Denver, Colorado: Market Data, Laws & Investor Guide

Denver, Colorado is an incredibly appealing destination to start an Airbnb business in 2024. As a vibrant city nestled at the base of the stunning Rocky Mountains, Denver offers an enticing blend of natural beauty, thriving culture, and strong tourism demand that makes it a prime location for short-term rental success.

In 2019 alone, Denver welcomed a record 31.9 million visitors who spent over $7 billion, demonstrating the city's immense draw for travelers. This trend shows no signs of slowing down, with experts predicting Denver's tourism industry will make a full recovery. For Airbnb hosts, this resurgence in travel demand presents an incredible opportunity to tap into a booming market.

Denver's appeal extends far beyond its tourism statistics. The city boasts 300 days of sunshine per year, world-class ski resorts just a short drive away, a thriving food and craft beer scene, and iconic attractions like Red Rocks Park and Amphitheatre. This diverse array of offerings attracts a wide range of travelers, from outdoor enthusiasts to culture seekers, ensuring a steady stream of potential guests for Airbnb hosts.

Moreover, Denver's progressive stance on short-term rentals makes it an accommodating city for Airbnb businesses. While the city requires hosts to obtain a license and abide by certain regulations, the process is straightforward and the fee is capped at just $150 by Colorado state law. This supportive legal framework, combined with the city's strong tourism outlook, positions Denver as a top choice for starting an Airbnb in 2024.

In the following sections, we'll dive into the specific steps and considerations for launching a successful Airbnb business in Denver, including navigating local regulations, choosing the right location and property, and implementing best practices to stand out in this competitive market. Whether you're a seasoned investor or a first-time host, Denver offers a wealth of opportunity for those looking to capitalize on the growing short-term rental industry.

Denver Short-Term Rental Market Analysis

Denver's short-term rental market has shown impressive growth and resilience in recent years. According to AirDNA, a leading provider of short-term rental data, Denver's key metrics as of August 2024 are as follows:

• Average Occupancy Rate: 63%
• Average Daily Rate (ADR): $204
• Seasonality: +6% year-over-year

Comparing Airbnb market data from 2022 to 2024 reveals a steady upward trend:

1. Occupancy rates have increased from 60% in 2022 to 63% in 2024.
2. ADR has grown from $195 in 2022 to $204 in 2024, a 4.6% increase.
3. Monthly revenue has risen from $18,525 in 2022 to $19,749 in 2024, a 6.6% increase.

Denver's tourism industry has also experienced significant growth in the past two years. The city welcomed a record 31.9 million visitors in 2019 who spent over $7 billion. Experts predict that Denver's tourism will fully recover to pre-pandemic levels by 2024, positioning the city for a strong rebound in the short-term rental market.

Several annual events and festivals in Denver contribute to spikes in tourism and short-term rental demand:

1. Denver Arts Week (Nov. 1-10, 2024)
2. Denver Film Festival (Nov. 1-10, 2024)
3. Denver Christkindlmarket (Nov. 22-Dec. 23, 2024)
4. Mile High Holidays (Nov. 28, 2024-Jan. 1, 2025)
5. National Western Stock Show & Rodeo (Jan. 11-26, 2025)
6. Denver Restaurant Week (Feb. 21-Mar. 1, 2025)

Discussions on Airbnb host forums suggest that Denver's mid-term rental market, particularly for travel nurses, is promising due to the city's proximity to several large hospitals. Studio and one-bedroom short-term rental units have seen their ADR grow by approximately 70% from January 2019 to June 2024, indicating a strong demand for smaller, flexible accommodations.

In summary, Denver's short-term rental market is thriving, with consistent growth in occupancy rates, ADR, and monthly revenue. The city's robust tourism industry, coupled with a diverse array of annual events and a growing mid-term rental market, makes it an attractive destination for Airbnb hosts looking to capitalize on the market's potential.

Best Neighborhoods in Denver for an Airbnb Business

When searching for the ideal location to start an Airbnb business in Denver, hosts should consider factors such as proximity to popular attractions, up-and-coming areas with growing demand, and established tourist hotspots. By analyzing data from reputable sources like AirDNA and Mashvisor, and combining it with local knowledge, we've identified the top 5 neighborhoods in Denver for starting a successful Airbnb venture.

1. RiNo (River North Art District)

RiNo, short for River North Art District, is a trendy neighborhood known for its vibrant street art, craft breweries, and eclectic dining scene. Its proximity to downtown Denver and unique industrial-chic aesthetic make it a popular choice among travelers.

1. Average Occupancy Rate: 71%
2. Average Daily Rate: $189
3. Airbnb Seasonality: High demand year-round, with peaks in summer and winter
4. Estimated Annual Revenue: $48,979

According to Zillow, the median home value in RiNo is $599,000 as of August 2024, with single-family homes averaging around $750,000. For optimal return on investment, consider investing in a one or two-bedroom property, as they tend to have the highest occupancy rates and generate the most revenue per square foot.

2. LoDo (Lower Downtown)

LoDo, or Lower Downtown, is a historic district known for its red-brick buildings, upscale restaurants, and lively nightlife. Its central location near Union Station and Coors Field makes it a convenient base for exploring the city.

1. Average Occupancy Rate: 68%
2. Average Daily Rate: $205
3. Airbnb Seasonality: Consistent demand throughout the year, with spikes during baseball season
4. Estimated Annual Revenue: $50,840

The median home value in LoDo is $675,000 as of August 2024, according to Zillow, with condos and lofts being the most common property types. Studios and one-bedroom units tend to perform best in this neighborhood due to their affordability and appeal to solo travelers and couples.

3. Cherry Creek

Cherry Creek is an upscale neighborhood known for its high-end shopping, fine dining, and luxurious homes. Its proximity to Cherry Creek State Park and the Cherry Creek Trail makes it an attractive option for outdoor enthusiasts.

1. Average Occupancy Rate: 65%
2. Average Daily Rate: $235
3. Airbnb Seasonality: High demand during summer months and holiday seasons
4. Estimated Annual Revenue: $55,815

The median home value in Cherry Creek is $1,100,000 as of August 2024, per Zillow data, with single-family homes being the predominant property type. Two and three-bedroom homes tend to have the highest occupancy rates and generate the most revenue in this luxury market.

4. Capitol Hill

Capitol Hill is a diverse and bustling neighborhood known for its historic mansions, indie shops, and lively restaurant scene. Its proximity to the Colorado State Capitol and downtown Denver makes it a popular choice for both business and leisure travelers.

1. Average Occupancy Rate: 67%
2. Average Daily Rate: $165
3. Airbnb Seasonality: Steady demand year-round, with peaks during summer and legislative sessions
4. Estimated Annual Revenue: $40,455

According to Zillow, the median home value in Capitol Hill is $525,000 as of August 2024, with a mix of single-family homes, condos, and multi-unit properties available. One and two-bedroom units tend to have the best performance in this neighborhood due to their affordability and appeal to a wide range of travelers.

5. Highland

Highland is a trendy neighborhood known for its hip restaurants, craft coffee shops, and stunning city views. Its proximity to downtown Denver and easy access to I-25 make it a convenient choice for travelers.

1. Average Occupancy Rate: 69%
2. Average Daily Rate: $180
3. Airbnb Seasonality: High demand during summer and winter months
4. Estimated Annual Revenue: $45,360

The median home value in Highland is $650,000 as of August 2024, per Zillow data, with a mix of historic single-family homes and modern townhouses available. Two-bedroom properties tend to have the highest occupancy rates and generate the most revenue in this neighborhood.

When selecting a neighborhood for your Airbnb business in Denver, consider your target audience, budget, and investment goals. By leveraging data-driven insights and understanding the unique characteristics of each area, you can make an informed decision that sets you up for success in this thriving market.

Maximizing Your Revenue Through In-Demand Amenities and Properties in Denver

To set competitive prices for your Denver Airbnb, consider factors such as seasonality, local events, and the prices of similar listings in your area. Utilize dynamic pricing tools that adjust rates based on real-time market conditions, and offer discounts for longer stays or last-minute bookings to attract more guests.

According to AirDNA data, the most in-demand and best-performing Airbnb listings in Denver share several key amenities:

1. Hot tubs: Listings with hot tubs earn an average of 20% more revenue than those without.
2. Dedicated workspaces: Properties with a dedicated workspace see a 15% increase in occupancy rates.
3. Pet-friendly accommodations: Denver is a pet-loving city, and listings that allow pets can boost revenue by up to 12%.
4. Fully-equipped kitchens: Guests appreciate the ability to cook their own meals, and listings with well-stocked kitchens earn 10% more on average.
5. High-speed Wi-Fi: Fast, reliable internet is a must-have for many travelers, and listings with high-speed Wi-Fi see a 8% increase in bookings.

To maximize revenue, consider investing in these amenities and highlighting them in your listing description and photos.

In terms of property types, apartments and condos are the most popular choices for Airbnb guests in Denver. Here's a breakdown of average property prices and potential revenue by bedroom count, based on Zillow and AirDNA data from 2022-2024:

Studios:

• Average property price: $200,000
• Average annual revenue: $26,942

1-bedroom:

• Average property price: $300,000
• Average annual revenue: $37,140

2-bedroom:

• Average property price: $450,000
• Average annual revenue: $52,000

3-bedroom:

• Average property price: $600,000
• Average annual revenue: $68,745

4+ bedroom:

• Average property price: $800,000+
• Average annual revenue: $85,000+

Keep in mind that these figures are averages, and actual revenue may vary depending on factors like location, amenities, and seasonality. Townhouses and single-family homes are also viable options for Airbnb investments in Denver, particularly in popular neighborhoods like RiNo, LoDo, and Cherry Creek.

By understanding the most in-demand amenities and property types in Denver, and setting competitive prices based on market conditions, you can maximize your revenue potential as an Airbnb host in this thriving market.

Understanding Denver Short-Term Rental Regulations

Denver, Colorado has implemented regulations for short-term rentals, including Airbnb and VRBO, to ensure responsible operation within the city. To start a short-term rental business in Denver, hosts must adhere to specific guidelines set by the local government.

The property must be the host's primary residence, and obtaining a short-term rental license from the Denver Department of Excise and Licenses is mandatory, with an annual renewal fee of $100. Hosts must display the license number on all rental listings to demonstrate legal compliance.

When applying for a license, hosts must submit various documents, including a Colorado driver's license, proof of primary residence, proof of property possession, and a valid city lodger's tax account number. Hosts are also responsible for collecting and remitting a 4.81% city sales tax and a 10.75% city lodger's tax.

Denver's short-term rental rules include safety requirements such as functioning smoke detectors, carbon monoxide detectors, and fire extinguishers. Rentals are limited to 30 non-consecutive days per year, and hosts must maintain appropriate insurance coverage.

Enforcement of short-term rental regulations in Denver is notable, with reports of fines for non-compliance. However, many Airbnb hosts continue to operate in the city, indicating the market's attractiveness for those willing to adhere to the regulations.

Read our full STR regulations guide for more detailed information on Denver short-term rental regulations, including insights from local hosts and a closer look at other policies.

Keys to Success as a Denver Airbnb Host

To thrive as an Airbnb host in Denver, it's essential to understand the unique preferences of travelers visiting the city and tailor your property to meet their needs. By incorporating popular amenities, embracing local design themes, and effectively marketing your listing, you can attract a steady stream of guests and maximize your rental income.

Popular Amenities and Design Themes in Denver

Denver travelers are often drawn to properties that showcase the city's natural beauty and outdoor lifestyle. Incorporate design elements that reflect the Rocky Mountain setting, such as rustic wood accents, cozy textiles, and nature-inspired artwork. Biophilic design, which integrates plants and natural materials, has been shown to boost bookings and revenue.

In terms of amenities, Denver guests appreciate features that cater to their active lifestyles. Bike storage, hiking guides, and ski racks are all valuable additions. Providing a well-equipped kitchen is also crucial, as many travelers prefer to cook their own meals using local ingredients from Denver's thriving food scene.

Attracting Denver Customers

To attract Denver customers, focus on highlighting your property's unique selling points and proximity to popular attractions. Showcase your listing's mountain views, access to hiking trails, or nearby craft breweries. Collaborate with local businesses, such as ski resorts or guided tour companies, to offer exclusive discounts or packages to your guests.

Optimize your listing for search by incorporating keywords related to Denver's top attractions and neighborhoods, such as "RiNo," "LoDo," or "Cherry Creek". Invest in high-quality photography that captures the essence of your property and its surroundings.

Potential Challenges and Guidelines for Success

While Denver's short-term rental market offers significant opportunities, hosts must also navigate potential challenges. One major consideration is the city's strict regulations, which require hosts to obtain a license and limit rentals to primary residences. Failure to comply can result in hefty fines, so it's crucial to stay informed and adhere to all legal requirements.

Another challenge is the competitive nature of Denver's rental market. To stand out, hosts must provide exceptional guest experiences and maintain high standards of cleanliness and communication. Respond promptly to inquiries, offer personalized recommendations, and go above and beyond to exceed guest expectations.

Successful Denver hosts also emphasize the importance of setting competitive rates based on market demand and seasonality. Utilize dynamic pricing tools to optimize your rates and maximize occupancy, particularly during peak travel periods like ski season and summer months.

Finally, consider leveraging social media platforms like Instagram and Facebook to showcase your property and engage with potential guests. While not essential for every host, a strong social media presence can help build brand awareness and drive bookings, especially for unique or highly-styled properties.

By implementing these strategies and staying attuned to the needs of Denver travelers, Airbnb hosts can create successful and profitable short-term rental businesses in this dynamic market.

Using BNBCalc to Find Profitable Properties in Denver, Colorado

BNBCalc is a powerful tool for aspiring Airbnb hosts looking to find and analyze potential investment properties in Denver. By leveraging the platform's data-driven insights and user-friendly interface, you can streamline your search process and make informed decisions to maximize your short-term rental revenue. Here's a step-by-step guide on how to use BNBCalc to find profitable properties in Denver.

1. Analyze Properties Using BNBCalc

To get started, simply enter the address of a potential investment property into BNBCalc. The platform will generate a detailed report, including projected annual revenue, occupancy rates, and estimated expenses. BNBCalc pulls data from reliable sources like AirDNA and Mashvisor to provide accurate, up-to-date insights on the property's potential performance as a short-term rental.

When analyzing properties, pay close attention to key metrics such as the cash-on-cash return, cap rate, and monthly cash flow. These figures will give you a clear picture of the property's profitability and help you compare it to other potential investments in the area.

2. Benchmark Comparable Rentals

One of BNBCalc's most valuable features is its ability to show you comparable short-term rentals in the same neighborhood as your potential investment property. By analyzing these "comps," you can gain insight into the nightly rates, occupancy levels, and amenities offered by successful listings in the area.

Use this information to benchmark your own property and ensure that you're pricing competitively while still maximizing your revenue potential. Look for ways to differentiate your listing, such as offering unique amenities or highlighting local attractions, to help you stand out in the Denver market.

3. Determine the Right Price and Property Size

BNBCalc can also help you determine the optimal number of bedrooms, bathrooms, and purchase price for your Denver investment property. The platform's analytics take into account factors like local demand, seasonality, and market trends to provide personalized recommendations.

4. Make an Offer

Once you've found a property that meets your investment criteria and shows strong potential on BNBCalc, it's time to make an offer. Use the platform's financial projections to determine a fair purchase price that aligns with your desired return on investment.

To streamline the purchasing process, consider working with BNBCalc's partnered short-term rental lender to get pre-qualified for a mortgage. Our team recommends Brian Bockholdt at Alliant Credit Union for the most competitive rates and a seamless lending experience.

5. Use BNBCalc's Tax Calculator

In addition to helping you find and analyze properties, BNBCalc also offers a built-in tax calculator to help you estimate potential deductions. Short-term rental owners can often take advantage of valuable tax benefits, such as bonus depreciation, which allows you to deduct a significant portion of your property's value in the first year of ownership.

By inputting your property details and financial information into BNBCalc's tax calculator, you can get a clear picture of the potential tax savings associated with your Denver investment property. This information can help you make more accurate financial projections and ensure that you're maximizing your returns.

6. Come Up With a Buy Box

When searching for profitable properties in Denver, it's essential to have a clear set of investment criteria, or a "buy box," to guide your decision-making process. Your buy box should include specific qualities that align with your financial goals and risk tolerance, such as:

• Location: Focus on neighborhoods with strong demand for short-term rentals, like RiNo, LoDo, and Cherry Creek.
• Property type: Consider investing in apartments, condos, or townhouses, which tend to have lower maintenance costs and higher occupancy rates than single-family homes.
• Cap rate: Look for properties with a cap rate of at least 8% to ensure a solid return on investment.
• Cash-on-cash return: Aim for a cash-on-cash return of 10% or higher to maximize your annual income.
• Occupancy rate: Target properties with a projected occupancy rate of 65% or higher to minimize vacancy risk.

By establishing a clear buy box and using BNBCalc to analyze potential investments, you can streamline your search process and focus on properties that have the highest likelihood of generating strong returns in the Denver market.

Ready to start your Airbnb journey in Denver? Use BNBCalc to analyze potential properties and make informed investment decisions. Our powerful tool provides comprehensive data to help you maximize your profits. Check out this pre-analyzed Denver Airbnb opportunity and see how BNBCalc can help you succeed in the short-term rental market. Visit BNBCalc.com today and take the first step towards building your Airbnb business.