Real Estate Deal Analysis & Advice

Colorado Springs Short-Term Rental: How We’re Averaging $6,200/Mo in Revenue

Expertise: Landlording & Rental Properties, Real Estate News & Commentary, Real Estate Investing Basics
44 Articles Written

It’s pretty obvious from my post, 10 Reasons to Invest in Colorado Springs Right Now, that I’m bullish on Colorado Springs. But it’s one thing to tell other people to put their money somewhere, and it’s another thing to do it yourself. So, this post is about putting your money where your mouth is and experiencing this from the client side.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

How It Happened

We’re pretty familiar with short-term rentals because we operated a few for two years and have constructed an entire real estate niche around telling people to do what we did: Leverage short-term rentals (i.e. Airbnb) to make money, acquire new properties, and repeat. It’s a lot like BRRRR (buy, rehab, rent, refinance, repeat) but with short-term rentals.

We also had former clients, now friends, who wanted to also do something like this and were interested in a partnership.

The Partnership

I cannot say enough nice things about our partners, and I think our wonderful relationship revolves around the following 

  1. We are respectful in our disagreements. (This is true in our business and politics. Before signing off with someone, you might want to discuss something you disagree on and see if you still like each other.)
  2. Expectations were set. All parties knew their responsibilities.
  3. We lawyered up. So did they. Contracts were drawn. Lawyers advocated on both sides for things that we didn’t even know we needed, allowing both parties to feel confident moving forward.

The Basics

Here’s what you need to do a short-term rental in a different city:

  1. 20-25% down
  2. A real estate agent who knows about short-term rentals (if you are thinking about using an agent that says they know about short term rentals, vet them because they can really make or break your investment)
  3. Additional money for a whole lot of furniture

For us:

  1. The money portion was not an issue.
  2. We were the real estate agents.
  3. Acquiring the furniture was the biggest headache. By far.

The Biggest Headache

In case you didn’t catch it before, furnishing causes the biggest headaches. To begin with, people have very different ideas about what is stylish. Secondly, there’s the question of bargain shopping versus simply taking a trip to IKEA.

When it comes to debates around bargain shopping versus IKEA, the debate is as follows.:

  • This is a business. Therefore, money needs to be conserved by purchasing Craigslist furniture rather than buying new.
  • Time is money. The longer it takes to hunt down every piece, the longer the place cannot be rented—and money is lost. Also, bargain shopping is annoying, is harder to track financially, and involves people who want to talk too much. You may be able to tell which side I’m on.

Either way, one thing you should do is use checklists to make sure you are being thorough and to prevent the headache of constant one-off trips to the store. 

Photos via: Richard Seldomridge

Was it a Good Buy?

First, I’d just like to say we bought a duplex that we kept telling other people to buy, but which they never executed on. We thought we were right, so we bought it, closed in mid-May, and had our first rental in June.

As far as the money:

  • It cost a little over $13K to furnish the place from IKEA. One unit is 2 beds/1 bath, and the other is 2 beds/2 bath. We got six sets of white towels, sheets, etc., because it makes cleaning easier. Also, we decked out the kitchen—not necessarily with nice stuff, but we made sure they had all the amenities because this is somewhere we’ve noticed investors do cheaply, and it gets annoying when you are the one renting it out. (This is an upfront expense that should be catalogued with closing costs, as it should be a one-time investment.)
  • The PITI (principal, interest, taxes, and insurance) is $2,156/month.
  • The utilities are $465/month (for both properties combined).
  • We put 5% of the revenue aside for future maintenance/upkeep expenses, which has been on average $315/month. (If you’re saying 5% is low, it’s because the revenue is much higher with a short-term rental, so 5% of short-term rental money is like 10% of long-term rental money.)
  • We’ve averaged $6,200/month in revenue.

So, what that means is:

  • Each month, we are getting approximately $6,200 in sales.
  • Each month, we pay out $2,900 in expenses between mortgage, utilities, and anticipated repair costs (CapEx and budget repairs),
  • On average, our LLC walks away with $3,300 per month, which is then split between us and our partners as agreed upon.

A couple of things to note in these calculations:

  1. These cover three summer months (June, July, August), so the height of the summer time, and we do see decreases during the winter months (October through March).
  2. A good property manager will take 20-30% of your revenue for short-term rentals.
  3. The laws are changing in Colorado Springs (and other cities nationwide) regarding short-term rentals. It’s important to stay on top of these to know you are making a sound business investment and that you have a Plan B should regulations change.

If you would like to learn more about partnerships, partnering with us, investing and/or general real estate, please reach out. We love talking to folks on this site about their goals and helping out.

Are you in the short-term rental market? Why or why not?

Comment below!

Erin Spradlin co-owns James Carlson Real Estate. She loves working with first-time home buyers or sellers because it is fun to help people real...
Read more
    Erik Benson from Modesto, California
    Replied almost 2 years ago
    I noticed you didn’t break out cleaning cost in the post. Isn’t this one of the larger categories?
    Michael Baum from Olympia, Washington
    Replied almost 2 years ago
    Cleaning costs are usually covered by the guests in the rental. It is most likely a wash. It could be plus or minus depending on your cleaning costs vs what you charge to the guest.
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    Correct. The cleaning costs are charged to the guest and they pay for them. This is because we use a professional service, if not- you could likely keep your rates lower as you may be handling them yourself.
    Tim Lowrie Contractor from Arvada, CO
    Replied almost 2 years ago
    Do you manage other investors properties in the springs? What are the best areas for short term rentals? I would like to hear more about your success story. I have been looking to purchase in the springs but I have little experience in the short term rental industry.
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    Thanks, Tim. We have a couple areas we really like in Colorado Springs because of the industry diversification down there. I’ll follow up with you via private message.
    Juan Ramirez
    Replied over 1 year ago
    I called and left a message. Thank you
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    Thanks, Tim. We have a couple areas we really like in Colorado Springs because of the industry diversification down there. I’ll follow up with you via private message.
    Michael Baum from Olympia, Washington
    Replied almost 2 years ago
    Great article and I agree with furnishing a home. It is pretty crazy to think how much you need for a decent sized home. We bought a lakefront home in Idaho and it took us a year to get it ready for guests. Things just kept popping up. Finding furnishing to full equip a 2400 sqft house is a real chore to do without going broke. You guys really did well as we haven’t broken even on all costs yet. It does take a while to build up reviews so people will feel comfortable staying. So far so good for us as we are all 5 star and are already booking for next year!
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    Thanks! We kept our furnishing costs decently low, and then kept our prices low initially as to drive traffic. It’ll be interesting to see how the numbers look as we enter seasonal stagnation, but hopefully it stays strong.
    Ronnie Saeteune from Denver, Colorado
    Replied almost 2 years ago
    Hello, I am completely new to real estate but was thinking of turning my home into an air bnb in the future. It always crossed my mind though, who does the cleaning? Do property managers take care of that? Or is that something we do our self? Great post by the way!
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    Thanks, Ronnie. Just depends on how you set it up. Typically, if people have a property manager- they want to be hands off and the property manager wants you to be hands off. Because of that, they handle all the cleaning and manage that team- you don’t. Without a property manager though, you would be handling that and/or managing the cleaning crew taking care of that.
    Christopher Jones Investor from Colorado Springs, CO
    Replied almost 2 years ago
    Thanks Erin, My wife and I just purchased a property in COS with intentions to use AirBnB. Thanks for the insights.
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    I hope you are planning on going to the upcoming meeting with City Council then. It’s October 23rd at 1PM. They really need to hear from people that are pro-airbnb.
    Colette Chase from Denver, Co
    Replied almost 2 years ago
    He Erin , how did you get around the part of the property having to be a primary residence? In Denver you can’t purchase property just to Airbnb. Thanks
    Buckner Toney Rental Property Investor from Denver, Colorado
    Replied almost 2 years ago
    Not to speak for Erin, but Colo Springs does not currently require that the property be a primary residence to be a STR. The laws are very much in flux right now as the city is considering changing the regulations in the near future. The state of Colorado also has some potential bills on the horizon proposing increasing the tax rates for STR’s as well that one needs to stay up on if interested in getting into the market.
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    Right, so Colorado Springs has different laws than Denver. Denver’s primary residence law went into effect on January 1st, 2017- essentially limiting investments and mandating that it be your primary (where you get your mail.) Colorado Springs has not had that provision to this point, and is kind of a free for all, but is vulnerable to two possible pieces of legislation: 1.) Colorado Springs is looking at limiting investments in Colorado Springs by adding the primary residence provision or something similar; essentially adopting something similar to Denver’s; 2.) the state of Colorado is trying to think of ways to work with the Gallagher amendment. One way they are considering is by raising the taxes to 30% (so more like a commercial tax rate than a residential). If that goes through, it will make Airbnb no longer tenable… We’ll see if that happens because 1.) cities would lose major tax revenue they are collecting; 2.) the mountain towns would be severely impacted; and 3.) a black market would likely immediately pop up.
    Ryan Plante
    Replied almost 2 years ago
    Love it. What are your annual gross profits, on average? If you have that number 🙂 Thanks for the insights!!
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    We can’t really say on that particular property, since we’ve only owned it for three months. Assuming we see $3300 in profit for the hot months (May – September), and a 30% reduction for the remaining months, we would be profiting around $30K for the year. I think that’s conservative, but better to be conservative with your investing numbers than overly liberal.
    Jeff White Rental Property Investor from Denver, CO
    Replied almost 2 years ago
    Hey Erin, Good stuff, looks like a very solid investment that is working out for all the investors, especially with the prices for multifamily down there in the Springs, and the regulatory environment is much more favorable than Denver. What’s your projections for the winter months revenue wise?
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    We project a 30% decrease in rates for October – March. (Also, please see my comments above about what Colorado Springs and Colorado are considering doing with short-term rentals, as that can affect future investments.)
    Eddy Ogbekhilu
    Replied almost 2 years ago
    xcellent post BP Colorado,and big up to Erin Spradlin and keep it up
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    Thanks!
    James Kennedy
    Replied almost 2 years ago
    Great read and detail. Have two single family rentals in Denver (Regis and Arvada) and interested in CS. Your articles are helpful in gaining knowledge, thank you.
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied almost 2 years ago
    Thanks, James. Let me know if you ever want to chat more about CS!
    Peter Schuyler from Montrose, CO
    Replied about 1 year ago
    Hey Erin, is there any update on the Colorado Springs STR laws that you mentioned earlier in this article?
    Ken L Britt
    Replied 9 months ago
    Please PM me. Many question.
    David Montoya
    Replied 8 months ago
    Does any one do any advertising of any sort for their vacation rentals to increase the rental numbers? If so, how and what? Do any of you have a website just for your rental? Also, other than reviews and price per night how else to you move closer to the top of the search list on vrbo and airbnb? Thanks.
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied 8 months ago
    @david montoya - I wouldn't do a website just for your rental. It's too hard to compete SEO wise to get eyes on that, so it will be a lot of energy with little pay off. I would post on Airbnb and VRBO, as those are the two biggies, although we are also seeing Booking.com emerge as a contender. The trick with these is calendar management, so I'd research apps on which ones to use.
    Aaron T. Developer from Tampa, FL
    Replied 8 months ago
    @David Montoya We only list on airbnb and are 90%+ booked. no other marketing.
    Danny Nguyen
    Replied 2 months ago
    Great article. I recently picked up an interest in STR and have been doing some research. Do you think it’s a good idea to sublet Airbnb’s? I live in Albuquerque but wanted to remotely manage my first property in Co Springs.
    Jake Vayda from Chula Vista, California
    Replied about 2 months ago
    Hey Erin! I love this. What a novel idea. How has your duplex been going with the pandemic? Have you pivoted? Thanks again :)
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied about 2 months ago
    Thanks. We've shifted everything to 30+ day, furnished rentals and those have done quite well as elective surgeries return to hospitals, etc. Really though, I think this year will be a hard to predict outlier that little should be based on.