It’s a Great Time for Denver Short-Term Rentals
Real Estate Agent · Denver, CO · Member since 2021 · 40 posts · 101 votes
It’s a Great Time for Denver Short-Term Rentals
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House Hacking Specialist · Denver, CO · Member since 2016 · 411 posts · 396 votes
5yGreat explanation and info!! @James Carlson
@Jim Stanley, Check out Airdna.co. That is a great tool for running comps for similar properties to yours. It will give you average nightly rate along with monthly occupancy rate.
Before I started Airbnb’ing my property in Arvada, I had the same concern with my neighbors you did and ended up doing the same exact thing James mentioned above- I talked to all my surrounding neighbor and explained to them my intentions of operating an Airbnb in the mother-in-law suite above my garage. Most importantly, I gave them my cell to contact me ASAP if there were any issues with parking or noise. However, this was for a 1 bed/1bath. Not an 5 bed/ 2.5 bath.
If you do decide to go the STR or MTR route, I have a cleaner I have used for about 3 year- super affordable. She covers areas from Arvada to Aurora and even down to Littleton.
Feel free to shoot me a message if you would like my cleaners contact info.
Cheers
26 Replies
- Realtor · Branson, MO · Member since 2018 · 272 posts · 283 votes5y
Regulations. What's the regulatory environment for vacation rental ownership in the Denver metro? I was under the impression that City of Denver only allowed primary residences to file for a permit, and the city was considering allowing accessory dwelling units. What are your thoughts on regulations currently and the impact it has on vacation rental property ownership?
- Rental Property Investor · Denver, CO · Member since 2020 · 5 posts · 3 votes5y
I just listed my first Airbnb in Arvada and it's performing much better than expected. I'm considering investing in more STR's in the Denver area in the future. How long have you been running yours? Do you experience seasonality in Denver? I figure there are a lot of people that come here in the summer for concerts and mountain activities, but also in the winter for ski season. I'm hopeful to see high traffic year round. Would love to hear others experiences.
- 5yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
@William Beck I’m also curious about this. @Alexa Ferguson any input on regulations? Do you do this outside the city limits or have a creative approach that allows you to Airbnb in compliance with city law?
- Real Estate Agent · Denver, CO · Member since 2021 · 40 posts · 101 votes5y
@William Beck @Scott Trench Apologies for my delay in response! Yes, regulations in Denver and surrounding neighborhoods definitely make short-term rentals a bit tricky. My Airbnb properties are outside of Denver County in Unincorporated Adams County, where there are currently no restrictions on short-term rentals. The same is true for neighborhoods including Littleton, Castle Rock, and Centennial.
For cities like Wheatridge and Arvada, you can Airbnb as a non-owner-occupied property so long as you obtain a STR license. (Arvada has some limits to this, but I won't get in the weeds here.)
In cities like Denver, Golden and Boulder, which require the property to be your primary residence (and in some cases also require a license) in order to Airbnb, I see short-term rentals as a great way to house hack while you live there. Renting out a portion of the property as an Airbnb is much more lucrative than a long-term rental in my experience, and will likely cover your mortgage if not surpass it. Once you move out, you would need to convert the property to a long-term rental to remain compliant with city laws.
Hope that’s helpful, happy to answer any other questions!
@Nakota Crow Great question. I have been running my Airbnb since March and have had only a handful of vacant nights. It will definitely be a learning experience to see how it performs through the winter; however, I do have friends who have Airbnb-ed through the winter and they have stayed busy.
- Realtor · Branson, MO · Member since 2018 · 272 posts · 283 votes5y
How do the HOA's and COA's look in the cities that don't have any regulatory issues? I think the HOA/COA & city/municipal/county regulations are the biggest hurdle this industry is facing right now and something that hopefully is addressed in an appropriate manner. Just like Lyft/Uber came to town and disrupted the whole cab industry, Vacation Rentals or Short Term Rentals, whatever you'd like to call it, are doing the same thing for hotels & timeshares.
- House Hacking Specialist · Denver, CO · Member since 2016 · 411 posts · 396 votes5y
Hi @Alexa Ferguson, This is a great post. Thank your for sharing. I am seeing the same for my properties in Wheat Ridge and Arvada. I have an Airbnb in my primary residence here in Wheat ridge and only available dates are a few Tuesdays and Wednesdays hear and there and some weeks I purposely block to have family and close friends come stay and visit (the beauty of STR's ability block out certain days out of the month vs LTR's). When I started filling up over 2 months out, I realized my nightly rates are a bit too low. I also have a furnished MTR (1-6 months) in Arvada that I operate through Furnished Finder and Kopa. Current lease ends 8/31 and did not have any trouble having new lease in place starting 9/1.
@Nakota Crow My rental in Arvada was an Airbnb when we lived there as a house hack and I definitely experienced seasonality. This was pre-covid. Winters were much slower than summer but was still able to maintain a high'ish (>80% occupancy rate, just at much less of a nightly rate. $70/night vs. $95/night for 1 bed/ 1/bath 600sf mother-in-law suite. 2021 is a much different story. Demand is very high right now!
- 5yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Awesome response! Thank you, Alexa!
- Member since 2019 · 1 post · 1 vote5y
Alexa,
Do you have any insights to the STR market in Colorado Springs? I have a lease ending in November and am considering turning the house into a short term. However, looking at the big short term rental apps, there doesn't seem to be a lot of options and I don't know if that's because they're booked up or if there is just no demand for them. TIA!
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes5y
Great post! I'd add Littleton to that list of Denver-area cities that allow investment Airbnb properties (or basically non-owner occupied STRs). Arvada and Wheat Ridge are the others.
But what I've heard from my contacts in the cities' planning departments is that these are all experiments and could very well change. Standard city procedure with these types of things is that if you are operating under a legally obtained license and the law changes, you are grandfathered in. It's not a guarantee, but it's what I have heard from all the planning departments. (I went so far as to get a letter from the city attorney's office in Littleton saying as much before my buyers closed there.)
@Scott Trench I know there's an effort from a group in Denver to open up those laws, but man, I've gone to those STR Advisory meetings. I don't see any appetite for allowing Airbnb investment properties. We've already got a housing affordability problem and rightly or wrongly, short-term rentals are seen as exacerbating that problem, so few city council people are going to want to be seen as making the problem worse.
@Nakota Crow Great to hear! Congrats on the success. There is definitely seasonality in the Denver area, kind of the inverse of the mountain towns. Strong occupancy -- 80-90% if wanted -- from late Spring to late Fall. It drops starting in November and is considerably lower until late March or so. That said, each property is different. If you have a large house, that's often an attraction to families during the holidays. (Hell, the numbers I see on AirDNA say that the bigger houses do the best, even accounting for the higher purchase price.)
@Jack Townsend Colorado Springs used to be totally open to STRs. Now ... well, it's not a totally primary-residence type of rule, but it's close. Everyone who had an STR investment prior to the change maybe a year and a half ago are grandfathered in. But anyone buying now and looking to Airbnb it without living there must meet two criteria: 1. The home is zoned R2 or higher (so any kind of multi-unit zoning) and 2. It has to be 500' away from any other non-owner occupied Airbnb.
So there are few pockets left where those two criteria exist. You just have to be patient and diligent about your searches and checking with the city.
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes5y
You're totally right. All of the Denver-area cities that allow Airbnb investment properties -- Arvada, Littleton and Wheat Ridge, and I'd add in Colorado Springs -- also give HOAs the restrict STRs however they see fit. I don't see that changing. Colorado statewide politics mirror those in Denver. That is, housing affordability is a huge issue and again, whether it's factually correct or not, investors buying homes for short-term rentals is seen as contributing to the problem. So the state is never going to pass something like Arizona did a few years ago prohibiting HOAs from restricting this.
- Realtor · Branson, MO · Member since 2018 · 272 posts · 283 votes5y
@James Carlson Was waiting for you to chime in on this thread! I know you know your stuff for this topic. Keep up the great work.
- Real Estate Agent · Colorado Springs, CO · Member since 2017 · 224 posts · 201 votes5y
@Jack Townsend Regarding regulations, James Carlson was absolutely correct. I have three units on one lot in OCC zoned R4 and I can tell you they are performing beyond my wildest expectations! Constantly booked year round. I use a wonderful local management team so it’s been essentially a hands off investment other than initial construction and set up and an occasional repair or question from my managers. I do always keep in mind that government can pull the rug out from under me if they change the rules so I have a couple of back up plans!
- 5yKatie MillerPro MemberGeneral Manager, Publishing at BiggerPockets · Denver, CO · Member since 2017 · 459 posts · 642 votes
@Alexa Ferguson -- I've lived in Denver for almost 6 years and have never heard of Sherrelwood! Fun area, right by Water World and some other fun attractions, right?
How's the neighborhood otherwise?
- 5yJim StanleyPro MemberDenver, CO · Member since 2017 · 58 posts · 27 votes
Anybody have experience with STR in Highlands Ranch? I have a 5 bed, 2.5 bath SFH there. My perfect (and only) tenants of 3+ years are moving out at the end of September and I'm considering the STR route.
Looking on the Air BNB site, I see just a couple of houses popping up in HR, so it must be legal (please tell me if I'm wrong!). But I'm not sure if only a few pop up because it's not profitable or because they are all booked.
Some reservations I have:
-Neighbors won't like constant new people in and out (the neighbors are really good and I want to keep them happy)
-Finding/managing cleaning staff (I don't want to do it myself)
-Cash flow in off season
-Have to buy furniture and be stuck with it if it doesn't work out. Also losing out on rent if it doesn't work out.Any insights appreciated!
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes5y
No personal experience with short-term rentals in Highlands Ranch. But my biggest concern would be any HOA that you're governed by. Almost all HOAs in the Denver area have at this point addressed STRs and Airbnb in their declarations or rules and regulations. And by address it, I mean they've prohibited it. If you're in an HOA -- which most or all of Highlands Ranch is, right? -- then ask for the declarations and rules & regs. Most docs have a section called "Uses" and then under that "Leases." They'll usually specify that leases have to be 30 day or more, or 60 days or more, etc.
We own two rental condos in Denver, and both have a 90-day minimum rental requirement. (We get around this by doing furnished medium-term rentals.)
Also, let's say your HOA hasn't prohibited it. That's not the same as them actively allowing it. It likely means they just haven't addressed it yet. So if you don't find a prohibition, I'd still call the board member or management company and see if there's a general feeling about STRs.
What about medium-term rentals? There's a big demand for that right now with remote workers. We do it at our Denver condos but also in a Colorado Springs home and find we have good demand. Just a thought.
Good luck!
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes5y
Also, I didn't really address your other concerns. (Again the biggest and first obstacle to overcome is if you can even do Airbnb in Highlands Ranch.)
Now, if you can do it, I wouldn't worry too much about demand. There's so many people visiting Denver and because of the restrictive STR laws in most cities, there's not enough supply of good homes to meet that demand. People always wonder if people want short-term rentals outside of the core of Denver downtown. Yes, yes, they do. I have clients who've bought Airbnb investments in Arvada, Wheat Ridge and Littleton (cities that allow non-owner occupied STRs), and they're doing really well with them.
The cleaning crew issue is a real one. Because you don't just want a cleaning company. You need someone that understands restocking and will do laundry as well and can do it on the sometimes tight turnaround schedule that an Airbnb demands. That said, there are certainly hustlers popping up to meet that demand.
People always ask if there's a down season. Yes, there is, but there's also a huge hot season that offsets that. I'm way less interested in occupancy rates or off-season revenues than I am in annual estimate revenue. If what you make all year round -- with highs and lows -- is good, then who cares what the house does in the off season (other than to know and plan for that period).
The neighbor issue is also not one to take lightly. It's kind of a hard conversation, but in an ideal world, you'd talk to all of them before you started this and tell them what you're going to do. Tell them that you'll be answering any complaints, that you'll screen for parties, that you don't any negative impact on the neighborhood. They may still not love it, but being upfront is way better than the neighbors all the sudden seeing random strangers. Then they feel duped.
Again, I wish you luck! I think you have some options, even if it's not Airbnb.
- Real Estate Agent · Denver, CO · Member since 2021 · 40 posts · 101 votes5y
@Katie Miller Sherrelwood is a nice family-friendly neighborhood. It doesn't have amenities as nice as the Denver metro area such as walking distance dining or shopping options, but it's situated near where I-25, Highway 36 and I-76 meet, making it 15min from Downtown, and 20min from Golden and Boulder. Airbnb guests have expressed that they enjoy this proximity to a variety of things, though not quite in the heart of any one area people travel to Colorado for.
- House Hacking Specialist · Denver, CO · Member since 2016 · 411 posts · 396 votes5y
Great explanation and info!! @James Carlson
@Jim Stanley, Check out Airdna.co. That is a great tool for running comps for similar properties to yours. It will give you average nightly rate along with monthly occupancy rate.
Before I started Airbnb’ing my property in Arvada, I had the same concern with my neighbors you did and ended up doing the same exact thing James mentioned above- I talked to all my surrounding neighbor and explained to them my intentions of operating an Airbnb in the mother-in-law suite above my garage. Most importantly, I gave them my cell to contact me ASAP if there were any issues with parking or noise. However, this was for a 1 bed/1bath. Not an 5 bed/ 2.5 bath.
If you do decide to go the STR or MTR route, I have a cleaner I have used for about 3 year- super affordable. She covers areas from Arvada to Aurora and even down to Littleton.
Feel free to shoot me a message if you would like my cleaners contact info.
Cheers
- Rental Property Investor · Denver, CO · Member since 2020 · 12 posts · 4 votes5y
@Alexa Ferguson Hi Alexa, I'm looking at a couple properties in Sherrelwood for STR. I have a couple questions though and I would love to connect!
- Real Estate Broker · Denver, CO · Member since 2017 · 59 posts · 40 votes5y
But I thought it was impossible to do STR in Denver?! Haven't you guys heard??
Haha, inspiring to see so many people having success in a niche of the market that is supposed to be impossible. - Real Estate Agent · Denver, CO · Member since 2021 · 40 posts · 101 votes5y
@Sam Bandak sure thing! Just sent you a DM.
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes5y
I would be careful about short-term rentals in Westminster. The Sherrelwood neighborhood is interesting. Easy access up US-36 to Boulder and 15 minutes to downtown Denver, so the location is great and at the current home values, you could do really well.
That said ... the future of Westminster's Airbnb regulations is murky, if you ask me. Maybe Alexa can speak to this better than I can as she has a property there. My understanding is that Westminster does not currently have any regulations regarding STRs or Airbnb. The way Westminster's codes are set up, anything not explicitly prohibited is therefore allowed. So the good news is that Airbnb appears to be allowed at this time.
But! (And it's a big "but.") The lack of prohibition is not the same as active allowance. The city has talked about adding new regulations for some time. See here, for example. I assume every city will get around to it. (I mean Denver doesn't allow investment Airbnbs. Neither does Lakewood or Aurora or Golden or Englewood ... on and on.) So if you invest there with the intent of doing short-term rentals, be sure to have a backup plan.
Also, I'd put a call in to the planning department at the city of Westminster. Ask for the "planner of the day." Most cities have a planner on call that will answer these types of questions. I'm not saying don't invest there for Airbnb. I'm just saying most investors want some regulatory certainty with a property. And Westminster doesn't provide that certainty at this time.
Good luck!
- Real Estate Agent · Denver, CO · Member since 2021 · 40 posts · 101 votes5y
@James Carlson @Sam Bandak The nice thing about where my properties are, and most of the Sherrelwood neighborhood, is that it is Unincorporated Adams County, so there are no city-specific rules governing short-term rentals.
While Unincorporated Adams County currently has no license requirement for short-term rentals, a member of the city planning department shared with me recently that a licensing requirement is in talks. She said no criteria are set to change (primary residence rules, etc.), but a license will be required. She wasn’t able to provide a timeframe for when this might go into effect because they’re in the very beginning stages of the discussion.
She also said that existing Airbnb‘s will have a grace period once the new permit rules come into play. After that, it will just be an annual permit renewal and fee. There's no information that I could find on their website about this yet, but if you call the planning department they’re pretty helpful if you want more info.
I agree that while Airbnb is a lucrative strategy, there is inherent risk in the fact that regulations could change at any time. Having an exit strategy is important to make sure you are protected should things change (switching to long-term rental, etc.).
Hope that's helpful!
- Kirkland, WA · Member since 2014 · 1 post · 0 votes5y
Thank you for sharing this info, very helpful. I am looking to purchase a property in the mountains near the slopes for both an STR and for personal use. Looking at Keystone, Silverthorne, Breckenridge etc. I learnt that Breckenridge is in the process of limiting residents to only rent out STRs. Any advice on that front and any referrals to someone who can help me zone in on a good property ?
Thanks
Jai
- Member since 2021 · 1 post · 0 votes4y
Littleton is not allowing non-primary going forward.
Quote from the website:- At a recent Council study session, Council gave direction to not allow non-primary rentals going forward. At that direction staff prepared an ordinance with that change included for Council consideration. Under the pending ordinance doctrine the City is not accepting applications for non-primary rentals at this time as Council considers whether to implement that restriction.
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