Denver Airbnb/STR Recommendations and Advice?

Question

Hi All - first time buyer (and first time poster!) looking for some advice here. Looking to buy an investment property to rent out as a STR for 1-2 years (since it seems to be about impossible to even break even on CF with LTR) before moving to Denver and then house hacking it while living part-time in my camper van/part time in one of the bedrooms of the property. Given my budget (~500k max, ideally more in 400-450k range) and Airbnb regulations, it seems like Arvada and Wheat Ridge are my best bets. Given that price range looking at 3 bedroom/2 ba type SFHs.

However I'm curious if 1) folks have a sense of the long-term permanence of existing regulations in these cities; and 2) if there are other locations in Denver metro that are unregulated currently but could trend toward investor friendly like Arvada and Wheat Ridge (and Littleton which is out of my budget). Westminster for example seems to have good value and is unregulated to my knowledge but not sure what city's future plans are, plan to talk to city planners in each of these locations but appreciate any and all advice from BP community! If moved to Denver and in some scenario where I was only there 3-5 years I want some sort of peace of mind that the place would still do okay as an investment (i.e BE on CF as an investment property, not primary residence) so looking presumably only at STR friendly areas but open to all general suggestions/advice.

James Carlson · Answer

@Daniel Baran

A few thoughts on your question.

Best Denver-area cities for AirbnbYes, your best bets are Arvada and Wheat Ridge at the moment. I've had clients buy short-term rentals in both cities, and they're all doing super well. One is in a new build in Arvada, another is the first hyperlink above.

Will Airbnb-friendly cities last?You ask an interesting question about the durability of any law that allows STRs as an investment. Littleton, for instance, in the Denver metro area passed a law to allow non-owner Airbnb properties a year ago and just this fall totally reversed course. Heck, even the Colorado ski areas that rely so heavily on tourists are cracking down now on Airbnb on Airbnb.

But what I hear from talking to the planning departments in these cities is that even if the laws changed, existing STR licenses would be grandfathered in. That's what happened in Littleton, for instance, and my contacts at the city of Arvada and city of Wheat Ridge say similar things.

Westminster ... eh.About Westminster. Eh ... I'd be leery. There's a big difference between a city that actively allows Airbnb through an law passed to say so ... and a city that passively allows short-term rentals through a lack of prohibition. Westminster is in the second category, and they could decide at any time to prohibit it. (And in fact, Westminster has this on their radar.) Any new law prohibiting Airbnb in an area that didn't actively allow it before could put you out of business. But if you have a legally issues license, there's a general consensus among municipalities, that you have to be grandfathered in.

I hope that helps and I wish you the best with this.

Ben Rhodin · Answer

Hey @Daniel Baran! Welcome to the forums and you will definitely get some solid advice here!

What's causing the 1-2 year timeline to get out here? If you are able to get out here earlier, you'd be able to take advantage of a low down payment loan. Instead of having to do 10% down (if you do a second home loan), or 20-25% if you did an investment property loan. Just a thought there, but If you are stuck where you are now for another 1-2 years, what is stopping you from house hacking a property out there? You could take advantage of the 2 years and get 2 properties out there, and then get your third when you move out here, all with putting about the same down as 1 property out here.

You could also grab a property out here now, if your current location isn't conducive to house hacking, and then pick up another one when you get out here. I wouldn't limit yourself to the thought that you can only get one property.

As for your questions... As @James Carlson stated there is never a guarantee as far as STR regulations, but Arvada, and Wheatridge are certainly the safest as of now. Personally I Airbnb a portion of my househack here in Arvada, and have numerous clients that do it as well and are able to cashflow with just STR a basement unit. I also inform my clients of Westminster's lack of regulations, it's a coin toss as to where they end up when they do choose to implement regulations. So it depends on your risk tolerance, and make sure to run your numbers so that you have back up plans if STR goes out the window.

I would also like to say that it isn't impossible to cashflow without STRs here in Denver, especially if you are buying an investment property. You could go with medium term rentals, rent by the room, or splitting a single family into more than one living area (Basement unit or ADU). It does require getting creative, but there are other ways to cashflow if you don't want to STR!

Wish you the best of luck, and please feel free to reach out!

Bradley Dosch · Answer

Hey Daniel, solid first post. Super cool you're looking to get into investing. I'd recommend reaching out to the FI team in Denver. Any one of their team members can answer your more detailed questions.

Gabriela Rezende · Answer

Hi Daniel, your looking in all the right places. Based on your plan sounds like staying in the STR friendly zone is beneficial & you can still find something in your price range with a little looking. I like using AirDna to really dive deep into the numbers and check occupancy rates so you know your buying in an area that can provide you that peace of mind, staying rented. Just have to decide if you want a property manager or increase your return by self managing and then make sure you set yourself up with a dependable cleaner & handyman. Feel free to connect I specialize in selling STR in Colorado. Have a great one!

Chad Rocke · Answer

@Daniel Baran Congrats on this mind set! House hacking is such a great way to build wealth and passive income. I would love to connect and share any information that might help you get started. I have a STR and a long term rental duplex up and running and looking to get my second str shortly. I'll send you a DM.

Talk soon!

Ben Einspahr · Answer

@Daniel Baran, Big congrats on your first post. I love your game plan!

As @Ben Rhodin already mentioned. You will be paying a large chunk of money (20% - 25% down payment) and much higher interest rate buying as investment property, then purchasing house as primary residence to then house hack.

Personally, I would do it the other way around. Wait until you move to Denver and purchase as your primary residence with <5% down. That way you are not stuck at a max purchase price of $500,000. At $500,000 or less, you will be limited to SFH’s that need a good amount of work or condos/ townhomes that can typically have HOA regulations that limit rentals <30 days.

How I see it:

Option 1- Buy a House Hack where you are currently living. With your decreased living expenses,  start aggressively saving for HH#2 in Denver +/- 2 years down the road. When you are ready to move to Denver, stabilize HH#1 and move into HH#2 in Denver. Or if you want you can always sell but real estate is a great forgiving investment in the long term.

Option 2- Continue saving as much as you can until you are ready to move to Denver. Then when you move here, find a kickass investor friendly realtor and buy HH as primary residence. Then start crushing it!

Ryan Thomson · Answer

@Daniel Baran I was just talking about Denver and the areas that are good to invest in for STRs with @Chad Rocke. He might have some good advice for you.

Denver Airbnb/STR Recommendations and Advice?

Most Popular Reply