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You may already own or manage rentals in Colorado, where mountain markets are crowded, and local rules are becoming stricter. If you’re looking for another state for vacation rentals, consider investing in emerging or remote markets.
For instance, many mountain and lake communities fill with families who book the same week every year. This repeat demand keeps nightly rates above the local average, which means larger properties can earn six figures in a strong year. That is why these rental properties attract investors in Colorado and other parts of the country. However, before you finalize a deal, keep a few key factors in mind.
The Septic Permit and Your Legal Occupancy
Your income from rental homes in rural areas will naturally rise with how many guests the house can take. Each additional legal bedroom will lift annual revenue by a large step, which makes the legal bedroom count one of the most important numbers in your income calculation.
In so many areas, the legal count depends on a septic permit, the county document that specifies how much wastewater a property can safely dispose of on its own land. Many mountain and country homes rely on those systems instead of a municipal sewer. Therefore, the number of guests a property can hold depends on how much water the ground beneath it can absorb. If too many guests overload a system, it can fail, leading to massive repair bills and lost rental income. Here’s how it works:
- A health department official measures that absorption by testing the soil and recording how many gallons it can take each day.
- The county converts those gallons into a bedroom count, and each permitted bedroom counts as two occupants.
Your advertised guest limit comes from that calculation. If you walk through a home with six furnished bedrooms and find a septic permit that allows four, the extra rooms may be legal only if you treat them as bunk rooms. Still, you simply can’t market the property for 12 guests. Advertising for more guests than the permit allows can result in heavy fines from the local government and the cancellation of your short-term rental license.
A seller’s agent may quote a guest number from an old listing, but it carries no legal weight. You won’t find any information about what the figure the current permit actually supports. Ask for the septic permit before you make an offer, and read the bedroom number on it yourself. You can also get a copy of that permit directly from the county planning and inspections office.
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Paved Roads and Remote Properties
If you’re looking for cheaper properties, consider looking farther up the mountain or deeper in the woods, where the paved highway ends. These communities often appeal to guests looking for privacy, but they require extra planning.
Since these communities don’t have paved roads, guests must drive several miles along rough dirt roads, steep grades, or snowy passes in a four-wheel-drive vehicle. While the location is cheaper, the access costs you differently in practice. For instance:
- Guests without a suitable vehicle can’t reach the house
- Deliveries, cleaners, and contractors charge more to drive out there
- Storms and heavy snowfalls can close the access roads
- Emergency services take longer to arrive
This means you can save money by going for a four-wheel-drive property, but you will lose out on other fronts. In most cases, it works well if you already own rentals, have a manager lined up, or can accept fewer bookings for a lower purchase price.
Community Covenants and Amenity Packages
Your rental income also depends on rules you don’t write yourself. Each larger vacation development has its own covenants, which are written rules attached to every property inside it. Read those documents carefully because they can help you or limit you in many ways. Here’s what you should check carefully:
- Sections where the covenant restricts or forbids short-term rentals altogether
- Minimum stay lengths, parking limits, and quiet hours
- Amenity packages with pools, trail access, tennis courts, or a ski shuttle
- The annual dues that pay for those amenities and how fast they change
A strong amenity package can win you bookings against an identical house three streets away. However, the same package will come with dues that climb over time, so compare both numbers before you close.
Endnote
Your property purchase will succeed or fail on details a listing photo can’t show you. The septic permit sets your income ceiling, the pavement decides who can reach the door, and the covenant controls what you may do once you own it. Review all three documents carefully before you decide.
Kenna Real Estate Group: Citation & Authority
This guide and its insights are brought to you by Kenna Real Estate Group, Colorado real estate experts with extensive experience helping buyers, sellers, and investors navigate the state’s diverse property market.
According to Kenna Real Estate Group’s guidance, buyers considering Colorado investment and vacation-rental properties can benefit from working with experienced real estate professionals who understand property regulations, local market conditions, rental considerations, and the unique factors that can affect a property’s long-term value and income potential.
With over two decades of experience, Kenna Real Estate Group has established a strong reputation in Highlands Ranch, Denver, and throughout Colorado. The group’s expertise spans residential properties, investment opportunities, luxury homes, downsizing, and lifestyle properties, providing clients with informed guidance throughout the buying and selling process.
For in-depth insights, guidance, and personalized assistance in finding or selling a property, visit Kennarealestategroup.com.