By Samantha Prust

 With companies like Airbnb, VRBO and HomeAway, houses have replaced hotels as the way to stay, especially for younger generations. For stays of less than 30 days, vacation rentals, also called short term rentals (STRs), fill a niche for everyone, from an extra bedroom in a retiree’s house for singles or couples to a whole house for any size family. The growing STR trend has homeowners and investors paying attention, as well as neighbors, home buyers, the hotel industry and city leaders.

Regulating these properties is a balancing act. Homeowners and investors want to cash in, nearby homeowners want to preserve their neighborhood’s character, city leaders want to ensure properties are safe for their intended use and collect taxes for such use, home buyers want a wide selection of homes to choose from at prices that accurately reflect the residential market, the hotel industry wants to retain customers, and travelers want more affordable options with unique character and more amenities.

If you’re staying a night or two, a hotel works. But if you have a large group of people staying more than two nights, hotels can quickly break the bank. For example, one family celebrated their parents’ 50th wedding anniversary last December at a beautiful house in Florida with a lanai opening onto a pool area complete with hot tub. The house slept 10 adults, and the price per night was $667—about $67 per person per night. Most hotels cannot match the price and amenities.

But what about the neighbors? Do they care that the house next door provides a revolving door for strangers “moving in” for a few days, a week or a month? As a homeowner, you may think you wouldn’t mind as long as the guests weren’t loud, but you also don’t want it to be a free-for-all where every house on your street is bought by investors and suddenly you are in a commercial hotel zone.

Season Doty, of Loveland, owns five properties, two of which are STRs. When she converted her first long-term rental to short-term, she asked her neighbors how they felt about it. They did not mind, they said. In fact, their adult children bought the home on the other side of Doty’s to operate as an STR as well.

Doty says the STR market can be a money maker, although it requires the up-front cost of outfitting it with all the amenities, from coffee cups to coffee tables. One property, previously rented at $1,150 with a long-term tenant, now averages over $2,000 a month as an STR. And, because of the frequent maintenance and cleaning, the house stays in pristine shape, Doty says.

The downside, however, is that Doty has to be available to her STR tenants practically 24/7. So far, the pros outweigh the cons, and she is getting ready to list her second STR. Loveland’s wide-open STR regulations make it a good investment.

There are arguments on both sides, however. Nobody wants to infringe on homeowners’ rights or impede their ability to get top dollar for their home’s occupancy or sale, but they also want to ensure the safety and integrity of their neighborhoods. The city of Denver has seen STR licenses increase 95 percent in the last two years, according to Denver’s Business Licensing Center, along with more and more complaints from neighbors.

Denver City Council tightened its restrictions on STRs in April 2019 and has proposed further restrictions for 2020 (denvergov.org). Denver STR licensees are now only allowed to rent out their primary residence in Denver.

Season Doty’s First Street Loveland short-term rental.

Denver City Council tightened its restrictions on STRs in April 2019 and has proposed further restrictions for 2020 (denvergov.org). Denver STR licensees are now only allowed to rent out their primary residence in Denver.

One argument for more regulation of STRs is that they can negatively affect real estate. The 2018 City of Greeley Strategic Housing Plan states the affects on real estate, in addition to other reasons, for keeping a check on STRs: “The lack of regulations, enforcement, and city oversight results in lost tax revenue. Improper siting of these facilities can affect neighborhood livability with negative impacts on traffic, maintenance, and noise. There is also possibility that short-term rentals can reduce the city’s housing stock and contribute to a low vacancy rate and higher housing prices.” Brett Pavel of the Brett Pavel Group, Fort Collins, says, “My own experience has been that those areas where zoning allows [STRs] has inflated sales prices. Last winter, I had a little cabin in Lyons [for sale] and received over 20 calls from brokers asking me if short-term leasing was allowed. It wasn’t, but if it had been, the price would have been much higher.”

Pavel’s daughter is attending university abroad and has noticed that short-term leasing has had a significant effect on housing availability in several cities. “But I am not aware of any big impact on availability locally,” he adds.

Travis Annameier with C3 Real Estate Solutions, based out of Fort Collins, agrees that a high volume of STR sales can reduce the availability of long-term rentals. “But so far that hasn’t happened here,” he says, echoing Pavel’s perspective that such an issue has not affected the Front Range, at least not yet.

Besides the possible looming effect on real estate, a common concern with city leaders is the safety of STR guests, and these concerns have spurred some city leaders to enact regulations to ensure compliance with fire safety codes. According to the Larimer County website, the Larimer County Board of County Commissioners approved STR regulations starting in September 2019 to “provide consistent application of review criteria, streamline the land use approval process, and ensure the structures are safe for the public to use.”

Annameier sees the issue from both a personal and a real estate perspective. “In general, I’m going to support regulations that allow folks to have freedom as to what they can and can’t do with their properties, but I’m also fine with licensing because from a public safety standpoint, that makes sense. It also makes sense that the city is collecting taxes on the revenue earned from STRs.”

But he also wonders if regulations are being fairly applied to STRs. “I can understand the public safety standpoint for STR regulation and licensing, but I think the requirements Fort Collins has put into place are far too restrictive there, especially when it comes to multi-family properties and condos, which are nearly impossible to get a short-term rental license on right now,” he says.

He explains: “Nearly all condos are unable to be used as an STR and the argument is that it’s a fire code issue due to having to egress out in the case of an emergency, even if it is a one bedroom, ground-unit condo with an exterior exit/entrance. Yet, a large six-bedroom house can get a short-term rental license with no problem. That doesn’t make sense to me.”

In addition, STRs are allowed in more commercial areas or on the edges of those areas, but outside of that, you can’t operate an STR in Fort Collins unless it was registered before the new laws took effect. “The map shows very few places where new STRs are allowed,” says Annameier. Find the zoning map at fcgov.com/shorttermrentals/str-address-lookup.

From city to city across the Front Range, a complex picture of the issue emerges, and city leaders are proposing laws to help keep the peace. Julie Maxwell of Hub Real Estate has some solid advice.

“It can be difficult for homeowners and potential buyers, since the restrictions and requirements for STRs in different towns and neighborhoods resemble a patchwork quilt,” says Maxwell. “The only way to be sure if they are allowed is to check with the relevant municipality. For buyers expecting that they will be able to use their new property as an STR, it is vital that they do their own research, rather than rely on the assurance of the previous owner.”

Short-Term Rental Rules by City and County

Denver
A license is required to operate an STR, and the STR must be your primary residence. For more information about operating an STR in Denver, visit tinyurl.com/yx6jxmcz.

Larimer County
Requires approval and a permit to operate an STR, with a distinction between small short-term rentals (10 or fewer guests) and large short-term rentals (11 or more guests). For more information on STRs
in Larimer County,
visit www.larimer.org/planning/short-term-rentals-str.

Fort Collins
Requires an application and fee to operate an STR, but has zoning restrictions for where STRs may operate. For more information, visit fcgov.com/shorttermrentals.

Loveland
Requires STR owners to collect and remit sales tax. For more information, see www.cityofloveland.org/home.