All Forum Posts by: James Carlson

Learn the Airbnb and short-term rental laws in Denver, Colorado Springs and other areas. 

Get updates on what's happening with Colorado Springs' new regulations and how Denver's laws are being enforced. (Like ... uh, the Denver District Attorney's Office has actually filed felony charges against a couple for running an illegal STR.)

We'll discuss:
-- Cities that are friendly to Airbnb investment
-- What you can do in Denver ... and what you can't
-- Insurance products to protect you
-- Tax collections
-- City enforcement efforts

The class is FREE, but we'd love for you to RSVP here on BP or through our website. Cheers!

@Tom Makinen

Sorry to hear about your losses before in RE. I can't speak to other markets, but I will say that we have had some success (both my wife and I personally, and with clients we work with) doing a furnished medium-term rental by buying a small studio or 1br in Denver, furnishing it, and renting it to the traveling nurse crowd. (That's a catch-all term that could include business people, new grads doing an internship, etc.) Right now we're seeing about 20-30% higher rents for the furnished units. If you buy in the right place, you shouldn't have too much trouble getting it rented. (We've had about two weeks total vacancy in the last two and a half years.)

I wish you luck.

@Sofia Sharkey

Late to the game here, but thought I'd chime in. Can't speak to other cities or states. (Though I know Arizona, as a state, has a law allowing for short-term rentals.) But I know we steer a lot of our STR-minded clients toward Colorado that Colorado Springs. As @Ryan Riches said, it's basically open for Airbnb. Unlike Denver, they have no "primary residence" rule and allow as many STRs as the zoning allows for units. (i.e. R-2 zoning can have 2 STRs. R-4 can have 4 STRs, etc.) What's even better is that there are a fair number of single-family homes zoned R-2, so you get a SFH at a SFH price and then do a little work to the basement to create a second space.

Anyway, good luck with everything. I grew up in Springfield, MO, and have family in Kansas City. That city is becoming cooler all the time. 

@Diane Tycangco

First off, congrats on taking a step toward investing in Denver. It's a great city with good long-term potential. In general, I'd find a good lender, figure out what you qualify for and what you want to spend. (Those two things are not always the same.) And then find a good agent who can walk you through what's going on here. 

Let me ask, what about the 80231 zip code is attractive to you? I believe that's Virginia Vale or Virginia Village area. A lot of new-ish condo complexes and some neighborhoods of 1960s SFHs. It's got potential but so do so many areas around Denver so I was interested in what drew you to that specific area.

About prices ... they are pretty steady in what they do over the past five or six years. They ramp up in the spring, hit a high somewhere in the summer or late summer and slowly drop off into winter, just to start all over again in the spring. (In the last number of years, the price increases in spring/summer have far outpaced the price decreases in fall/winter, which has lead to the increase in home prices.) 

Sales price increases have actually slowed quite a bit. In the spring of last year, sales prices were averaging 8-10% higher than the previous spring. (That was a trend in the couple years prior to that as well.) This spring, things changed. Sales prices in the Denver metro area are between 1-3% higher than the same months last year. That means that while prices are still going up, they're going up at a much slower rate, and the trend is flattening out.

Good luck!

@Jared Stoneman

Telling you where to live is like telling you how to dress. It's such a personal choice. That said ... 

I'd weigh what you want most out of this purchase. What are your priorities? City life? Quiet suburban life closer to the mountains. A touch of one of them but with an emphasis on the investment?

Denver's obviously the biggest city (and coolest city if you ask me). Lots to do, more bustle, tons of great neighborhoods. If you have kids, schools might be important to you. Park Hill neighborhood has a number of areas in great school districts, as does Hilltop and Mayfair/Hale. The long-term strength of Denver seems pretty great, though price increases have leveled out the last few months. We work with a lot of house-hacking clients to find properties with a basement apartment or basement setup in which they can do Airbnb while living up top.

I second someone above who said Englewood for that a few reasons. One, it's not quite as pricey as Denver, it's only a 10-12 minute drive to downtown, and the neighborhoods are turning into some really nice places. Plus,  you can find a number of homes that have that basement apartment. 

Colorado Springs is good if you want a slightly slower pace but with some city amenities. A lot of our Airbnb and short-term rental investment clients look there because the STR rules are wide-open.

Up north of Denver is interesting as well. Thornton seems to be coming along. 

Again, though, it comes down to what your priorities are for this. I wish you luck!

@Charlsi Kelley Congrats on the relocation. That's exciting. 

So you kind of ask two questions: What's the legality of short-term rentals in Denver and are there any good short-term rental management companies. Here's way more info than you probably wanted.

What's the legality of what you're hoping to do?

We go to the Short-Term Rental Advisory Committee (STRAC) meetings every other month to hear about the Airbnb and STR enforcement in Denver. (We also teach a class about the Airbnb laws in various cities. July 17 is the next if you're interested.)

There are kind of two answers ... 1. what the law intends and the city is trying to enforce; and 2. what in practice you might get away with.

The city of Denver's definition of primary residence is your "primary place of return." This is pretty straight forward. Do you live there or do you not? As soon as you move elsewhere, then you don't live there. 

Now, when applying for an STR application, you have to upload your driver's license and another form of ID showing the primary residence address. In your situation, you might still have the driver's license and can upload that. And if you plan to return and stay there for a bit, you might have a case. (We've had clients who bought a place in Denver but travel the majority of the year, and they've done okay so far.) But having a DL with the address is not the deciding factor. The city cares about whether you live there, and how they look at situations like yours hasn't been tested yet.

So at this point, it comes down to your neighbors. There is little (but a growing) amount of active enforcement of the primary residence rule. They mostly rely on neighbor complaints. If your neighbors don't complain, they won't investigate, and you might be able to get away with it for awhile. We don't recommend it, but that's how it's working in practice.

That said, they have put a priority on PR enforcement and are getting better at it. You can see their numbers on this presentation from the latest STRAC meeting. One Airbnb house's permit has been pulled because of a PR violation; 6 hearings are pending to determine whether a violation has occurred; and another 8 investigations have been completed and are awaiting a hearing to be scheduled.  

In the end, it really comes down to your risk tolerance. 

Any good STR property management companies in town?

The big ones seem to me to have no personal touch and can be difficult to communicate with. That's a problem for the very hands-on, time-intensive world of short-term rental management. You might try a smaller company. We like Synchro Management, who we know was doing a good job last year. Don't know if they're still in business or not. (PM if you want a contact.)

Many companies have an incentive to obscure the legality of this because their whole business model is based on people who operate an STR in their non-primary residence.

I wish you luck!

@Hunter T.

Such a good question. There are certainly a few risks. 

For one, you might not actually save money. So many people think off-market and no agent means good price and cost savings. It certainly can mean that, so I don't want to sound too negative. But there are a couple ways it might lead to you overpaying

• From working with sellers in Colorado, we know that a lot of owners have an inflated sense of their home's value. So use Redfin, look up comparable properties and let that set the price.
• You might not push for items you should during an inspection. A good agent will know what to look for and how hard to push on this or that.

All that said, my wife and I bought our first rental in Denver without representation after a letter-writing campaign. While we're real-estate agents now, we weren't then. We knew what our mortgage would be at X price, and what we could rent it as and felt comfortable with it. 

Good luck.

@Shiloh Lundahl

As so many have already said ... it depends. In Denver, we still get some people who really care about school district, but especially for the younger couples, as soon as they see the perfect home outside of the right school district, it seems that district matters a lot less to them at that point. In Colorado Springs, I think it matters slightly more, but even then, a lot of our buyers are house hacking or doing an Airbnb or short term rental, so they don't care as much either. 

Interested to read what other says. I'm sure it depends on the market and the type of buyer you are/type of client you work with.

You hear all about cap rates and cash flow here on BP. But what about the nuts and bolts of the buying process? Come learn more at this FREE seminar at Colorado Free University. 

We'll discuss:

• What documents you'll sign and what they mean
• What to expect during inspection
• What makes a good agent and a good lender
• When you can get earnest money back ... and when you can't
• What's going on in the market right now
• And more! (cue infomercial audience clapping)

Whether looking to house-hack, buy a full-on investment or just purchasing a primary residence in Denver, Colorado Springs or elsewhere in this beautiful state, you'll get something out of this.

The class is free but please check out the Colorado Free University site for registration info.

James Carlson
[email protected]
720-460-1770

@Courtney Radmall

Smart move thinking about the right insurance. We recommend Proper Insurance to all our STR and Airbnb-seeking clients in Denver and Colorado Springs. We also use Proper for our own short-term rental in the Springs. Their coverage areas are great and they're underwritten by Lloyd's of London and can be trusted. It's worth the peace of mind.

Good luck!