Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
I own a duplex in Denver. Living in 1 unit and renting the other on Airbnb. My intention was to rent on Airbnb upon exiting the property. That seems risky now considering the current trajectory of regulation in the city. How are other people thinking through this? Long term rental cash flow isn't great. Hard to turn my back on short term rental income. Thoughts?
@Jason Breton - @Andrew Myers has it right: you can rent out one or both units as medium-term furnished rentals for 30+ days and still make a good margin compared to a traditional unfurnished rental. I operate a 19-unit furnished rental business in San Francisco and just south. SF has some of the toughest STR restrictions in the country, but there is a strong year-round market for medium-term business travelers. It's a nice way to earn decent "semi-passive" cash flow in any market with a lot of business travelers. Tech workers, construction workers, consultants and medical professionals often travel for more than a month. Good luck!
@Eric P. - My simple mitigation strategy in California is the spread between market rent and the monthly rent for a furnished rental. If a “tenant” (medium-term guest) in a 3-bedroom home in San Francisco is paying $6000 a month and my unfurnished market rent is $4400 plus $500 in utilities and expenses, then there’s a $1000 spread. As long as the person pays rent, I am happy to let them “squat.” I collect rent each month 2 weeks before the month begins, so I have time to respond if someone doesn’t pay rent. Finally, the vast majority of people paying for a medium-term furnished rental are business travelers whose rent payments are tied to their work. In nearly 2 years of doing rental arbitrage, I have never had a problem collecting rent for more than a few days.
@Ethan Cooke By the powers vested in me by @Luke Carl and others on this STR board, I now pronounce thee "King of the Rental Arbitrage Strategists". Ask BP if they can give you an award for that, or maybe put it in your sig file.
@Paul Sandhu - I am deeply honored. But in the immortal words of Wayne Campbell, “We’re not worthy!!”
All who post here know that YOU are the “King of The R-Rated Refinery Worker Furnished Rentals!” Nice niche! Not to mention the insane stories that go along with it!! Before reading your posts, I thought mold and dead rats were bad...
@Jason Breton I agree with @Ethan Cooke and @Andrew Myers.
I am in a hotbed market for Airbnbs, Scottsdale, Arizona. After just renting out STR for high season (Jan-April) I decided I could make the same rent and switch to minimum 1-month stays, giving me back a lot of time spent overseeing the multiple stays in a month. I am already booked for Dec-March at $5800/month.
Still flexible to switch to shorter-term stays, for times when monthly folks don’t appear.
Like Ethan, I Airbnb Arbitrage. I pay my friend $2000 in rent (I furnished and upgraded her house) and keep all the profits.
Renting out nightly sounds sexy, but renting by the month—for me mostly to retired doctors from the Midwest and Northeast—is much easier to manage. And they treat your place well because they aren’t there for a bachelor party.
If you’re curious, here’s my Scottsdale rental: www.evolvevacationrental.com/427526
@Andrew Myers I just started renting out one of my properties mid term in denver and it is going great so far. Caught a couple between houses for 4 months at about 140% long term rental rates. I think it’s a good secondary market to target.
@Jake Cohen Just curious of the 140% additional rent you get how much of that is eaten up with additional costs? I assume your vacancy and utility costs are higher. I'm shutting down an Airbnb I've run for 3 years here in Denver so weighing my options.
I'd second @Jake Cohen about the medium-term furnished model seems to do quite nice here in Denver. We do it ourselves in the first condo we bought years ago. A number of our buyer clients have also bought property in Denver for the traveling nurse model, and it's worked well for them too. (Of course, this all depends on what you bought in at. If your mortgage is $4,000, then it'll be more difficult.)
On the question of whether to do Airbnb/short-term rentals (STRs) or not ... no, DO NOT DO IT. We talk about this in our monthly presentation, but the city of Denver now requires every STR applicant to sign a legal affidavit affirming that it's your primary residence. If they find out you lied, you can be charged with a felony. (Like this couple was, and this lawyer, and this guy.) I get the allure of the Airbnb money, but you want your investments to be something you can count on, and one that's always in legal jeopardy doesn't fit that bill.
If you like Airbnb money, you might look at Colorado Springs. We've had a lot of clients buy there where the laws are open to short-term rental investment. It's not Denver Airbnb money, but it's better than a medium-term rental here.
My mortgage is definitely not $4000k and it's a duplex, so I can spread the vacancy risk over two units and likely make a decent premium over LTR. I'm guessing, like STR, when renting furnished medium term units the tenant doesn't pay utilities - right?
I was at an Airbnb STR meetup last week in Denver and the tone doesn't sound good. Definitely don't want to end up with a felony. The fact it's even an option is ridiculous.
Regarding the Springs, do you know that market well? Are there pockets where Airbnb makes the most sense?
Yes, when you're doing a furnished rental -- whether medium term or short-term rental like Airbnb -- I think you should be covering everything. They want to move in and be ready to go. No hassle.
Yeah, we know the Colorado Springs market well. (About 50% of our deals are down there.) There are definitely areas that seem to get the biggest volume of Airbnb travelers. Old Colorado City, downtown area (though you gotta know where the boundaries of good/bad are. It's hit or miss.), and a bit north on the west side all seem to do well. Those are the areas where most of our clients look and is also where we own run our own STR on both sides of a duplex.
@Jason Breton my place is located in Sunnyside. Federal & I-70 area. I tried to target travel nurses but ended up renting it through airbnb for 4 months to someone building a house. Crossing my fingers it rents just as well when these folks checkout in December.
@Tyler Work so far I would say my additional expenses are about $350/ month for utilities and yard work. When these folks check out I will see how long it is before the next rental. That is my biggest question mark currently. If I can keep vacancy to around 10% I think this is a great business model!