Denver, Colorado is a hotbed for rental income opportunities, thanks to its booming population, outdoor lifestyle, strong job market, and vibrant tourism scene. Whether you’re looking to rent long-term to residents or short-term to visitors, Denver offers great potential for real estate income. This beginner’s guide explains how to get started with rental income in Denver, including legal requirements, investment strategies, and profitability tips.
Why Denver is a Great Market for Rental Income
- Population Growth: One of the fastest-growing large cities in the U.S., with strong migration from California, Texas, and the Midwest.
- Strong Rental Demand: High housing costs and a large millennial population mean many residents choose to rent instead of buy.
- Tourism & Outdoor Attractions: Denver draws millions of tourists annually, especially for skiing, hiking, and breweries — fueling demand for short-term rentals.
- Diversified Economy: Tech, healthcare, aerospace, and government jobs keep Denver’s rental market strong and resilient.
Top Rental Income Strategies in Denver, CO
1. Long-Term Residential Rentals
Buy a condo, single-family home, or duplex in neighborhoods like Capitol Hill, Berkeley, or Washington Park and rent to tenants on 12-month leases. This strategy offers steady income with less turnover.
2. Short-Term Rentals (Airbnb, Vrbo)
Denver has a profitable short-term rental market, especially in Downtown, LoDo, and RiNo. However, the city has strict rules requiring STRs to be owner-occupied (primary residence only) — making compliance a key factor.
3. House Hacking and ADUs
Live in one unit and rent the other (e.g., duplex, basement suite, or garage apartment). Denver allows Accessory Dwelling Units (ADUs) in certain zones, offering excellent opportunities for extra income.
4. Student Rentals
University of Denver and Metropolitan State University attract thousands of students each year. Properties in University Park and South Denver can be rented by the room or per unit for strong returns.
5. Corporate and Mid-Term Rentals
Traveling nurses, consultants, and digital nomads look for fully furnished stays of 1–6 months. Focus on units near hospitals, downtown offices, or the Denver Tech Center for consistent bookings.
Legal Requirements for Landlords in Denver
- Residential Rental License: As of 2023, all landlords must obtain a Residential Rental Property License from the City and County of Denver for long-term rentals.
- Short-Term Rental License: Only primary residences are eligible. Hosts must live in the property for at least 183 days per year and obtain a license through Denver’s Department of Excise and Licenses.
- Zoning Compliance: STRs and ADUs are permitted only in specific residential zones. Verify before listing or buying.
- Sales and Lodging Tax: STRs must collect and remit:
- Denver Lodger’s Tax (10.75%)
- State and local sales tax (8.81%)
- Lease Compliance: Leases must follow Colorado landlord-tenant law, including rules on deposits, notices, habitability, and eviction.
Estimated Monthly Rental Property Costs in Denver
| Expense Category | Monthly Cost Estimate |
|---|---|
| Property Taxes | $200 – $800 |
| Landlord or STR Insurance | $60 – $150 |
| Repairs & Maintenance | $100 – $300 |
| Property Management | 8% – 12% of rental income |
| STR Licensing & Lodger’s Tax Filing | $50 – $200/year (plus monthly taxes) |
Best Neighborhoods in Denver for Rental Income
- Capitol Hill: Densely populated with renters, great for long-term investments.
- RiNo (River North Art District): Trendy and popular for STRs and furnished rentals.
- Berkeley: Up-and-coming with good appreciation potential.
- Washington Park: Desirable area for family rentals and mid-term leases.
- City Park: Great for Airbnb or student housing near hospitals and universities.
Tax Benefits for Denver Landlords
Rental income in Colorado is subject to both federal and state income tax. However, landlords can deduct a wide range of expenses, including:
- Mortgage interest
- Depreciation
- Property taxes and insurance
- HOA dues and utilities (if paid by landlord)
- Repairs, legal, and management fees
Short-term rental owners must also register and remit lodging and sales taxes regularly.
Tips for Maximizing Rental Income in Denver
- Understand Licensing Rules: Non-owner-occupied STRs are prohibited. Consider ADUs or long-term rentals for investment properties.
- Target High-Growth Areas: Invest in neighborhoods with development projects and public transportation access.
- Furnish Mid-Term Rentals: A 1–3 month lease term often yields more than long-term rates without STR restrictions.
- Use Local Property Managers: Especially for STR compliance and marketing on Airbnb or Vrbo.
Conclusion
With high rental demand, economic diversity, and a strong tourism draw, Denver is an ideal city for generating real estate income — especially for those who follow city-specific licensing laws. Whether you’re house hacking a duplex, offering furnished rentals downtown, or converting an ADU in Berkeley, there are plenty of profitable paths for beginners to succeed in Denver’s rental market.
Need help with STR licensing, business registration, or rental tax compliance in Colorado?
Contact PEAK Business Consultancy Services — your trusted partner for setting up and managing rental income investments in Denver, CO.
