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Airbnb Investments

Buying a short-term rental is one of the few ways to cash flow in Denver, Colorado Springs, or the mountains of Colorado. But there are questions to answer before you buy.

  • Are STRs legal in Colorado?

  • Is Airbnb profitable in Colorado? 

  • Is Colorado a good place to invest in real estate?

Let's dive right in.

Are STRs legal in Colorado?

The most important thing to know before buying a full-time vacation rental for investment is whether you can legally do it at all.

 

First things first, STR laws in Colorado are city-to-city and county-to-county. There are no statewide laws governing Airbnb in Colorado.

While the options to buy an Airbnb investment property are narrowing, there are still windows of opportunities. Denver, unfortunately, prohibits non-owner occupied STRs (with the narrowest of exceptions), but there are a few adjacent cities that allow Airbnb investment properties. Even within those cities, however, the rules vary.

 

In some cities, like Arvada, you can only do short-term rentals for 240 nights of the year. In other cities, like Wheat Ridge, there are caps on the number of non-owner occupied STRs per council district. (Three of the four districts are currently at their cap.)

It's important to work with a real estate agent that knows the laws in and out so you your real estate investment is based on regulatory certainty.

 

Colorado Springs only allows short-term rental investments in certain areas, and those areas are smaller and small. 

 

The mountains outside of just outside Denver and just outside of Colorado Springs offer some more opportunity for those who want a second home or vacation rental. 

I say "some," because there are several counties and cities outside of Denver that have caps on the number of STR permits and are past those caps. 

The mountainous area west of Colorado Springs has growing interest for Airbnb investors. Teller County is STR-friendly, and there are several areas where my clients have had success with newer-build cabins.

One of my favorite strategies is to buy in a place that is either about to cap the number of STRs or is already surrounded by other areas that prohibit them. Anything I can do to have an Airbnb in a place where the competition is artificially restricted is a good thing.

IS AIRBNB PROFITABLE IN COLORADO?

There is no one answer to this. The Covid-19 pandemic ushered in a wave of STR supply in the state as more and more remote workers wanted a place to work in the Colorado mountains.

The increased inventory of vacation rentals in the state, combined with higher interest rates that increased monthly mortgage payments, means cash-flowing on an Airbnb in Colorado is not as easy as it once was.

Compouding the confusion for some STR investors, some of the more popular Colorado destinations -- think Breckenridge, Vail, Aspen -- produce the worst returns. (Now, if you're truly just looking for a second home, profit-be-damned, then yeah, those places are great and will continue to appreciate in value.)

So, can you make money on Airbnb in Colorado? Yes, for sure, but you've got to be professional about it. There are some ways to maximize your STR:

  • Design it well. You can't throw in hand-me-down furniture anymore. In a crowded STR field, you've got to stand out with great design and beautiful furnishings. My clients who have the most success hire a designer for their vacation rental.

  • Use professional photos. This will be the biggest single investment of your life, so for the love of God, do not try to save a few hundred bucks by using your iPhone. A professional that specializes in real estate photography is the best $500 you'll spend.

  • Offer amenities. Want to beat the competition? Offer amenities the competition doesn't have. Game room, a sauna, hot tub. AirDNA, the STR revenue estimate tool, released a report in 2024 that showed all things being equal between mountain properties, a hot tub increased revenues by around 30%.

IS COLORADO a GOOD REAL ESTATE INVESTMENT?

Yes, buying Colorado real estate is a good investment. 

That's the short answer. The long answer is that everyone defines a "good investment" differently. And it often comes down to cash-flow versus appreciation.

For me, Colorado has so many factors that will drive long-term growth:

  • A diverse economy. Colorado's economy isn't reliant on one sector. It's built on tourism, health care, oil and gas, finance, and retail to name a few. 

  • Low property taxes. Colorado has the third-lowest property taxes in the country.

  • Lifestyle appeal. Nature is out your backdoor here. Why spend $10,000 on a two week summer vacation when you can have a piece of Colorado for yourself? 

For some people, cash flow is everything. And if that's the case, some midwestern cities can give that to you with long-term rentals. But in most popular states, like Colorado, the appreciation far outpaces anything you'd get with cash flow. 

The average single-family home price in Denver, for instance, has averaged 6% annual appreciation for 40 years. That's accounting for two big housing recessions. That means on the median Denver home costing $650,000, you'd gain $26,000 in appreciation alone the first year. There's no amount of cash flow that equals that.

 

Whether you're an out-of-state investor who wants a second home or vacation rental in Colorado, or you are a Colorado resident looking for an Airbnb property for cash flow, you need to know the answers to these questions.

 

Ready to start your search for an Airbnb investment property? 

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