Need advice on investment location

[Warren Mitchell]

We have a 5 bedroom STR in Windosr Hills, Kissimmee. Our roi is just above break even over a three year period. But we have seen good appreciation. We would like to purchase a second STR in Colorado (we are in Denver) or near a coast line. We could invest as high 800k if the risk on the roi was limited. My research has lead me down rabbit holes and I am still unsure. Any input on location or favorite tool to research purchase of a str?

[Ben Rhodin]

Hey @Warren Mitchell! There is no shortage of research tools to get an idea of potential STR revenue. The biggest one being AirDNA. Biggerpockets also has one, that is much more simplistic. You just input your address and it spits out a revenue.

The Denver market is a good place for STR and I know a lot of clients, and friends that are killing it. You just need to know where you can have them and be careful with regulations. A lot of cities and towns (even mountain resort towns) are cracking down on STR and regulating them to the point of not being allowed.

In most of the Denver Metro Area, STRs are limited to owner-occupied properties, and a lot of areas require them to be licensed and permitted as well. Currently, the safe areas are Arvada and Wheat ridge which both allows them on investment properties and have few regulations. I am currently setting up an STR in my primary house hack in Arvada. Littleton used to be on this list as well, but they are in the process of reversing their regulations and limiting STRs again.

Westminster is able to work as well, as they do not currently have any measures allowing or limiting STRs. But this presents the risk that they could go either way in the future and your STR could become illegal. Now if you are in a position where you could House Hack a new primary here in the Denver Metro, and find a place that has a legal ADU you could place yourself almost anywhere and rent the ADU as an STR. Then you could also get another STR somewhere else, as you could utilize a low down payment loan on the primary.

Denver is a great area to invest, and I always prefer investing in your backyard! Don't hesitate to reach out if you have any other questions!