All Forum Posts by: James Carlson

It finally happened. Colorado Springs passed a law banning some Airbnb/short-term rentals last week. So, what do you need to know?

What's banned?

• all new non-owner occupied short term rentals in R-1 or PUD zoning
• any new non-owner occupied STRs in R-2 and higher zoning that are within 500 feet of another non-owner occupied STR

What's still allowed?

• all existing permitted STRs (non-owner occupied and primary residence homes), regardless of zoning, as long as you continue to renew the license ... in other words, everyone who's currently (and legally) operating an STR is grandfathered in.
• all new non-owner occupied STRs in R-2 and higher zoning that are NOT within 500 feet of another 
• all new primary STRs in any zoning

Confused? Feel free to reach out to me. I have a sick love of talking about STR and Airbnb laws. Here's some more info.

Definition of "owner occupied"?
You live there 210 days or more. How do they police that? Who knows.

When do the new regulations go into effect?
The council has to give final approval at their next meeting, Dec. 19, 2019. There is some confusion about whether it will be in effect upon that approval or if it will go into effect a few days later when it's officially recorded.

How does this impact my current or about-to-be Airbnb rental?
If you're permitted, you're good. If you have a rental but no permit, apply for the permit right now.

What about future STR investments in Colorado Springs?
Funny you should ask! You should probably work with someone who understands the laws inside and out. (Ahem.) If you are creative and know how to search, you can find homes for Airbnb. I already have a handful of current listings that I know would still work under the new laws.

We can attack any study's methods, but I'm siding with studies and surveys over anecdotes any day. "All my friends are Democrats" does not mean all of the country is. Likewise, "I know tons of female investors" does not mean that holds across the country.

Again, back to some data ... 

Here's an interesting survey conducted by Harris Polling in 2017. (Flip to pages 19, 20, and 21 for some interesting points.) Two interesting points that seem to back up @Erin Spradlin's point (also my business partner and wife.)

1. Men and women were about equal when asked if they were interested in real estate investing.
2. But men were nearly twice as likely to say "yes" when asked if they were currently investing in real estate.
3. 19% men to 11% woman
   
4. The gap was even wider in the 18-34 cohort and 35-44 cohort (28% and 25%, respectively vs 11% and 13% for women of those age groups.)

I would be interested in seeing any kind of data from someone who thinks this dynamic is hogwash. (For instance, you could cite this study from Lending Tree showing that single woman own 22% of homes, while single men own 13%. It's not exactly what we're discussing here, but it's at least data getting near the point.)

@Bonnie Johnson

That's good to hear you have some interest in your place. I have a lease that we use that I will share. I make no guarantees of its superiority, but I'm happy to share. (I'll PM you.)

About getting a signed lease, even when sourcing the tenant through Airbnb ... I hear mixed thoughts on this. We have Denver clients who bought a condo and operate a medium-term rental and get their tenants through Airbnb. They never use a lease and have had no problems. Even in the event of a problem, maybe Airbnb's agreement would suffice. 

But without having read the agreement, I suspect it's not as tight as a lease. And I wonder if it would require arbitration, not court in the event they don't leave. I know that many of the problems you encounter with normal short-term renter guests have to be resolved through Airbnb's system. Or maybe it's that even though I'm only 38, I'm kind of old school and just want to have a paper lease with a signature.

Either way, I'd be sure to put the lease requirement in the listing description and mention it in any initial communication. Springing a lease on someone can make some guests from Airbnb suspicious. And rightly so. Transparency matters. 

Good luck!

So what do all you agents out there think about this?

My wife and biz partner, @Erin Spradlin, heard this NPR story this morning about HGTV's 25th anniversary that mentions how contrived and fake the channel's rehab and flipper shows are. The pertinent quote for my this thread's purpose: "Every person I know that's renovated their house has ended up in bankruptcy or in divorce court."

As agents, we see a steady stream of first-time homebuyers in Denver and Colorado Springs who have no experience with renovations who want to replicate their favorite HGTV show. 

We counsel our buyers to steer clear. I think the first purchase should be an easy win so that you repeat it over and over. Want an investment? Buy a SFH and house-hack by the room or find a place with a basement apartment to rent. But then I know people like @Jeff White who took on a big project in Denver, and it turned out great. 

So are we saving our clients from divorce and financial collapse? Or are we being negative nellies?

Proximity to the mountains, great beer, legal weed, 300 days of sun, arts, restaurants and bars, good jobs ... I think that has more impact on the net migration into Denver.  

@Rick Novotny

You're not wrong. Multi-units in Denver are just really tough to make work anymore. You might consider two other options:

1. Buy a single-family and house-hack/rent by the room
2. Buy a single-family house with a basement apartment or lock-off basement of some sort and rent the bottom (either long-term, furnished medium term to traveling nurses, or short-term on Airbnb)

In an ideal world, I like searching with our buyers for a home in the second category that also is zoned "TU" or two unit so that when you move out after some time, you are legally allowed to rent both units. It's like a back-end way to get a duplex.

I wish you luck!

A quick update on the proposed Colorado Springs short-term rental changes. (Or Airbnb changes, for you keyword warriors.)

The council meeting scheduled for Nov. 26 has been rescheduled for Dec. 5 at 8 a.m. The Airbnb legislation will be discussed at 10 a.m. Again, the two proposals are either to 1. implement a density restriction for non-owner-occupied STRs or 2. implement said density restriction and ban all future STRs in R1 zoning districts.

Want to help? You can do two things:

1. Attend the meeting at 8 a.m. (again STR talk starts at 10 a.m.) on Dec. 5 at 107 N. Nevada
2. Email council members. (Email addresses found here.)

@Thadeous Larkin

Forgive me if I'm missing something in your question, but the cost/night should actually be lower because you're not going to charge short-term rental rates. (Ex. A 2br unit in a decent location might get $130/night as an STR in Colorado Springs, but you're going to charge $2,100/mo for it as a medium-term rental, so you're nightly is actually $70/night.)

@Chad Lamb

Finding a condo building in Denver with a healthy HOA is hit or miss. I don't think a bad HOA is necessarily a deal-killer. It's just weighing how much any potential assessment for deferred maintenance will offset cash flow or appreciation. I hope the move goes well and the medium-term rental goes well.

@Thadeous Larkin Snobby Denver hipster here. What'd you expect?

We set the minimum number of nights for stays on Airbnb to 90 days, which is the minimum required by our HOA. We also make everyone sign a lease outside of Airbnb. (And we disclose that to any interested parties before they book through the platform.) We used to try taking a deposit outside of Airbnb, but not surprisingly, the platform doesn't take kindly to taking any kind of transaction outside of the system. So we keep the deposit within the system, which isn't ideal because I don't have as much control. But I'm willing to take that for the extra exposure that Airbnb gives our rental. 

I think a lot of people are waiting to see what happens with the Colorado Springs council. The meeting was cancelled today. Not sure yet when the vote will be.