Updated Oct. 3, 2022
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 is Airbnb legal in Colorado? STR laws are city specific, and an increasing number of 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 STR 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.
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. 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 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 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.
Want new construction in an HOA that allows Airbnb? We know of an Arvada development of new construction single-family homes that are walking distance to the light-rail and that will allow STRs. They still have a few available units as of October 2022.
If you're interested, contact us today.
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.
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. However, that density cap does not get triggered until Nov. 1, 2021. In the event a district has exceeded the cap at that time, any short-term rentals operating prior to that will be allowed to continue.
Email us today if you want to chat about the details.
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
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. The current law allows you to rent on Airbnb anywhere if it's your primary residence, and also operate an Airbnb investment property but only if:
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 great 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.