It's tough to run a full-time Airbnb in Colorado. Most cities have a primary residence rule -- that is, you can only do short-term rentals in the place you call home.
But just last month, Littleton became the second Denver area city in 2020 to vote to legalize short-term rentals in non-owner-occupied homes. (Arvada was the first, passing a law in August that allows investors to own up to three Airbnb investment properties.)
Why is this exciting? Because you can make more money with short-term rentals, and these laws allow investors to buy properties for the sole purpose of Airbnb-ing them. Any city near Denver does well on Airbnb, and with Denver allowing STRs only in your primary residence, there remains a good demand for Airbnb listings. Littleton also has its own charming little downtown with bars and restaurants and shops, and it offers the same easy access to the mountains and outdoor activities.
But just as in Arvada, Littleton's law may provide investors with only a short window of opportunity. I'll get to that in a minute. First, though, what exactly does the Littleton Airbnb allow for?
Are there limits on how many short-term rentals I can own?
No, the Littleton Airbnb law does not place any restrictions on how many STRs a person can buy. One, three, nine, whatever. However, be aware that you if you operate numerous Airbnbs on the same block, you may be setting yourself up for the headache of neighbor complaints.
Can I operate a short-term rental in both sides of a duplex?
Yes, you are allowed to run as many Airbnb listings as there are "legal dwelling units" on the property. So you can run two STRs in a duplex, three in a triplex, etc.
Does my property have to have any particular zoning?
No, you can operate an Airbnb in any zoning district.
Are there limits on guests?
Yes, you can host two guests per legal bedroom with a cap of eight guests total. So you can host six guest in a 3br house, four guests in a 4br house, but you can not host 10 guests in a 5br house because the cap is eight guests no matter what. (How the city could possibly enforce this, I don't know.
Can I rent an ADU on Airbnb in Littleton?
Oddly enough, no you can't. I don't know why they would allow you to short-term rent the main house but not the carriage house, but them's the rules.
Can I rent a portion of the space if I live in the property?
Oh totally. If you're into house hacking and want to rent a room or rent a basement apartment, you can still do totally do that as well.
What happens if Littleton changes the law?
This, people! This is the big question. We talked to the Littleton planning department. The official said the city is likely to readdress the issue of short-term rentals in the next year. This could be small restrictions or it could include an outright prohibition on non-owner-occupied Airbnb properties.
So what happens if you buy an Airbnb investment property and then they outlaw it? For two reasons, we think you will be grandfathered in. (This is no guarantee at all.)
The planning department staff member we spoke to said in most cases where people were operating with a legal license at the time, you would be able to continuing operating with that license as long as you renew it every year on time and it's not revoked for any reason. This is called a legal non-conforming use.
Colorado Springs is a great case study. They legalized short-term rentals in non-owner-occupied homes in late 2018. People got licenses (like Erin and I on a home with a potential duplex setup.) Those people ran Airbnb legally. Then in late 2019, just one year later, Colorado Springs essentially outlawed Airbnb investment properties. But! They also grandfathered in all previously legal STRs. There is reason to believe Littleton would do the same. (We heard the same logic from the Arvada planning department as well.)
So, what to do? Well, if you like the short-term rental market in Denver and want to run one, Littleton offers you one of the few opportunities to do so.