Updated September 20, 2023.
Buying a short-term rental is one of the few ways to cash flow in Denver, Colorado Springs, or any Colorado real estate markets. But are STRs legal in Colorado? Can you Airbnb a rental in Colorado? STR laws are city specific, and an increasing number of Colorado cities are prohibiting STRs unless they're in your primary residence.
While the options to buy an Airbnb investment property are narrowing, there are still windows of opportunities. There are a few Denver-area cities that allow Airbnb investment properties. Colorado Springs allows short-term rental investments in certain areas. And the mountains just outside Denver and just outside of Colorado Springs allow for Airbnb and provide cash-flow opportunities.
Whether you're an out-of-state investor who wants a second home or vacation rental in the Denver or Colorado Springs areas, or you 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.
Ready to start your search for an Airbnb investment property? Contact us today.
You can't operate an Airbnb investment property in the actual city of Denver. Its Airbnb law restricts short-term rentals to only your 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 a handful of Denver-area cities that have 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 downtown and is on the 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 allows you to operate a short-term rental in a non-owner occupied home.
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.
Wheat Ridge is just below Arvada and just west of Denver's hottest spots in the Berkeley and Highlands neighborhoods. In February 2021, the Wheat Ridge city council voted to allow Airbnb investment properties.
The main thing to know about Wheat Ridge is that they cap the number of STR permits per council district. As of September 19, 2023, there is still one council district that has available STR licenses. Reach out today if you're interested in an Airbnb investment in Wheat Ridge.)
Centennial, south and southwest of Denver, is the newest city to pass a law to allow Airbnb in non-primary residences. In September 2021, their city council passed an ordinance that allows investors to buy short-term rentals with very few limitations.
Adams County stretches from northwest Denver to the Denver International Airport to the east of Denver. The northwest portion of it is just a 15-minute drive to downtown Denver.
Adams County is considering a new ordinance to allow Airbnb investment properties. Our contact in the county planning department says it will be permissive and should pass in late 2022 or early 2023. Reach out to us to get more updates.
Northglenn is 20 minutes north of Denver. Do we love it as a short-term rental haven? No, it's not really close to much, but if you're looking for a city north of Denver that allows STRs in non-owner occupied homes, it's a good reasonably-priced option. Their law is pretty wide-open, but contact us for more info.
Okay, so Wheat Ridge, Arvada, Centennial, Adams County (soon), and Northglenn 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-occupants 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
In Colorado Springs, you can operate a short-term rental in your primary residence anywhere, but if you wan to run an Airbnb investment property, it has to meet strict geographic standards:
The property is zoned R2 or some other multi-family zoning; and
It is 500' away from any other non-owner occupied STR.
This certainly limits the number of homes eligible for a non-owner occupied short-term rental, but we find one or two Airbnb eligible properties every month.
MOUNTAIN TOWNS/SKI TOWNS
Colorado's ski towns get a lot of attention as vacation rental or STR-friendly areas for good reason. (Though many are now cracking down on STRs.)
But the middle mountain areas just outside of Denver and just outside of Colorado Springs are good short-term rental markets for those wanting an Airbnb investment or a second home in Colorado.
Woodland Park, Cascade, Divide, Florissant and Cripple Creek west of Colorado Springs are great opportunities for STR investments or a second home. Big mountain homes or small cabins are in high demand from visitors pouring into the state and wanting an Airbnb. And that means potential great revenue numbers for you.
And areas like like Evergreen, Conifer and Black Hawk just west of Denver likewise have beautiful wooded lots and mountain homes that are a big draw to tourists wanting that mountain vibe in a short-term rental.
Read more about the Secret Colorado Towns to Buy a Vacation Rental.
Looking for a traditional ski-town Airbnb property? We know Airbnb-friendly realtors in Breckenridge, Fairplay, Vail and Eagle. Let us know if you want a referral.