with nearly five times the probability of death than another resort close by, I would likely choose an alternate location on another activity for my family. If a significant number of other consumers made similar choices the resort and the community would be impacted due to lower visitation, lower spending, etc…
Do I think Summit County and one resort in particular will fall off a cliff as a result? Absolutely not. But, this could lead to less appreciation than other comparable areas in the future if consumers vote with their wallets on their vacation choices. What should you do? Investing in real estate is full of unknown risks; the objective of real estate investing is to mitigate risk while maximizing return. If you are looking at a ski town investment, the information on death rates should be factored in since it is a risk and could influence future appreciation.
This month, the 130th death on a slope in Colorado happened. Do you want this advertised in the marketing materials for your vacation rental property/mountain investment?
Sources:
Steamboat Pilot: http://www.steamboattoday.com/news/2017/apr/23/whiteout-hidden-figures-human-toll-colorados-ski-i/
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all they need is their simple one page application (no upfront fees or other games).