All Forum Posts by: Alexa Ferguson

The short-term rental (STR) strategy can take on a different form 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 like Denver, 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, Denver investors cannot ignore the upfront time and money output required to get an STR up and running.

In analyzing a potential STR investment in the Denver 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 this facet of STR investing, please don't hesitate to reach out!

@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!

@Sam Bandak sure thing! Just sent you a DM.

Hey Naleen, congrats on launching your business! I agree with @Bruce Lynn, networking with Airbnb/VRBO owners is a great way to go. You may have already done this, but your local BP forum is a great place to find STR owners. You can scout for owners there and then DM them about how you can help.

Another approach may be to connect with investor-friendly real estate agents in your area. Many of them regularly help investors purchase properties that they plan to rent out as a STR, and then follow up with a list of their recommended vendors to get their listing set up. Partnering with agents to have them give your name when clients ask for help setting up and managing their property may be a successful route.

Best of luck!

@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. 

@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.

@William Beck

Hey, Brandon! One of the best strategies to get started in real estate investing is house hacking, which is essentially renting out part of the property you live in. It's a great way to get in the game while you are still building your liquid assets. I currently house hack in Denver, renting out the basement of my house as an Airbnb, and typically cashflow between $500 and $1,000 per month after expenses. Airbnb is one great option, but you can also rent by the room long term if that would work better for you. A great place to start is to pick up "The House Hacking Strategy" by Craig Curelop to learn more about the process. Happy to connect or answer any questions!

As summer rolls in and temperatures heat up, so does the short-term rental market in Denver. As a personal example, my Airbnb unit near Sherrelwood is already booked every night in June and and July except for two nights, and August is filling up quickly.

If you're interested in this strategy, how can you properly analyze a property to know if it will perform well as a STR?

Calculating Revenue: Your estimated monthly income = Occupancy Rate x Calendar days in month x Average daily rate.

Be sure to also account for seasonality - are you in a beach or mountain town, for example? Adjust your occupancy rates to account for changing popularity in your destination.

Calculating Expenses: Be sure to take into account rehab, furnishing costs, financing, taxes, insurance, utilities, property management, repairs and maintenance.

Putting these together, you will be able to assess whether any property would be a good fit for a STR.

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

Hi @Jesse Dadon! Congrats on embarking on your first investment. Have you considered which investment strategy you might use to start out? I know you mentioned looking elsewhere, but a great way to start is to house hack where you live. If you are able to buy a single family home, you can rent by the room long-term, or if it has separate living space (basement, mother-in-law sweet, etc.) you can Air Bnb, and likely cover your mortgage and potentially make money while living there, especially in a hot market like Austin. This strategy has worked great for my husband and I in getting us on our way to financial freedom. Happy to answer any questions, and good luck!

Hey, Matthew! One of the best strategies to get started in real estate investing is house hacking, which is essentially renting out part of your property. I know you mentioned investing out of state, but house hacking where you currently live is a great way to get in the game while you are still building your liquid assets. I currently house hack in Denver, renting out the basement of my house as an Air Bnb, and typically cashflow between $500 and $1,000 per month after expenses. Air BnB is one great option, but you can also rent by the room long term if that would work better for you. A great place to start is to pick up "The House Hacking Strategy" by Craig Curelop to learn more about the process. Happy to answer any questions!