AIRBNBS & SHORT TERM RENTALS IN DENVER

Using Airbnb and other online platforms like VRBO to short-term rent a property can be a powerful way to build wealth through existing or new real estate investments.

A short-term renal (STR) is defined as a property rented out for a period of less than 30 days. STRs can be vacation rentals, Airbnb rentals and other similar properties rented out on a short-term basis. STRs offer a “home like” experience for travelers or those looking for short-term housing solutions and supply amenities such as furnishings, utilities and WI-FI.

The Benefits of Short-Term Rentals

Airbnb makes it easy to rent a room, an ADU or your entire house!

More Profitable - Since people are paying per night, at a higher rate, you could generate 2x to 3x more income than a long-term rental.
Flexibility - If you have family and friends visiting, you can block your rental off and have a place to host. How bougie!
Less Wear and Tear - Most people think that because of high guest turnover STRs get more wear and tear, but that's not what we see! Renters visit an area to be out and about and spend little time in the units compared to a LTR.

Variable Pricing - There may be times of the year where demand for STRs are higher. If you're in tune to these events or use tools like AirDNA you can maximize your rent when demand is higher.
No Bad Tenants - When managing a STR, even your worst guests will leave soon. You won't need to worry about bad tenants, lack of payment and evictions.
Short-Term STRs - You can rent your primary residence on a short-term basis. You could cover the cost of your vacations by renting out your own house while you're away.

The Drawbacks and Risks to Short-Term Rentals:

Legal and Regulatory Risk - Short-term rentals are subject to various legal and regulatory requirements, such as zoning laws, building codes, and landlord-tenant regulations. Non-compliance with these requirements can result in fines and penalties, which can impact the profitability of the investment.
Market Risk - The demand for short-term rentals can be unpredictable, and changes in tourism or travel patterns can impact occupancy rates and rental income. Economic downturns or natural disasters can also impact the demand for short-term rentals.

Reputation Risk - A negative review on Airbnb or other platforms can significantly impact occupancy rates and rental income. It's essential to maintain the property's cleanliness, safety, and comfort to ensure positive reviews and repeat business.
Security Risk - Short-term rentals can attract guests who may not be familiar with the area or property, which can increase the risk of theft, property damage, or liability. It's essential to take steps to secure the property and protect against potential risks.

Get Educated on Airbnbs & STRs:

Check out Short-Term Rental, Long-Term Wealth by Avery Carl for a guide to analyzing, buying and managing vacation properties.

Listen to Podcasts from Invest2FI –

Some key episodes to tune into are:

Know the Rules and Regulations for Airbnbs and STRs in Your Area. For Denver area investors, check out our Colorado investor toolkit which includes rental rules by cities.

SHORT TERM RENTAL CASE STUDY

Airbnb in Old Town Arvada

5 Bed | 3.5 Bath
2,250 sq. ft.
Purchase Price: $653,000
Cash Flow: $6,000
CoC Return: 70.76%
NWROI: 160.97%

Determine the Right Kind of STR for you!

Vacation Rental: These properties are geared towards vacationers (duh!), but typically investors who manage vacation rentals treat their property as a business. Vacation rentals are typically purchased in mountain towns, by bodies of water or high-end city apartments.
Corporate Rentals: Corporate rentals are often used by businesses to provide housing to employees who are traveling for work. Typically located in business districts these rentals can include anything from furnished apartments to full-service corporate housing.
Airbnb Rentals: On Airbnb you can rent out your entire home, an ADU or single room at your primary residence. This is a great way for a property owner to generate passive income from their primary residence.

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