Market Performance Overview

Denver’s short-term rental market demonstrates solid performance metrics that continue to attract investment:

• Average Daily Rate (ADR): $150-275 for standard properties, with luxury properties commanding $350-1,500+
• Average Occupancy: 68-75% for professionally managed properties (10% higher than self-managed)
• Typical Revenue Range: $25,000-75,000 annually depending on property size, location, and management quality
• Average Cap Rate: 5.8-7.5% for well-located properties (significantly outperforming long-term rentals)

Neighborhood Performance Analysis

Downtown/LoDo/RiNo

Urban core neighborhoods attract business travelers and tourists seeking walkable amenities. Properties here command premium weekday rates due to business demand but face increasing competition. Average nightly rates range from $140-250 for one-bedroom units and $225-400 for two-bedroom properties, with occupancy averaging 72-78%.

Cherry Creek/Washington Park

These upscale residential areas attract luxury travelers with higher average daily rates ($200-350) but slightly lower occupancy (65-70%). These areas show strong weekend performance but may experience weekday softness outside peak seasons.

Highlands/LoHi/Berkeley

These trendy neighborhoods offer strong performance with balanced demand from both business and leisure travelers. Properties here achieve balanced occupancy throughout the week with nightly rates from $150-275 and occupancy rates of 70-75%.

Denver Foothills (Evergreen, Morrison, Golden)

The foothills communities represent some of the strongest performing areas for short-term rentals, with weekend rates often double weekday rates. These properties see extremely strong seasonal performance with summer and winter peak seasons. ADRs range from $175-450 with luxury mountain homes commanding $500-1,500+.

Regulatory Environment

Denver’s short-term rental regulations remain relatively stable in 2023 after significant changes in previous years. Key requirements include:

• Property must be owner’s primary residence (with exceptions for certain areas)
• Business license required ($25 application fee plus annual renewal)
• Lodger’s tax collection (10.75% of rental amount)
• Liability insurance requirement (minimum $1 million coverage)

Note that regulations differ in surrounding communities like Evergreen, Morrison, and Golden, which often have less restrictive primary residence requirements, making them attractive for investment properties.

Investment Opportunity Analysis

Current investment opportunities in Denver’s short-term rental market include:

Emerging Neighborhoods

Areas like West Colfax, Sloan’s Lake, and Overland show strong appreciation potential with increasing short-term rental demand as travelers seek authentic experiences beyond traditional tourist areas.

Accessory Dwelling Units (ADUs)

Denver’s continued relaxation of ADU regulations creates opportunities for property owners to develop separate rental units on existing residential properties, creating strong ROI potential with relatively lower capital requirements.

Mountain-Adjacent Properties

Properties in foothills communities continue to show excellent investment metrics due to their unique position offering mountain experiences with city proximity. These areas typically fall outside Denver’s primary residence requirement, allowing for pure investment purchases.