Denver Short Term Rental PROPERTY MGMT

[Charlsi Kelley]

Hello!

Any fellow Denverites the LOVE their short term rental management company?

We are relocating in August and since we purchased our home less than 2 years ago, we don’t want to sell so we can avoid cap gains taxes.

I interviewed one company- but was “underwhelmed” with their knowledge of taxes, legality, trends etc.

I would love some recommendations and general insights into Denver short term market- especially legality. This house is currently our primary residence and we may not repurchase right away so I think we should be square??

Thanks Denver!

-Charlsi

[James Carlson]

@Charlsi Kelley Congrats on the relocation. That's exciting. 

So you kind of ask two questions: What's the legality of short-term rentals in Denver and are there any good short-term rental management companies. Here's way more info than you probably wanted.

What's the legality of what you're hoping to do?

We go to the Short-Term Rental Advisory Committee (STRAC) meetings every other month to hear about the Airbnb and STR enforcement in Denver. (We also teach a class about the Airbnb laws in various cities. July 17 is the next if you're interested.)

There are kind of two answers ... 1. what the law intends and the city is trying to enforce; and 2. what in practice you might get away with.

The city of Denver's definition of primary residence is your "primary place of return." This is pretty straight forward. Do you live there or do you not? As soon as you move elsewhere, then you don't live there. 

Now, when applying for an STR application, you have to upload your driver's license and another form of ID showing the primary residence address. In your situation, you might still have the driver's license and can upload that. And if you plan to return and stay there for a bit, you might have a case. (We've had clients who bought a place in Denver but travel the majority of the year, and they've done okay so far.) But having a DL with the address is not the deciding factor. The city cares about whether you live there, and how they look at situations like yours hasn't been tested yet.

So at this point, it comes down to your neighbors. There is little (but a growing) amount of active enforcement of the primary residence rule. They mostly rely on neighbor complaints. If your neighbors don't complain, they won't investigate, and you might be able to get away with it for awhile. We don't recommend it, but that's how it's working in practice.

That said, they have put a priority on PR enforcement and are getting better at it. You can see their numbers on this presentation from the latest STRAC meeting. One Airbnb house's permit has been pulled because of a PR violation; 6 hearings are pending to determine whether a violation has occurred; and another 8 investigations have been completed and are awaiting a hearing to be scheduled.  

In the end, it really comes down to your risk tolerance. 

Any good STR property management companies in town?

The big ones seem to me to have no personal touch and can be difficult to communicate with. That's a problem for the very hands-on, time-intensive world of short-term rental management. You might try a smaller company. We like Synchro Management, who we know was doing a good job last year. Don't know if they're still in business or not. (PM if you want a contact.)

Many companies have an incentive to obscure the legality of this because their whole business model is based on people who operate an STR in their non-primary residence.

I wish you luck!