As this rental area is taking off, different localities are starting to create new guidelines to regulate these rentals. It can be confusing and overwhelming to wade through county rules, figure out how to create the best listing, and put in all of the necessary work to create a top tier home.
Recently, I sat down with agent Lauren Valinoti and Bryan Looney, owner of iTrip Vacations Denver, a property management company that focuses exclusively on short term rentals. He told us why the Denver area is great for these types of rentals, the benefits of opting for short term over long term rentals, and how a professional management company can greatly boost your income.
- Listen to the podcast “#295: How Professional Property Management Can Increase Profit on Short Term Airbnb Rentals” on the Denver Real Estate Investing Podcast
- Watch the YouTube video (at the bottom).
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
Is the Denver area a good location for an Airbnb?
Bryan says that there are four markets nationally that perform well above everywhere else: northern Florida beaches; South Carolina beaches; Gatlinburg, Tennessee; and Colorado. Every month this year, the Denver airport has been the number one destination in the country. People are coming to Colorado from all over the country and the world, and instead of staying in hotels, they’re choosing short term rentals.
The Denver metro area is a great location for short term rentals within Colorado. Suburban areas do well because their proximity to the highway gives visitors the option to go into the city one day and the mountains the next. While summer is the most popular season, year round activities consistently draw in tourists. Nearby Clear Creek County is becoming a more popular skiing destination, as it’s a cheaper alternative to Summit County, further boosting the metro area’s appeal.
As more people travel to Colorado and opt to stay in short term rentals, counties are grappling with how to regulate these types of rentals. Denver County has the harshest restrictions, with Airbnb’s only being allowed in a primary residence. However, adjacent counties are starting to create more Airbnb-friendly guidelines. Jefferson County is in the process of writing their rules so that they can be open to short term rentals while also ensuring that owners have proper business licenses, permits, and safety features. Arvada’s short term rental policy allows one owner to have up to three short term rental properties, though they are capped at renting them out at 240 nights a year. Before getting started with short term rentals, it’s important to understand the local guidelines and how to work within them.
What are the benefits of a short term rental?
While short term rentals require a lot more work and upkeep than long term, they have unique benefits that make them attractive to investors. Running a successful short term rental is a full time job that requires a solid system in place and attention to detail. When done well, they bring in more revenue, are exceptionally well maintained, and give owners a nice place that they can stay in, too.
When priced correctly and with good upkeep, Airbnb’s can bring in two to three times the revenue of long term rentals. iTrip uses software to advertise properties across different platforms, specifically targeting international tourists who will pay top dollar for a home. Bryan recently ran the numbers for a client who owns a home in Arvada and plans to live in the basement while renting out the first floor via short term rentals. Even while living in the home, the first year gross would be $67K, with a net income of $12K after paying management fees and all of his PITI. A long term rental with the same setup would net thousands less.
The upkeep required by a short term rental ensures that the home is always in great shape. This is a benefit for homeowners, particularly those who aren’t living in the property full time. With a long term tenant, a minor issue with leakage or the HVAC system may not be noticed until it becomes a bigger problem. For a short term rental with a professional cleaning crew, the property will be inspected after each stay to ensure that these small issues are dealt with immediately. iTrip further helps keep their homes in great condition by not allowing the properties to be used for parties and restricting renters to age 27 and higher. Accidental damage, such as a broken window blind, are covered by the company, while substantial damage, like a hole in the wall, is charged to the guest.
By maintaining the home through a professional company, the owner has a great place to stay in for free when they want to use the property for themselves. iTrip has a booking system that allows the owner to go in and block off the dates they want to stay in the property, and the home will be unavailable across all platforms during that time.
Why should I use a professional management company for my Airbnb?
Running a highly rated short term rental and maximizing its income is a full time job. A lot of people who attempt to rent out their homes via Airbnb don’t realize how to reach their full potential and are leaving thousands of dollars on the table. iTrip has systems in place that ensure top rates are charged and the homes are kept in impeccable condition. For a 25% share of the average daily rate, iTrip manages all aspects of running a short term rental.
When it comes to setting prices for an Airbnb, Bryan uses AirDNA to find local comps. While he doesn’t use the conservative rates recommended by the program, he finds nearby homes being rented and looks at occupancy numbers and amenities to set prices. iTrip focuses on six-eight week windows at a time when setting rates to ensure that they are getting the highest possible rents for that time period. Anything booked outside of the window is charged at the peak price, ensuring that owners are always getting top dollar. If a property is fully booked outside of the current window, they’ll adjust prices the next year to make sure they are getting the most money possible.
Many owners only market their properties on Airbnb, which prevents a large swath of potential renters from ever seeing the property. iTrip uses an algorithm to get their properties on the front pages of various websites, using nine different platforms to spider out to over 100 websites. The company uses a calendar that is synced across all platforms to ensure that the property can’t be double booked. At the end of the year, the owner is provided with an accurate 1099 they can use to file taxes.
When it comes to upkeep and maintenance, Bryan has a solid system in place to ensure that each property is in excellent condition for every guest. He set up pods of handymen and cleaners who focus on no more than three homes at a time. He pays them above market rates and gives them flexibility in order to retain them. Thanks to this set up, retention rates for his cleaning crew went from 10% to 90%. Cleaners are trained on what to look for so that the home is always sparkling clean and any potential issues can be dealt with ahead of time.
When an unexpected problem does pop up, calls are answered by a call center so that the homeowner never has to deal with an issue directly. These problems are addressed right away to ensure guests’ satisfaction and safety. Recently, Bryan got a phone call at 1am that a carbon monoxide detector was going off, so he arranged for the guest to stay in a hotel and then contacted the fire department and determined that it was a false alarm. Now, the home has brand new carbon monoxide detectors and the homeowner can rest assured there won’t be any issues in the future.
What are some tips for running a short term rental?
Bryan has a few tips for those who are interested in using their home as a short term rental.
Amenities are a big draw for renters and can allow the owner to charge more for their home. Hot tubs are the number one sought after amenity, and homes that have one can charge anywhere from $25-$70 more a night. Air conditioning or some sort of cooling system is also necessary for summer rentals, especially in the Denver metro area.
There are three tiers of insurance that people should make sure they have before renting out their home. The first is host insurance comes through short term rental websites, such as Airbnb and VRBO. The second is built into the cost of the of the rental by iTrip, which is about $2 a day and offers $25K in personal liability, $100K in property damage, and bedbug protection. Thirdly, homeowners should declare their property as a short term rental through their insurance company and get a million dollar umbrella. Some insurance agents don’t understand what this is and think they should be selling a commercial policy, so it’s important to make sure the agent is knowledgeable about short term rentals. Bryan has found that Farmer’s and Safeco are the best for this umbrella, but iTrip also has a list of local agents who can help with this type of insurance.
Anyone who is interested in turning their home into a short term rental should talk to a professional first. There is a lot of disinformation floating around, and much of this market is in a gray area that a professional can help navigate. Bryan has seen people not even attempt a short term rental because they were told it wasn’t allowed, but this is almost never the case. Professional management companies can help run a property well and make sure it’s being done within the regulations set by the locality.
Connect With Bryan Looney
If you’d like to learn more about iTrip Denver
- visit https://www.itrip.net/property-management/denver
- call 303-835-0729
- Email Bryan directly at [email protected]
We plan on having Bryan as a guest on future episodes, so keep checking back to learn more about short term rentals.
If you are interested in buying a Denver property and maintaining it as a short term rental, start here.