Buying an Airbnb investment property is one of the few ways to cash flow in the Denver or Colorado Springs markets.
But is Airbnb legal in Colorado? Short-term rental laws are city specific, and there are a few Denver area cities that allow Airbnb investment properties. Unfortunately, most cities prohibit STRs unless they're in your primary residence. Knowing the difference in city laws is key.
NOTE: This page was last updated Feb. 16, 2021.
Whether you're an out-of-state investor who wants a second home or a vacation home in the Denver area or are a Colorado resident looking for an Airbnb property for sale for cash flow, you need to know the laws and the strategies. Below are the Airbnb laws and strategies in prominent Colorado cities.
BIG CAVEAT: We've spent years curating this information through calling planning departments, reading ordinances and attending city meetings. We don't get paid for this. We hope it attracts buyers, which is how we make our money. To that end, we don't share everything unless you are our client.
Ready to start your search for an Airbnb investment property? Contact us today.
Buying an Airbnb investment property in the actual city of Denver can be difficult. Denver's Airbnb law restricts short-term rentals to only your primary residence. (And as of August 2020, the city had filed felony charges against four Airbnb hosts who were running short-term rentals in properties that weren't their primary residence. So be sure to consult with an expert -- hint, hint: That's us here at Erin + James Real Estate.)
But there are options in three Denver-area cities that have voted to allow STR properties in non-owner-occupied homes:
Arvada, the city directly northwest of Denver, passed a law in late 2020 that allows Airbnb investment properties. It's an interesting investment opportunity as the city has its own charming bustling downtown and is on the new light rail line taking you directly into downtown Denver.
Here is the high level of what the Arvada law will allow you to do with STRs. For more details, contact us.
It limits the number of Airbnb properties you can own, whether primary residence or not.
It limits how many nights you can rent per year.
It has limits on what you can do with a duplex
Littleton is directly south of Denver and like Arvada, has a charming little downtown of it's own. It's also on a light rail line. And in late 2020, Littleton passed a law to allow investment Airbnb properties.
It differs from Arvada in how many vacation rentals you can operate, how many nights you can rent as an Airbnb or short-term rental, and whether you can rent all units on Airbnb in a multi-unit property.
Reach out with specific questions.
Wheat Ridge is just below Arvada and just west of Denver's hottest spots in the Berkeley and Highlands neighborhood. In February 2021, the Wheat Ridge city council voted to allow Airbnb investment properties.
It's similar to Arvada's and Littleton's Airbnb laws but differs in how many STRs you can operate as investment properties. The city also placed a density cap on the number of short-term rental investments allowed per city council district.
Email us today if you want to chat about the details.
Okay, so Arvada, Littleton and Wheat Ridge allow Airbnb investments in the Denver metro area. What about the actual city of Denver?
The Denver Airbnb law allows short-term rentals only in your primary residence. So what are you to do?
Well, the Denver law also allows owner-occupiers to rent out a separate space on their property as much as they want. So we work with a lot of clients to find properties with a basement apartment or a carriage house out back that gives you a full Airbnb rental while retaining the privacy of your own space.
With an Airbnb investment property like this, you can live mortgage free or close to it. So you get a new home and a rental that will cover much if not all of your mortgage.
There is not an easy way to search for homes on the MLS with ready-to-go separate spaces with a kitchen and bathroom. We have developed a number of searches that capture these units. Reach out today if you're interested.
COLORADO SPRINGS AREA
Up until late 2019, Colorado Springs provided a great investment opportunity. Unlike Denver, Colorado Springs did not have the primary residence rule and in fact, the city had passed an ordinance specifically allowing for Airbnb and VRBO in any kind of investment property.
That changed in December 2019. Now, the current law allows you to rent on Airbnb anywhere in the city if it's your primary residence. But if you want an Airbnb investment property in Colorado Springs, the rules have tightened:
The property has be zoned R2 or some other multi-family zoning; and
It has to be outside of a 500' bubble from any other non-owner occupied STR. (There can be as many primary residence Airbnbs near you. You just can't have another investment Airbnb near you.)
But smaller towns just outside of Colorado Springs are more open to Airbnb. Woodland Park, Cascade, and Monument are great areas to consider buying a vacation rental. They're also just physically beautiful as they're more in the mountains.
Colorado's mountain towns like Winter Park, Vail, Aspen, Steamboat Springs, Breckenridge, Keystone, etc. tend to be open to Airbnb investment properties. This makes sense as short-term rentals are their bread and butter. With many of the towns, however, they restrict the areas in which you can do it and prohibit it in other areas that they want to retain for affordable housing.
We have a great realtor friend in Summit County where Breckendridge and Keystone are if you're looking in those areas.