An investor sends you a listing that says "Airbnb potential" and asks what it'll gross. Stop right there. Short-term rental rules in Colorado are local, they change often, and in Denver they shut out most pure investment plans. Your job isn't to forecast nightly rates. It's to make sure the buyer has an eligible property before revenue numbers drive the price. Here's the order I teach agents to work in.
The short answer
Eligibility first, revenue second. In Denver, a short-term rental license generally requires the property to be the host's primary residence, meaning the place they actually live and usually return to. Many mountain counties and towns license short-term rentals separately, and some cap the number of licenses or limit them by zone. HOAs can ban short-term rentals even where the city allows them. Verify all three for the exact address before your buyer counts a dollar of rental income.
Step by step
- Ask how the buyer will live in it. Will this be their real, full-time home? Or a second home or pure investment? The answer decides which rules apply.
- Find the right local authority. City limits, county, or a town inside the county? Each may have its own license, cap and tax registration.
- Check Denver's primary-residence rule (if it's in Denver). Denver defines primary residence as where your habitation is fixed and your usual place of return. A person has only one. Claiming the address for another purpose, like taxes, doesn't prove it by itself. See Denver's STR licensing page.
- Check the property's layout. Duplex? Each side is generally its own primary dwelling in Denver, so living in one side doesn't let you short-term rent the other. ADU? Denver's guidance has allowed someone living in the main house to rent the ADU, but not the other way around. Verify on the city's current FAQ.
- Check mountain licensing. Many resort counties and towns require a license, limit the number issued, keep waitlists, or restrict certain zones. Some licenses don't transfer to a new owner. Call the town or county licensing office.
- Read the HOA documents. Look for rental bans, minimum lease terms, rental caps, owner-occupancy rules, registration and fines. "Other owners are doing it" isn't proof.
- Confirm insurance. The insurer has to cover the actual use. In wildfire areas, that can be a separate problem. See wildfire insurance and mitigation.
- Only then, model revenue. Nightly rate, occupancy, seasonality, cleaning, platform fees, furnishings, management, licensing and lodging taxes.
- Stress-test the backup plan. If STR use fails, would the buyer still want the home, or a separately checked long-term rental plan?
What to verify, and where
| Question | Where to check |
|---|---|
| Is an STR license needed, and who qualifies? | City or county licensing office (Denver: denvergov.org) |
| Is there a cap or waitlist? | Town or county STR program page |
| Does an existing license transfer to the buyer? | The licensing office, in writing |
| Does the HOA allow it? | Current declaration, bylaws, rules and amendments |
| Is the unit legal as configured? | Permit and assessor records |
| Will it be insured for this use? | A licensed insurance agent |
| What taxes apply? | City, county and state tax offices |
Denver's rules, in plain terms
Denver's guidance has said a short-term rental is a stay of 1 to 29 days, and rentals of 30 days or more fall under different rental licensing. The host doesn't have to be home during guest stays, but the property must remain their real primary residence. The city also has said you can't rent several rooms to separate parties at the same time under separate bookings. A non-residence lodging use exists in some zones, but it's a different zoning and building path, not a shortcut. Rules change, so read the city's current page before every deal.
How to explain it to your client
"Before we talk about what this place could earn, we need to know if you can legally rent it short-term at all. In Denver, that usually means it has to be your real, full-time home. In the mountains, many towns require a license and some limit how many they give out. And the HOA can say no even if the town says yes. Let's verify those three things for this exact address. If it passes, we'll run the numbers. If it doesn't, we'll know before you've paid extra for income you can't earn."
Watch-outs
- "Airbnb potential" proves nothing. Treat it as a reason to investigate.
- Seller's history isn't your buyer's license. Reviews and a past license may not transfer.
- Future ADU income isn't a current feature. Don't let a buyer pay for a unit that doesn't exist yet.
- Don't swap in long-term rent blindly. A failed STR plan doesn't automatically make a good long-term rental.
- Don't waive protections for a projection. Keep inspection and other deadlines.
- Fair housing. Talk about the property and the rules. Don't describe who the guests or neighbors "should" be.
- Not legal or tax advice. Licensing, zoning and tax questions go to the local office, an attorney or a CPA.
Further reading
This is training for real estate agents. It isn't legal, tax or lending advice. Check with your managing broker.
Questions
Can my buyer purchase a Denver house just to run it as an Airbnb?
Not under Denver's regular short-term rental license if it won't be their primary residence.
Can they live in one side of a duplex and short-term rent the other?
Denver's guidance says no under the normal rule. Each side is its own primary dwelling.
Can an HOA ban short-term rentals the city allows?
Yes. Read the current HOA documents.
Do mountain towns limit STR licenses?
Many license them and some cap or zone them. Check the specific town or county.
Does the seller's STR license transfer?
Don't assume it does. Confirm in writing with the licensing office.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.