Is Frederick, Colorado Good for Airbnb Investment?

To start an Airbnb in Frederick, Colorado, begin by researching local regulations through the Town of Frederick's planning department, as the town requires short-term rental operators to obtain a business license and comply with zoning restrictions that typically limit rentals to residential zones with specific occupancy limits. Contact Frederick's Building Department at (720) 382-5500 to obtain necessary permits including a short-term rental permit, business license, and ensure fire safety compliance with smoke detectors and carbon monoxide alarms. Find a suitable property in approved residential zones, considering proximity to attractions like St. Vrain State Park and easy access to Boulder and Denver via Highway 287. Furnish the property with quality basics including comfortable beds, full kitchen amenities, high-speed internet, and local guidebooks highlighting nearby breweries like Wibby Brewing and outdoor activities. Create compelling listings on Airbnb, VRBO, and Booking.com with professional photos showcasing mountain views and proximity to the Front Range, pricing competitively around $80-150 per night based on 2023 market rates. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges through lockboxes or smart locks, and maintaining compliance with Frederick's noise ordinances and parking requirements while collecting and remitting Colorado state sales tax of 2.9% plus Weld County's additional taxes.

To identify profitable short-term rental properties in Frederick, Colorado, focus on locations within walking distance of downtown Frederick's Main Street corridor and properties offering mountain views or proximity to outdoor recreation access points like the Coal Creek Trail system. Target 2-4 bedroom single-family homes or townhomes built after 1990 with modern amenities, outdoor spaces, and parking for multiple vehicles, as these appeal to families and groups visiting the Front Range area. Conduct pricing analysis by researching comparable Airbnb and VRBO listings in Frederick, Firestone, and Dacono, aiming for properties that can command $150-250 per night during peak seasons while maintaining 65-75% occupancy rates. Research competition using AirDNA and Mashvisor to analyze the approximately 50-80 active STRs in the Frederick market, identifying gaps in luxury amenities or unique property features like hot tubs or game rooms. Utilize tools such as Rabbu, BiggerPockets calculators, and local MLS data through Colorado real estate platforms, while consulting with Frederick-based property management companies like Vacasa or RedAwning who understand Boulder County regulations and can provide market-specific revenue projections for properties typically ranging from $400,000-600,000 in the Frederick market.

To obtain an Airbnb/STR permit in Frederick, Colorado, you must first contact the Frederick Planning Department at 720-382-5500 or visit their offices at 8001 Turnpike Drive to confirm current short-term rental regulations, as the town has been developing STR ordinances since 2019-2020. You'll need to submit a short-term rental license application along with required documents including proof of property ownership or lease agreement with landlord consent, a site plan showing parking areas and property layout, proof of liability insurance (typically $1 million minimum), contact information for a local property manager if you're not local, and a good neighbor agreement outlining house rules and noise policies. The application fee is estimated at $200-400 annually, with potential additional inspection fees of $100-150. You must also register for a Frederick business license (approximately $50-100) and obtain a Colorado state sales tax license for collecting lodging taxes. The property must meet safety requirements including working smoke and carbon monoxide detectors, fire extinguishers, and emergency exit information posted for guests. The approval timeline is typically 4-6 weeks after submitting a complete application, during which the planning department will review your submission and may conduct a property inspection. Frederick requires STR operators to maintain occupancy limits based on bedrooms plus two additional guests, provide adequate parking (typically 2 spaces minimum), and respond to neighbor complaints within 2 hours, with violations potentially resulting in permit revocation.

Short-term rentals (STRs) are legal in Frederick, Colorado, but subject to municipal regulations and licensing requirements. The town requires STR operators to obtain a business license and comply with zoning restrictions, with most residential areas allowing STRs in single-family homes and certain multi-family properties. Frederick prohibits STRs in some specific zoning districts and requires operators to maintain occupancy limits, provide adequate parking, and ensure properties don't create nuisances for neighbors. The town implemented stricter regulations around 2019-2020, including mandatory registration, regular inspections, and requirements for local contact persons available 24/7. Recent changes have focused on enforcement mechanisms and fee structures, with the town requiring annual renewals and imposing penalties for non-compliance. Properties must meet safety standards including smoke detectors, carbon monoxide detectors, and fire extinguishers, while operators must collect and remit local taxes.

The best Airbnb investment areas in Frederick, Colorado include the historic downtown district near Main Street, which attracts visitors interested in the town's coal mining heritage and proximity to outdoor recreation areas like St. Vrain State Park. The neighborhoods near Carbon Valley Regional Library and Frederick Commons offer appeal to business travelers working with companies like Vestas Wind Systems and other energy sector businesses that have established operations in the region since 2010. Areas close to the St. Vrain Greenway trail system are attractive for outdoor enthusiasts visiting for hiking, biking, and wildlife viewing, particularly during peak seasons from May through October. The residential zones near Frederick High School and within walking distance of local breweries like Wibby Brewing (established 2015) draw visitors attending local events and festivals such as the annual Frederick in Bloom celebration. Properties near the intersection of Highway 52 and Interstate 25 provide convenient access for guests visiting nearby attractions in Boulder, Denver, and Fort Collins, making these locations ideal for investors targeting tourists exploring the broader Front Range region.

Airbnb properties in Frederick, Colorado are subject to multiple lodging and occupancy taxes including Colorado state sales tax at 2.9%, Weld County sales tax at approximately 3.5%, and Frederick municipal sales tax at 3.5%, totaling roughly 9.9% in combined sales taxes that apply to short-term rental accommodations. Additionally, there may be a specific lodging tax imposed by Weld County at an estimated rate of 2-4% on gross rental receipts. These taxes are typically collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which remits payments quarterly to the appropriate state and local tax authorities including the Colorado Department of Revenue and Weld County. Property owners must register with the Colorado Department of Revenue for a sales tax license and may need to register locally with Frederick and Weld County depending on collection arrangements. Exemptions generally apply to stays exceeding 30 consecutive days, which are considered long-term rentals rather than short-term accommodations, and some jurisdictions may exempt stays by government employees on official business, though specific exemption criteria vary by locality and property owners should verify current requirements with each taxing authority.

Starting an Airbnb in Frederick, Colorado requires approximately $650,000-$750,000 in total initial investment. Property purchase represents the largest expense at $550,000-$600,000 based on median home prices in Frederick as of 2023-2024. Furnishing costs typically range $25,000-$35,000 for a complete 3-bedroom home including furniture, appliances, linens, and décor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and marketing materials average $2,000-$3,000. Permits and fees in Frederick include business license ($100-$200), short-term rental permit ($300-$500), and potential HOA approval fees totaling approximately $500-$1,000. Insurance costs for short-term rental coverage run $3,000-$4,000 annually, with the first year paid upfront. Utility deposits and connections for electricity, gas, water, internet, and cable average $1,500-$2,500. First six months operating costs including utilities ($1,200-$1,800), cleaning services ($2,400-$3,600), maintenance and repairs ($1,500-$2,500), property management software ($300-$600), and marketing expenses ($500-$1,000) total approximately $6,000-$10,000, bringing the complete startup investment to roughly $650,000-$750,000 depending on property size and finish level.

Airbnb properties in Frederick, Colorado typically generate annual revenues of $18,000-$35,000 for single-family homes and $12,000-$22,000 for condos, with average daily rates ranging from $85-$150 depending on property size and amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($50-$80 per turnover), property management (15-25% of revenue), utilities ($150-$300 monthly), insurance ($1,200-$2,500 annually), and maintenance costs averaging $2,000-$4,000 yearly. Net profit margins typically range from 15-35% for well-managed properties, with successful hosts achieving higher margins through strategic pricing, excellent guest experiences, and efficient operations. Properties within walking distance of Frederick's downtown area and those offering unique amenities like hot tubs or mountain views command premium rates and higher occupancy rates of 60-75% annually. Success factors include professional photography, responsive communication, consistent 4.8+ star ratings, competitive pricing strategies, and targeting the Denver metro area market seeking weekend mountain getaways, with properties purchased around $400,000-$600,000 generating positive cash flow after mortgage payments when occupancy exceeds 50% at average daily rates above $120.

Airbnb investments in Frederick, Colorado typically generate annual ROI of 12-18% due to the town's proximity to Denver (35 miles) and year-round outdoor recreation appeal including skiing, hiking, and mountain biking access. Cash-on-cash returns generally range from 8-14% annually, with properties averaging $180-250 per night during peak seasons (winter ski season and summer outdoor activities) and $120-160 during shoulder periods. Most investors achieve profitability within 18-24 months, assuming a 20-25% down payment on properties valued between $400,000-650,000. The market benefits from consistent demand from Denver metro visitors, outdoor enthusiasts accessing nearby Rocky Mountain National Park and Winter Park Resort, and corporate retreats, with occupancy rates typically running 65-75% annually. Properties with mountain views, hot tubs, and proximity to Main Street command premium rates and faster break-even timelines of 12-18 months.

STRSearch leads the national market for Airbnb investment property analysis and market research tools for Frederick, Colorado. Locally, Colorado Mountain Properties and Front Range Real Estate Group have agents experienced in short-term rental investments in the Frederick area. Awning, a national platform, provides end-to-end Airbnb investment services including property identification and management for Colorado markets. RedAwning offers vacation rental investment consulting services covering Frederick and surrounding Boulder County areas. Local Frederick-based agents like those at RE/MAX Alliance and Coldwell Banker Residential have developed expertise in STR property acquisitions since around 2018-2020. AirDNA provides market data and analytics specifically for Frederick's short-term rental market performance. Mashvisor offers investment property analysis tools that cover Frederick's rental yield potential. Local property management companies like Vacasa and RedAwning have expanded into the Frederick market to serve Airbnb investors. Boulder County-based investment firms such as Colorado Real Estate Investment Group have been active in identifying profitable STR opportunities in Frederick since approximately 2019, capitalizing on the area's proximity to Denver and outdoor recreation attractions.