All Forum Posts by: James Carlson

Hey @Jordan Norwood. Welcome to BP! And congrats on taking the first steps toward investing. It's probably a little less exciting than taking one all the way at Mile High, but it's still pretty exciting. There's a good community here with a heavy Denver contingent. You'll feel at home. Jump in, ask questions, read the forums. You'll be an expert in no time. Cheers!

@Kevin Shuler. Awesome idea. It seems like the above people have some good ideas about zoning and variances. I won't retread there. But I'll touch on Aurora and its STR regulations.

You probably already know that Aurora just passed a law allowing Airbnb-style rentals but ONLY in your primary residence. So, my biggest question is whether the two units are legally separated. As in, do they have two different addresses on file with the city? If they do, then you cannot do short-term rentals in the second unit. 

However, if they're not technically separated, then I think you could live in one and the other would be considered an accessory unit, which IS allowed under the Aurora Airbnb law. (I'll reinforce that point, that under the new law, you would have to live there for the second place to be considered legal as an STR.)

One other option to not deal with the Airbnb law, is to rent out both as furnished 3-6 month rentals for traveling nurses. My wife and I have found decent demand for that at our two rentals. Good luck!

@Michael Greenberg. Your numbers look fantastic. That's good to know. What I found most persuasive, though, was your idea that this is a potentially attractive business for someone to buy at some point. I was just contacted by an owner in Lone Tree who is trying to sell his place as a turn-key STR. It's furnished and he's been renting for 11 years. I've approached a number of current STR owners about the opportunity, and they're definitely interested. So you're on to something.

Hey @Tawa W.

@Michael Greenberg is right about Airdna.co. Great tool. And @Monika Haebich brings up a good point that winter is traditionally a very slow season, unless your place is near a ski resort. I tell students in my Airbnb class that they should consider renting to a traveling nurse or relocating professional for 3-6 months during the slow season, and that gives you the flexibility to open your place up to short-term rentals during the summer. And it's worth reiterating @Francisco Arango's point as well. Occupancy rates don't matter as much for STRs as does yearly revenue vs. expenses. For some areas, a good spring and summer season can more than pay for your entire year.

@John Arendsen. No, your homeowner's policy likely does NOT cover anything that happens in a short-term rental (STR). They likely consider it a commercial use of your property and therefore you aren't covered. I've called numerous carriers and asked about it, and once they fully understand what you're doing, they're adamant that you're not covered. Try calling yours, describe what you're intending to do and see what they say. I'm NOT an insurance broker, but in my experiencne, you need to buy specific vacation rental or short-term rental insurance. CBIZ -- developed with HomeAway, VRBO's parent company -- is a good one to look at. I've also heard good things about this start-up called Slice, which is on-demand coverage. (Just as an aside, it seems like a huge oversight by the insurance industry to have not developed a product for this yet. The industry is booming, and they're missing out.)

That's very interesting about Oceanside. My wife and I loved our experience with STRs and have been considering buying somewhere that is open to the idea. Being on the beach wouldn't hurt. Thanks for the thorough response and interesting forum prompt.

Thanks, @Tyler Howell, for the shout out. Just about everything's been covered, so I won't beat a dead horse. A few items I thought of as I read through the responses:

Liability coverage

@Kevin Shuler brings this up. This is really important. Whether you market your space on Airbnb or on an independent site, no one should be without a third-party policy. You can read about various reasons for this -- there are plenty -- but my main one is that Airbnb's Host Guarantee does NOT protect you against personal liability. If someone gets seriously injured on your property and decides to sue you, you are NOT covered. I think that's your biggest exposure and the area for which you most need to cover your ***.

Independent websites
I've had coffee with @Michael Greenberg. I'm impressed with his model of creating an independent site to market his spaces. I understand @Tim Spires' concerns about costs to get your site seen, but I think it's possible to do some up front marketing and hire a good SEO manager, and after a few months or a year, you might have enough organic search SEO power that you show up when people search.

My concern is in the future and based on no evidence....that said, I wonder whether anyone will be Googling for STRs or VRs in 10 years. Airbnb is becoming so ubiquitous, will anyone try to find their own short-term rental, or will everyone who wants a vacation rental just automatically go to Airbnb to find their space? If that's the case, and you're not on there, having built up good reviews and good search rankings within Airbnb's system, it could be a problem. 

STR sanctuary cities
@John Arendsen,you're smart to look for Airbnb-friendly cities. It seems more and more, though, that you've got to get further from the city. If you're in a metro area of any size, regulations are coming at some point. (City council members are drawn to the siren argument from established residents that the character of their neighborhoods are being ruined by transients.) Even cities that have allowed a restricted number of non-owner-occupied STRs have started to pull back a bit. So, if you're looking to play it straight, it seems like you're playing it in the 'burbs.

This is such an interesting topic. It's great to read about everyone's experiences.

Hey @Alex Boyce . I can't speak to your other numbers but just wanted to weigh in to say that I don't think that Airbnb money is crazy at all. The biggest issue is if you're in an area where people want to stay. Be sure to do some detailed comps on the Airbnb site -- look at places that are getting booked that are the same size, same style, same area. You can also try AirDNA or Mashvisor where you can pay for more concrete numbers on occupancy and Airbnb rental rates for your area. If you're in a good location, and if you furnish it nicely, take great photos and ensure good customer care, you can get that. Good luck!

Hey @Dan Sheeks 

Congratulations on taking a huge and smart step. As @Jay Dewberry already pointed out, you wouldn't necessarily have to put 10% down with an FHA loan. The best financing strategy depends on your goals, which you should discuss with your agent and with a trusted lender.

About owner occupancy, one year is what is required in many loan documents. It sounds like you're more than willing to do that, so you should be good. The next step is probably to reach out to a reputable lender and understand exactly what you can do.

To put a little more detail to the above answer ... 

You'll read some people say the only thing that is required is your "intention" to live there. I don't know. There are multiple documents that you will sign at closing where you are certifying that you will occupy the residence. 

You'll sign a deed of trust that likely states you'll occupy the residence within 60 days of closing and "shall continue to occupy the property as borrower's principal residence for at least one year after the date of occupancy ... unless extenuating circumstances exist which are beyond borrower's control."

You'll also sign an Affidavit of Occupancy where you certify owner occupancy and that it's a federal crime to knowingly make a false statement regarding that status.

There's at least one other place where you have to certify OO status. Again, it seems like you're willing to do that so you should be good.

@Eric DeVito. As @Jake Thomas said, that's a personal choice. Are you okay living next to your tenants? If you're looking to build a stable of properties, have you considered not selling the current place? Do you need to sell it to have the downpayment on the second place or could you pull the equity from it, use it for a downpayment for second place, live in one side of it, rent the other side and also rent out your first place?

Just a thought. Good luck.

@Brandon Henry. Unfortunately, I don't have any great insight for you. I'm just writing to say I'd love to hear how this goes if you decide on either option. I love that Platt Park area. Good luck.