All Forum Posts by: Alexa Ferguson

@R. Marcella Poole Your realtor should be able to find the HOA's contact information on the MLS listing and reach out to them to obtain this information. Hope that helps!

Hi @Aeon Jones, great question. You may have already looked into this, but if there is an HOA in the development I would be sure to confirm whether STRs are allowed. Even if the property is in a STR-friendly-zoned area, an HOA can still choose to not allow STRs. Other questions that you may not need to ask on site, but would be good to look into are:

- Is an STR license required in this area?

- What is the average nightly rate/occupancy rate for similar AirBnbs in the area?

Hope that's helpful!

In many markets across the country, the short-term rental (STR) strategy for investors is gaining popularity due to the huge cash flow it can generate. If you are considering adding this strategy to your repertoire, here are a few pros and cons to consider.

Pros:

- Cash flow: STRs generate more than double the cash flow of long-term rentals, on average. In many U.S. markets, rising home prices are making it increasingly difficult to cash flow. STRs are a great option to remain profitable.

- Not as much ongoing work as most people think: We typically spend 1-2 hours per week managing our 3 AirBnb units. This includes communicating with guests, coordinating with cleaners and performing any maintenance tasks we have not yet hired out (restocking supplies, minor repairs, etc.).

- Well-maintained property: With guests staying for 4 nights on average, a cleaning crew will come in several times a month. In contrast to long-term rentals in which you primarily rely on tenants to keep the unit clean, the quick turnover of STRs ensures the unit is being cleaned frequently.

Cons:

- More upfront time and money: The actual hours and dollars required to set up an AirBnb vary based on the unit’s size and the level of luxury you would like to offer; yet it cannot be ignored that furnishing a unit takes a considerable amount of time and money at the outset.

- Management time: The time allotted for managing your STR property(s) can also vary greatly based on whether you have outsourced each task required. It can be as simple as coordinating landscapers, cleaners and handymen, or performing each of those tasks yourself. As you build your STR portfolio, hiring these tasks out is the best way to go to truly generate passive income.

- City/County Restrictions: If you are not living in the STR property as your primary residence (i.e. "house hacking"), there are a limited number of cities that allow STRs.

- Risk of STR rules changing: While many cities have legislation in place that allows for STRs, these rules are always subject to change. Wise investors will have an exit strategy such as converting to a long-term rental.

If you have any questions about STR investing, please don't hesitate to reach out!

In many markets across the country, including Denver, the short-term rental (STR) strategy for investors is gaining popularity due to the huge cash flow it can generate. If you are considering adding this strategy to your repertoire, here are a few pros and cons to consider.

Pros:

- Cash flow: STRs generate more than double the cash flow of long-term rentals, on average. In the Denver market in particular, rising home prices are making it increasingly difficult to cash flow. STRs are a great option to remain profitable. 

- Not as much ongoing work as most people think: We typically spend 1-2 hours per week managing our 3 AirBnb units. This includes communicating with guests, coordinating with cleaners and performing any maintenance tasks we have not yet hired out (restocking supplies, minor repairs, etc.).

-Well-maintained property: With guests staying for 4 nights on average, a cleaning crew will come in several times a month. In contrast to long-term rentals in which you primarily rely on tenants to keep the unit clean, the quick turnover of STRs ensures the unit is being cleaned frequently.

Cons:

- More upfront time and money: The actual hours and dollars required to set up an AirBnb vary based on the unit’s size and the level of luxury you would like to offer; yet it cannot be ignored that furnishing a unit takes a considerable amount of time and money at the outset.

- Management time: The time allotted for managing your STR property(s) can also vary greatly based on whether you have outsourced each task required. It can be as simple as coordinating landscapers, cleaners and handymen, or performing each of those tasks yourself. As you build your STR portfolio, hiring these tasks out is the best way to go to truly generate passive income.

- City/County Restrictions: If you are not living in the STR property as your primary residence (i.e. "house hacking"), there are a limited number of cities in the Denver area that allow STRs.

- Risk of STR rules changing: While several cities in the Denver area have legislation in place that allows for STRs, these rules are always subject to change. Wise investors will have an exit strategy such as converting to a long-term rental.

If you have any questions about STR investing, please don't hesitate to reach out!

The short-term rental (STR) strategy is a great way for new investors to get in the game and fast track their journey to financial independence, due to the huge cash flow it generates. This strategy can take on different forms depending on the market in which it is executed. If you purchase a STR in an established vacation destination, such as a Florida beach town or the Smoky Mountains, it often comes furnished and you don't need to worry about setting up your unit.

In a metro area, however, this is usually not the case, and is something many investors fail to take into account when running the numbers on a potential STR. They focus only on cash flow, taking into account typical monthly costs such as mortgage, utilities, reserves, capital expenditures, cleaning fees, etc. While this analysis is certainly important, investors in metro areas cannot ignore the upfront time and money required to get an STR up and running.

In analyzing a potential STR investment in a metro area, include these estimates as upfront costs (these are strictly furnishing expenses, not including any rehab work):

- Living Room: $2k⠀⠀

- Dining Room: $700⠀

- Kitchen: $750⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀

- Bedroom: $1.5k⠀⠀⠀⠀⠀⠀⠀⠀⠀

- Bathroom: $300⠀⠀⠀⠀⠀⠀⠀⠀⠀

You can certainly furnish a STR for more or less, but these are numbers I try to stick to in putting together a nicely furnished rental that includes personal touches and local flair.

If you have any questions about STR investing, please don't hesitate to reach out!

Hey @Bradley Dosch, thanks for the kind words! If you house hack and live in the property as your primary residence, you can AirBnb part of your residence with a STR permit in almost every city in the Denver area (excluding Lakewood, which has recently put a moratorium on any STR applications). If you don't live there as your primary residence, STR-friendly neighborhoods in the area include Arvada, Wheatridge, Unincorporated Adams County, Littleton (for now), and Centennial. Hope that's helpful!

House hacking is a great way to get started on your real estate investing journey - short-term rentals (STRs) are the best way to maximize your return.

Most investors have heard of the house hacking and STR strategies as separate ideas. House hacking - renting out a portion of your primary residence to cover part of, all, or more than your mortgage payment - is an excellent strategy for investors of all experience levels to reduce or even eliminate their housing expenses and begin to generate cash flow right where they live. When most people think of short-term rentals, they think of vacation destinations such as mountain or beach towns, often bringing them out of state.

In hot metro areas, which are both vacation destinations and residential hubs, investors have the unique opportunity to combine these strategies to boost their cash flow in their own city.

While it typically requires a bit more work than long-term rentals, house hacking with STRs in popular metro areas allows you to live where you want and maximize your return while living there. More specifically:

Live where you want: Short-term rental laws in many U.S. cities are somewhat in flux, with many cities instituting a primary-residence requirement, meaning you must live in the property in order to rent part of it as a STR. For investors who want an investment property they don't need to live in, these rules limit their search to the cities that have non-primary residence STR-friendly laws. Renting out part of your primary residence as a STR opens your search to the majority of the metro area where, often with a license, you can legally rent part of your residence as a STR.

Maximize your return while living there: I have rented part of my primary residence as both a long-term and short-term rental. While our long-term rental covered 60% of our mortgage, switching to a STR consistently covered 100%+.

When you move out, if it's in a non-primary residence STR-friendly city, you can convert the entire property to a STR - whether 1 unit or 2 based on that city's STR rules. If it's not in a non-primary residence STR-friendly city, you can convert the property to a long-term rental and still cash flow if you run your numbers right when initially analyzing the property, but you will have maximized your return during the time you spent living there, helping to set you up for your next deal.

If you have any thoughts or questions about STRs, I’d love to hear from you!

@Tommy Cheng congrats on your new investment! Great question. I would track all income/expenses for the mother-in-law suite separate from that of your personal home. A good CPA or CFP will be able to guide you through the tax nuances and gray areas where personal and business income/expenses overlap. 

Hey @Gray Hall! Once the STR is up and running, we spend about 1 to 2 hours managing it. Most of this time is spent communicating with guests (responding to new reservation requests and answering miscellaneous questions they may have) and coordinating with our cleaner (ensuring her cleaning schedule for our units is up to date, etc.). We currently handle the landscaping as well, so in the spring/summer that adds another hour per month.

Having just a small kitchenette (no sink or range) limits occupancy in the fact that you typically don't get any stays over a week long. As far as nightly rate, you can charge more with a full kitchen, although the difference is not that substantial. Where you lose with the basic kitchenette is in limiting yourself to short, 1-4 night stays. It just creates more space for vacancy and puts more stress on your cleaner having to turn the unit over more frequently. 

House hacking is a great way to get started on your real estate investing journey - short-term rentals (STRs) are the best way to maximize your return.

Most investors have heard of the house hacking and STR strategies as separate ideas. House hacking - renting out a portion of your primary residence to cover part of, all, or more than your mortgage payment - is an excellent strategy for investors of all experience levels to reduce or even eliminate their housing expenses and begin to generate cash flow right where they live. When most people think of short-term rentals, they think of vacation destinations such as mountain or beach towns, often bringing them out of state.

In the Denver area, which is both a vacation destination and a residential hub, investors have the unique opportunity to combine these strategies to boost their cash flow in their own city.

While it typically requires a bit more work than a long-term rental, house hacking with a STR in Denver allows you to live where you want and maximize your return while living there. More specifically:

- Live where you want: Short-term rental laws in the Denver area are somewhat in flux, with many cities instituting a primary-residence requirement, meaning you must live in the property in order to rent part of it as a STR. For investors who want an investment property they don't need to live in, these rules limit their search to a few cities that have non-primary residence STR-friendly laws. Renting out part of your primary residence as a STR opens your search to the majority of the Denver metro area, where with a license you can legally rent part of your residence as a STR.

- Maximize your return while living there: I have rented part of my primary residence as both a long-term and short-term rental. While our long-term rental covered 60% of our mortgage, switching to a STR consistently covered 100%+.

When you move out, if it's in a non-primary residence STR-friendly city, you can convert the entire property to a STR - whether 1 unit or 2 based on that city's STR rules. If it's not in a non-primary residence STR-friendly city, you can convert the property to a long-term rental and still cash flow if you run your numbers right when initially analyzing the property - but you will have maximized your return during the time you spent living there, helping to set you up for your next deal.

If you have any thoughts or questions about STRs in the Denver area, I’d love to hear from you!