STR Advice in CO

[Charles Frazier]

Note: New here - but reading the Short Term Rental, Long Term Wealth book and going to sign up for the STR Bootcamp in June.

I currently live in Denver (own in the Sunnyside area) and looking to purchase my first STR in Colorado. Ideally this would be in a mountain town area, but know licenses are strict/prohibited - but curious to know about areas such as Bailey/Evergreen/Frasier/Grand Lake/etc. My budget is 100-150k(max) all-in and would like a mix of cash flow and appreciation. Additionally, we would use this property for personal use when not fully booked up. No strict requirement on Condo/Townhouse/SFR. Any experts in the area to help advise?

If mountain towns are not a attractive investment then I have been looking into Wheat Ridge/Arvada area. Would love to learn more about investors in these areas and what type of CoC/Cash Flow/Regulations are out there. Thanks for any info!

[Michael Baum]

Hey @Charles Frazier, I just want to make sure that your budget is 150k for the purchase and setup?

This seems pretty low to me. How much would be left in reserve?

Have you been looking at VRBO and AirBNB in those areas to see how others are doing? What about real estate prices?

I just did a quick look at Grand Lake and the median price is $780,000. Evergreen is $866k.

So your 150k is burned up with the down payment. Outfitting is going to depend on the place, but you are looking around 20k maybe if you are frugal and watch for deals.

I don't want to discourage you but I wanted to make sure you had at least some info.

[Brett Deas]

Wheat ridge/Arvada is now basically impossible with their permit caps and that price point. I am also looking at STR's in the Bailey area, as park county is the easiest to get permits in. Jeffco, and grand county are either extremely competitive or impossible to get permits in.

[Charles Frazier]

@Brett Deas can you tell me why/how price point plays into getting a permit in the Wheat Ridge/Arvada area?

[Stacy Rozansky]

Hi @Charles Frazier, welcome to BP!

I own STRs in Park County and have helped clients in Evergreen and Grand County. Each area has a different set of rules and regulations so really figuring out which makes the most sense for what you want to accomplish with the property, and where you want to be will be the first step. In the mountains, many places do come furnished so it shouldn't be too much extra depending on the look you are going for etc. but it good to budget for that as well. 

Happy to hop a call to go over the different restrictions in different areas and what you can expect for cash flow. 

[Zach Edelman]

I would check out Good Neighbor Realty. They're an STR friendly/specialty brokerage out of Denver and would probably be a great fit for you/your scenario.

[Ben Einspahr]

@Charles Frazier Welcome to the forums! $150k is a little on the low end if you are wanting to purchase an investment property + furnish in the Denver Metro Area. Having to put 25%+ as a downpayment will be very tight leaving you in a price point that would require a significant amount of updates. If you plan on staying there at least 14 days out of the year, you can put down as low as 10% using a second home loan. Worth looking into. 

Additionally, there are pros and cons investing in each. The only area that is still allowing STRs as investment properties in Wheat Ridge is "district III". T (check out this link). There is a waiting list for the rest. Coming from someone that has STRs in both Wheat Ridge and Arvada, I have noticed that supply has seemed to outpace demand over that past year or so. 

Investing in Arvada/ Wheat Ridge can be nice because it is your own backyard which can help decrease some of the PM costs. If you are leaning towards investing in mountain towns, you will need to lean on a good realtor like @Stacy Rozansky that can bring that team to the table for you. Best of Luck!

[Brett Deas]

Quote from @Charles Frazier:

@Brett Deas can you tell me why/how price point plays into getting a permit in the Wheat Ridge/Arvada area?

 The permit caps are making it harder to get an str, so competition to get them is hard. Thus making the investment not worth it in my eyes unless it is a huge rev earner. 

[Ben Rhodin]

Hey @Charles Frazier! As many have pointed out, I don't believe has been clarified. Is 100-150k your Purchase price, or is that the amount liquid you have for Downpayment and other costs? It will change the answer here very much.

The STR Laws here in Colorado are very tough to navigate and could write a novel on the different counties and cities. So best to reach out to a solid STR agent and get the run down that way. However, in short, it is divided into two sections. The mountains/foothills vacation markets and the Denver metro area. There are more STR-friendly spots in Denver other than Arvada/Wheatridge, that others haven't mentioned.

The other question is, If you live in Sunnyside, and have been there for a year, have you thought about the opportunity to move out and move into a new place in Denver, that may have an ADU? You could rent out your current place, and get a new home that has an STR opportunity on it. You could mitigate your Cash out of pocket this way, and create two rentals instead of one.

[Charles Frazier]

Hi Everyone,

Thanks for the responses! The $150k is my liquid price for downpayment, closing, furniture costs. I have the ability to get this to 200-250k if I were to partner with another investor. @Ben Einspahr Love the insight on 2nd home loan vs investment property loan. If we were to purchase in the mountain/foothill areas - we would/could certainly be able to spend ~14 days at the property. Regardless of location, I would be self managing the rental. Mostly trying to figure out how to narrows things down into a few CO markets or look into other states.

[Ben Einspahr]

@Charles Frazier adding another investor into the mix can muddy the waters + change your lending terms. My advise is keep investment with in driving distance especially if this is your first. Focus on that 2nd home loan. Best way to narrow down markets is to start running the numbers. I'll DM you some lenders and other resources.