Risks and Rewards of Investing in Colorado Short Term Rental Market

Colorado has a lot of diversity in its landscapes. Situated in the West of the United States of America, Colorado has every type of landscape. Arid deserts, snow-covered humongous mountains, and river canyons are the key landscapes in this state. Apart from that, many geographic parks and other similar things have become the face of this beautiful western state. Apart from that, the Colorado short term rental market is an important one in real estate in the USA.

 However, you must never go for investment only after reading that the Colorado is beneficial for you. You must first know the rewards and risks associated with investing in the Colorado real estate market. This will make it easy for you to make your decisions. So, without wasting a minute, let’s move toward them. 

Rewards of Investing in Colorado Rental Market

Following are some top listed rewards that you are going to get after investing in the Colorado

1. High Rents

Rents in Colorado are pretty high. If you have a quality rental property, you can make big and steady amounts from it. Rents in Colorado have been increasing continuously for rental properties over the past few years. This is a good sign for you as you can make an investment in the Colorado short term rental market without worrying much about profits. 

2. Low Taxes

Taxes are pretty low in Colorado, especially for rental properties. It means you don’t have to spend a big part of your profit from the short term rental colorado springs to pay taxes. The tax rate is 0.49% which is the 3rd most affordable tax rate in the USA. Furthermore, it is more than 50% lower than the average tax rate on rental properties in the USA.

3. High Demand

Every year many tourists visit Colorado. When they arrived in Colorado, demand for your rental properties increased at a quicker pace. They have to stay in Colorado during their tours. Some of them will definitely choose your property as well. This will increase the demand for your short term rental colorado springs properties and you will earn hefty amounts. 

Risks associated with Colorado Short Term Rental Market

  • When you invest in Colorado properties, you have only a limited time to earn big profits. If you failed to grab some residents during that period it will become hard for you to cover the loss. 
  • Most of the rental properties were leveraged. It could put you in some serious problems if your property does not earn you the expected amount.
  • Some natural disasters such as earthquakes or floods in the region where you have invested in the Colorado properties will affect the occupancy rate. We all witnessed it in 2020, during Coronavirus Pandemic. 

Rental Data Analysis of Some top Places in Colorado

Only going through the risks and rewards associated with an investment in the Colorado short term rental market will not be enough to make a final decision about investing here or not. Therefore, you must go through the rental data analysis of some top places in Colorado so you can understand the real trend of the rental market in Colorado. 

1. Denver

It is the capital of Colorado. With a lot of monuments present there, Denver rental properties are of prime importance.

  • The occupancy rate is 81%.
  • Average daily rate is $178.
  • Traditional median price for a rental property is about $499,000.
  • Rental demand is 77 with 83% of it for entire homes only.
  • Return on investment ratio is 3.14% which is pretty high. 
  • The total No. of active rental properties is just a few short from 1500.

2. Colorado Springs

At an elevation of 6035 feet, Colorado Springs is a municipal community in Colorado. A high cash on cash ration makes short term rental colorado springs a suitable place for investment.

  • The average occupancy rate is 81%
  • The average daily rate is $181.
  • The median price for rental property is $455,000.
  • Rental demand is 88 with 85%of it is only for entire homes.
  • Cash on cash ration is pretty higher at 4.32%

3. Boulder

Located at the foothills of the ice-covered mountain regions in northern Colorado, Boulder is the prime attraction for tourists in Colorado. Its rental data analysis reflects its importance in the Colorado market as well.

  • Traditional median price for the property is 944,950.
  • The average occupancy rate is $262.
  • Average daily rate is a staggering 83%.
  • The cash-on-cash ratio is 2.6%.
  • The average rental income is more than $ 5100. High rental income and cash-on-cash ratio are the key reasons for investing in Boulder business.

4. Breckenridge

Well known for its gold rush history, Breckenridge is located at the base of Tenmile Hills. Apart from ski resorts and alpine activities, The Breckenridge properties are also of special interest in this town.

  • The average daily rate is about $382.
  • The average occupancy rate is about 66% which will be higher in February at 86%.
  • The median property price in Breckenridge is 1,395,000
  • The return on cash ratio is around 1.16%
  • The average rental income is around $4300-5000.

5. Aspen

The home to ski resorts and all-year touring activities, Aspen is a town in Colorado. The Aspen properties and the benefits associated with it is attracting investors to this region as well. 

  • The average occupancy rate is $739.
  • The average daily rate is 55% which will be up to 75%percent during touring months.
  • Median rental property price is 3,025,000. It is one of the highest median processes among the  Colorado short term rental properties. 
  • Return on investment ratio is 1.45%.
  • Rental growth is 6% quarterly expansion. 
  • The average rental income is pretty high, about $9500-10,000.

6. Fort Collins

Fort Collins, situated in northern Colorado, is a historic city and is attracting several tourists. Therefore, The Fort Collins rental business is among the successful ones in the state. 

  • The traditional median property price is about $574,900
  • The average daily rate is $190.
  • The average occupancy is 75%.
  • ROI ratio is about 3.02.
  • Rental demand is about 75 with 81% of it for the entire home only. 

7. Frisco

Frisco is a municipality that is located in the Summit community of Colorado. It is a part of Breckenridge and a major investment place in the Colorado market. Following is the analysis of the Frisco rental data. 

  • The average occupancy rate is 56% which will be higher up to 83% in touring seasons
  • The average daily rate is almost $300.
  • The median rental property price is 1,275,000.
  • The return on cash value is about 1%.
  • The average rental income is about $3379.

Final Words

Rental data analysis of different places in the Colorado short term rental market will definitely have helped you to better understand the risks and rewards of investing in it. Furthermore, the risks associated with investing there are very rare and are masked by its rewards. So, you must buy a rental property in a suitable place in Colorado to earn bigger benefits.

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