All Forum Posts by: James Carlson

@Matt Swearingen

I don't mind the question at all. It's a good one. 

I think some people think regulations are bad. Period. End of story. For me, I weigh the intrusion of government oversight with the intended goal of alleviating a societal problem. I think housing affordability is a serious issue, and a few studies -- here and here, to name a few -- show that an increase in short-term rentals leads to a decrease in long-term rentals. (Economics tell me fewer LTRs equals higher rent prices.)

For some people, the calculus might lead them to say the intrusion is not worth the small exacerbation of the housing affordability problem in Denver. For me, it does. I think unfettered markets result in yawning inequality. I don't want an outright ban, just small measures. A primary residence rule, or even a primary residence + one STR type of rule seem reasonable.

I can see the other side. I just don't fall into that camp.

I think there are two parallel conversations going on here. 

1. The worthiness of the laws. I don't have a problem with STR regulations. If you choose to live in a neighborhood -- to paraphrase Oliver Wendall Holmes -- your property rights extend only as far as my nose. (Now I find some of the neighbor complaints overwrought and reeking of "get off my lawn" old cranks, but there are certainly issues we can foresee with unabated STR growth.)

And the fact that we have societal problems that some deem more serious (i.e. drugged driving) doesn't mean we shouldn't address other issues in society. Rape and murder seem more serious than petty theft from a supermarket, but we still pursue charges for the latter. We can walk and chew gum at the same time. 

In my watching of the council meetings in Denver and Colorado Springs, cities purported reasons for laws are not for public safety. Denver and Colorado Springs were pretty clear that they thought this new stream of income needed to be taxed. And in Denver's case, they say clearly that the regulations are also aimed at curbing a flood of investors in a low-inventory market plagued with affordable housing issues. 

2. The fairness of these felony charges. I tend to agree with @Russell Brazil. While many may think real estate agents are sleazy, we do have a code of ethics, and we should stick to that. Part of that is following the law. 

@Stuart Crowell

Good to see here in the forums. I'd second @Tanner Crawley's comment about L&D Construction. They're one of the biggest leaders of accessory dwelling units here in Denver. They were involved in discussions with the city over its Blueprint Denver plan that includes recommendations for expansion of the ADU zoning here in Denver. (They were pushing for it more for the affordable housing side of it, not for people wanting to use it as an Airbnb or short-term rental, though that's certainly an option, too.)

You might be interested in their ADU Home Tour happening all day on June 29.  

@Diane Tycangco

A couple options I'm thinking of. 

1. What about a really small condo in the heart of Denver that you can furnish and rent to traveling nurses? That usually brings in 20-30% more per month than a traditional long-term rental. (There are places around $170-$180 that can be nice. I am trying to get some clients to buy a $150k place right now that I think would do well.)

2. Maybe a slightly larger condo out west by the CU medical campus. You can get a 2 (maybe 3) bedroom unit out there that might cash flow okay as well. 

3. Look at Colorado Springs, where your $270,000 is going to go further. Also, you have the option of operating an Airbnb/short-term rental, which can give you flexibility and likely higher rents.

We've had two condo rentals and both are (or were) great. We live in Denver and both of ours were small units in the heart of the city. (Capitol Hill neighborhood, for those of you keeping score.) 

Our first is a 350sf studio that we bought in Feb. 2016. We furnished and rented to traveling nurses. We pulled in about $400 in monthly cash flow on average and got about $40k when we sold it after owning for three years. 

Our second was an 800sf 1br condo also in Cap Hill. It was actually our first primary residence and then we furnished it and did the same traveling nurse model when we moved out. We still have that. We're cash flowing about $200/mo, and it's appreciated between $90-$100k in the four years we've owned it. 

Of course this is Denver, and we bought in 2015 and 2016 (even then, though, people would say, "It can't possibly go up any further.") Denver's market has made a lot of people look like real estate geniuses. We're happy to reap the benefits of its boom.

@Robin Searle

Well, that would certainly put a wrinkle in many a plan for Airbnb and short-term rentals in Colorado Springs. Thanks for the notice. I will be interested to see how it goes because the pro-STR crowd had a lot of sway at the city council meeting at which they voted to approve the current ordinance. I think that would be the same at any meeting where they propose to triple STR owners' taxes.

To @Nate Marshall's point about the Airbnb and short-term rental laws in Denver, we have a forum thread about the recent felony charges over here. 

And actually, it was the police who did the investigation. The Excise and License Department conducted the initial investigation and then submitted it to the Denver Police Department. At least that's what excise and license rep said at the Short-Term Rental Advisory Committee meeting that happened the day the charges were reported on in the media. I asked the EXL guy how he determined to go for criminal charges against these people instead of simply pursuing revocation of their permit, and he said it was a police and district attorney decision.

@Chris Lopez

Yes, I hear the same. They were told by people in the know within the city of Denver that they were being watched and still didn't do anything. Set aside that you should follow the law -- you should, by the way -- but to paraphrase a great Robert DeNiro movie, you should also be smart enough and disciplined enough to pull back from something when you feel the heat around the corner.  

That said, before I get too high and mighty, I will also say that I empathize with anyone who has to be the example case. Literally a few months ago, a Denver man had his license revoked for flouting the primary residence rule. Because these two renewed their license more recently and signed the new affidavit, they are now facing felony charge for flouting the same rule in the same way. That's tough. 

Oh, @Thadeous Larkin, you and your "law." Silly concept. As a former journalist for 10 years -- beat that, Mr. 6 Years Prosecutor -- I found people often confused their beliefs about the "rightness" of a law with the law's applicability. 

The city telegraphed this move, by the way. (Not to brag, but I predicted this six months ago in a forum here. (Okay, to brag a little. There's a reason the city of Denver changed the short-term rental/Airbnb rules in April to require an actual affidavit to be signed affirming their primary residence. They wanted to set up something that, when violated, gave them teeth to set an example. Now they have that example. 

It will be interesting to watch how this plays out.  

Wow, this is interesting ... Denver has filed felony criminal charges against a Denver couple for operating multiple Airbnb short-term rentals in violation of the primary residence.

According to the people I talk to in the city, this has been a long time coming. The key point here is that anyone who applies for a short-term rental license with the city of Denver has to sign an affidavit affirming that the rental is your primary residence. The Denver district attorney's office says these folks -- real estate agents, no less -- lied on those forms. The formal charge is attempting to influence a public official. 

And we get this exact question all the time in our classes about Airbnb laws: Can my spouse and I have two different "primary residences." Yes, of course, if you happen to have a unique relationship and actually live in separate homes. The thrust of Denver's short-term rental law is clear: You can only rent out a place for short-term if it is where you live. We hear a lot of "creative" solutions to this for the savvy investor, but the city knows all those "creative solutions" and has been taking steps to crack down. 

We always advocate that you work within the law because:

1. It's the law
2. A legal investment is a better long-term investment
3. No one wants to look bad in the news; 
4. Running a successful, legal Airbnb is possible (within your primary residence or in Colorado Springs as a pure investment)