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Short Term Rentals Here to stay
In the bustling real estate market of Denver, short-term rentals have firmly established themselves as a lucrative income stream. As I do not manage clients short-term rentals, but do wholeheartedly advocate for clients to consider building a diversified real estate portfolio. This strategy might involve carving out a section of your homes to operate a short-term rental in times while you are not utilizing your home.
Denver homeowners have witnessed a transformative shift in their financial landscape with short-term rentals. According to AirDNA Marketminder data, there are over 5,000 active short-term rentals in Denver, boasting an impressive average daily rate of $178. This translates into monthly earnings of over $3,000 per month per property, with an astonishing 81 percent occupancy rate. But it's not just Denver reaping the rewards. Colorado, as revealed by Airbnb analysis, stands as the 9th state in the U.S. for new host income, with new hosts raking in over $55 million in 2021. In Denver County alone, new hosts contributed about $9 million to this revenue stream.
The shared economy has breathed new life into the hospitality industry. Homeowners, utilizing platforms like Airbnb and VRBO, now provide travelers with a wide array of accommodation options that cater to different budgets and preferences. This shift allowed travelers to explore cities, towns, and neighborhoods in ways that traditional hotels and lodges couldn't provide, especially during the COVID-19 pandemic when remote work allowed for extended 'work vacations.'
Navigating Regulations
With the rise in popularity of short-term rentals comes increased scrutiny and regulations from local governments. Noise complaints and disturbances have forced changes in the rules. For instance, Denver implemented an ordinance six years ago requiring short-term rentals to be on the host's primary residence property. Many cities have imposed caps on the number of short-term rentals, raised license fees, and encouraged property owners to convert their rentals into long-term housing solutions, particularly in areas facing housing shortages.
Short-Term vs. Long-Term Income
Despite regulatory challenges, the allure of short-term rentals lies in their revenue potential. Consider the following average income figures:
Long-term rentals: $1,300-$1,400 per month; $15,000-$16,000 annual net income.
Monthly rentals: $1,800-$2,000 per month; $20,000-$22,000 annual net income.
Short-term rentals: $3,000 per month; $35,000 annual net income.
These figures underscore the financial appeal of short-term rentals.
Pros and Cons
Like any investment, short-term rentals come with pros and cons. The advantages include upfront payment, generally considerate guests, high profitability through platforms like Airbnb, and regular cleaning, reducing overall wear and tear.
However, there are downsides, such as the inability to screen guests, the time-intensive cleaning process, profitability variations by location, and ever-changing laws and restrictions.
Navigating Shifting Regulations
The evolving landscape of regulations surrounding short-term rentals cannot be ignored. Cities and counties frequently modify their rules, potentially affecting your plans. It's crucial to stay informed about these changes, especially if you're considering investing in resort condos or expanding your property for short-term rentals.
The Appeal of ADUs
Despite the challenges, homeowners in Denver are increasingly recognizing the value of Accessory Dwelling Units (ADUs). These can take the form of a basement, a detached dwelling, or an apartment above a garage. However, ADU regulations vary between neighborhoods, so consulting local authorities is essential before embarking on such a venture.
In conclusion, short-term rentals are a significant income source in Denver's real estate market, as exemplified by RE/MAX's commitment to guiding clients toward diversified real estate portfolios. While challenges exist, the financial rewards and the flexibility offered by short-term rentals make them a compelling option for homeowners. Moreover, the emergence of ADUs adds another layer of opportunity to this exciting investment landscape.
Denver homeowners have witnessed a transformative shift in their financial landscape with short-term rentals. According to AirDNA Marketminder data, there are over 5,000 active short-term rentals in Denver, boasting an impressive average daily rate of $178. This translates into monthly earnings of over $3,000 per month per property, with an astonishing 81 percent occupancy rate. But it's not just Denver reaping the rewards. Colorado, as revealed by Airbnb analysis, stands as the 9th state in the U.S. for new host income, with new hosts raking in over $55 million in 2021. In Denver County alone, new hosts contributed about $9 million to this revenue stream.
The shared economy has breathed new life into the hospitality industry. Homeowners, utilizing platforms like Airbnb and VRBO, now provide travelers with a wide array of accommodation options that cater to different budgets and preferences. This shift allowed travelers to explore cities, towns, and neighborhoods in ways that traditional hotels and lodges couldn't provide, especially during the COVID-19 pandemic when remote work allowed for extended 'work vacations.'
Navigating Regulations
With the rise in popularity of short-term rentals comes increased scrutiny and regulations from local governments. Noise complaints and disturbances have forced changes in the rules. For instance, Denver implemented an ordinance six years ago requiring short-term rentals to be on the host's primary residence property. Many cities have imposed caps on the number of short-term rentals, raised license fees, and encouraged property owners to convert their rentals into long-term housing solutions, particularly in areas facing housing shortages.
Short-Term vs. Long-Term Income
Despite regulatory challenges, the allure of short-term rentals lies in their revenue potential. Consider the following average income figures:
Long-term rentals: $1,300-$1,400 per month; $15,000-$16,000 annual net income.
Monthly rentals: $1,800-$2,000 per month; $20,000-$22,000 annual net income.
Short-term rentals: $3,000 per month; $35,000 annual net income.
These figures underscore the financial appeal of short-term rentals.
Pros and Cons
Like any investment, short-term rentals come with pros and cons. The advantages include upfront payment, generally considerate guests, high profitability through platforms like Airbnb, and regular cleaning, reducing overall wear and tear.
However, there are downsides, such as the inability to screen guests, the time-intensive cleaning process, profitability variations by location, and ever-changing laws and restrictions.
Navigating Shifting Regulations
The evolving landscape of regulations surrounding short-term rentals cannot be ignored. Cities and counties frequently modify their rules, potentially affecting your plans. It's crucial to stay informed about these changes, especially if you're considering investing in resort condos or expanding your property for short-term rentals.
The Appeal of ADUs
Despite the challenges, homeowners in Denver are increasingly recognizing the value of Accessory Dwelling Units (ADUs). These can take the form of a basement, a detached dwelling, or an apartment above a garage. However, ADU regulations vary between neighborhoods, so consulting local authorities is essential before embarking on such a venture.
In conclusion, short-term rentals are a significant income source in Denver's real estate market, as exemplified by RE/MAX's commitment to guiding clients toward diversified real estate portfolios. While challenges exist, the financial rewards and the flexibility offered by short-term rentals make them a compelling option for homeowners. Moreover, the emergence of ADUs adds another layer of opportunity to this exciting investment landscape.
