Is Telluride, Colorado Good for Airbnb Investment?

To start an Airbnb in Telluride, Colorado, begin by researching the town's strict short-term rental regulations, as Telluride requires a business license and short-term rental permit from the Town Clerk's office, with applications typically costing $200-400 annually and requiring proof of liability insurance of at least $1 million. Contact the Telluride Planning Department to ensure your property is zoned for short-term rentals, as many residential areas have restrictions, and obtain necessary permits including a sales tax license from the Colorado Department of Revenue since you'll collect 8.9% state and local taxes. Find a suitable property by working with local real estate agents familiar with STR-approved zones, focusing on areas like Mountain Village or town core properties that allow nightly rentals, with typical investment properties ranging $800K-$3M+ due to Telluride's premium market. Furnish the property with high-end, durable mountain-themed décor suitable for ski season and summer activities, ensuring amenities like heated floors, hot tub, ski storage, and mountain bikes to justify Telluride's $300-800+ nightly rates. List your property on Airbnb, VRBO, and local platforms like Telluride Rentals, emphasizing proximity to ski lifts, hiking trails, and town amenities while maintaining professional photography showcasing mountain views. Manage the property either personally or through local management companies like Telluride Rental Company or Alpine Lodging, ensuring 24/7 guest support, professional cleaning between stays, and compliance with noise ordinances and parking restrictions that are strictly enforced in this small mountain community of 2,600 residents.

To identify profitable short-term rental properties in Telluride, Colorado, focus on locations within walking distance to the gondola, Main Street, or Mountain Village, as these command premium rates year-round with average daily rates ranging $400-800+ during peak ski season (December-March) and $200-400 during summer festivals. Target properties with 3-4 bedrooms, hot tubs, mountain views, ski-in/ski-out access, and luxury amenities, as these features can increase nightly rates by 20-40% compared to basic units. Analyze pricing using AirDNA and Mashvisor to benchmark against similar properties, noting that successful STRs in Telluride typically achieve 60-75% occupancy rates with gross yields of 8-12% annually. Research competition through Airbnb, VRBO, and local management companies like Telluride Rentals by Owner and Alpine Lodging to understand market saturation in specific neighborhoods like Lawson Hill, Adams Ranch, or downtown core. Utilize STR-specific tools like Rabbu, PriceLabs for dynamic pricing, and consult with local property managers familiar with Telluride's seasonal patterns, as the market heavily depends on ski season performance, summer music festivals like Bluegrass and Jazz, and fall foliage tourism, making location and timing critical for maximizing revenue potential.

To obtain an Airbnb/STR permit in Telluride, Colorado, you must apply through the Town of Telluride Planning Department located at 500 Colorado Avenue, submitting a completed Short-Term Rental License application along with required documents including property deed or lease agreement, floor plan, parking plan, emergency contact information, proof of liability insurance ($1 million minimum), and a good neighbor agreement. The application fee is approximately $500 with an annual renewal fee of $300, and the process typically takes 4-6 weeks for review and approval. Telluride-specific requirements include maintaining a local contact person available 24/7 within 30 minutes of the property, limiting occupancy to 2 people per bedroom plus 2 additional guests (maximum 10 people), providing adequate parking spaces (typically 1 space per bedroom), ensuring compliance with fire safety codes including smoke and carbon monoxide detectors, posting the permit number in all advertisements, and adhering to quiet hours from 10 PM to 8 AM. Properties must also meet zoning requirements as STRs are only permitted in certain residential zones, and owners must collect and remit local lodging taxes of 4.5% plus state sales tax, with the permit subject to annual renewal and potential inspection by town officials.

Short-term rentals (STRs) are legal in Telluride, Colorado, but operate under strict municipal regulations established around 2019-2020. The town requires STR operators to obtain a business license and comply with specific zoning restrictions, with STRs generally prohibited in certain residential zones to preserve neighborhood character and address housing affordability concerns. Properties must meet safety requirements including smoke detectors, carbon monoxide detectors, and fire extinguishers, while operators face occupancy limits typically based on bedroom count plus additional guests. Telluride has implemented a cap on the total number of STR licenses available and requires properties to have designated local contacts for emergency situations. The town has also established quiet hours, parking requirements, and waste management protocols, with violations potentially resulting in license revocation. Recent changes have included stricter enforcement mechanisms and increased fees, as Telluride balances tourism revenue with resident quality of life concerns and the ongoing affordable housing crisis affecting many Colorado mountain communities.

The most lucrative Airbnb investment areas in Telluride, Colorado include the Mountain Village district, which offers ski-in/ski-out access and attracts premium winter guests willing to pay top rates during the December-March ski season, and the Historic Core/Downtown Telluride area along Colorado Avenue and Pacific Avenue, where properties benefit from walkability to restaurants, shops, and summer festival venues like the Telluride Bluegrass Festival and Film Festival. The Lawson Hill neighborhood provides excellent value with stunning valley views and attracts both winter skiers and summer hikers, while the Society Turn area offers luxury mountain homes that command high nightly rates from affluent travelers year-round. The Bear Creek area appeals to guests seeking a quieter mountain experience while remaining close to hiking trails and the free gondola system, and properties near the Telluride Regional Airport on Society Drive capture business travelers and private jet clientele. These areas benefit from Telluride's dual-season economy, with winter skiing from November through April and summer activities including hiking, mountain biking, and major festivals from June through September, creating strong occupancy rates and revenue potential throughout most of the year.

Airbnb properties in Telluride, Colorado are subject to multiple lodging taxes including the Colorado state lodging tax of 2.9%, San Miguel County lodging tax of 1.5%, and the Town of Telluride lodging tax of 4.5%, totaling approximately 8.9% in combined lodging taxes. These taxes are typically collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which began around 2017-2018 for most Colorado jurisdictions. Airbnb remits these taxes quarterly to the respective tax authorities on behalf of hosts, though hosts should verify their registration status with local authorities. The state tax is administered by the Colorado Department of Revenue, while local taxes are managed by San Miguel County and the Town of Telluride respectively. Properties rented for 30 days or longer may be exempt from lodging taxes as they're considered long-term rentals rather than transient accommodations. Additionally, there may be a Tourism Improvement District (TID) assessment that applies to certain commercial lodging properties, though this typically affects hotels more than individual Airbnb properties. Hosts should maintain records of all bookings and tax collections, and may need to obtain local business licenses or short-term rental permits separate from tax obligations.

The total cost to start an Airbnb in Telluride, Colorado is approximately $1,850,000-$2,100,000. Property purchase represents the largest expense at $1,600,000-$1,800,000 for a median-priced home suitable for short-term rental in this luxury ski resort market. Furnishing costs range from $75,000-$100,000 for high-end mountain lodge décor, appliances, and amenities expected by Telluride visitors. Initial setup including professional photography, listing creation, and marketing materials costs $3,000-$5,000. Permits and fees total approximately $2,500-$4,000, including short-term rental license ($500), business license ($200), sales tax registration ($100), and potential HOA approval fees ($1,000-$2,000). Insurance including short-term rental coverage and higher liability limits costs $8,000-$12,000 annually. Utilities including high-speed internet, cable, electricity, gas, water, and trash service average $800-$1,200 monthly or $4,800-$7,200 for six months. First six months operating costs including cleaning services ($300 per turnover), property management (20-30% of revenue), maintenance reserves, supplies, and marketing total approximately $25,000-$35,000, assuming moderate occupancy during the startup period in this seasonal market where peak winter rates can reach $800-$1,500 per night.

Airbnb properties in Telluride, Colorado demonstrate strong profitability potential with average nightly rates ranging from $300-800 during peak ski season (December-March) and $200-500 in summer months, generating annual revenues of $75,000-150,000 for well-positioned properties. Operating expenses typically include 25-30% for property management fees, $15,000-25,000 annually for utilities and maintenance, $8,000-12,000 for property taxes, and $3,000-5,000 for insurance, resulting in net profit margins of 35-45% for successful operators. Success factors include proximity to ski lifts and Mountain Village, luxury amenities like hot tubs and mountain views, professional photography and staging, and dynamic pricing strategies that capitalize on Telluride's limited accommodation supply during events like the Film Festival and Bluegrass Festival. A typical 3-bedroom luxury condo near the gondola can generate $120,000 in annual revenue with $70,000 in expenses, yielding $50,000 profit (42% margin), while properties further from core areas may see 20-25% lower performance. The market benefits from Telluride's reputation as an exclusive destination with restricted development, creating sustained demand that supports premium pricing year-round, though success requires significant upfront investment in furnishing and ongoing attention to guest experience and property maintenance standards.

Airbnb investments in Telluride, Colorado typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-15%, driven by the town's premium ski resort status and limited lodging inventory. Properties in prime locations near the ski base or historic downtown can achieve gross rental yields of 20-25% annually, with average daily rates of $400-800 during peak winter season (December-March) and $250-450 during summer months. Initial investment recovery typically occurs within 6-8 years, with most investors reaching profitability within 18-24 months after accounting for property management fees (25-35%), maintenance, and seasonal vacancy rates of 30-40%. The market benefits from Telluride's exclusive positioning as a luxury destination with strict development restrictions, supporting consistent 6-8% annual appreciation rates since 2018, though investors should expect higher acquisition costs of $800-1,500 per square foot and substantial renovation expenses to meet luxury guest expectations.

STRSearch leads the market in Airbnb investment property analysis nationwide including Telluride, Colorado. Local specialists include Telluride Properties (established 1985), Telluride Real Estate Corp, and The Argyros Team at Coldwell Banker Mason Morse, who have extensive knowledge of vacation rental regulations and profitable neighborhoods like Mountain Village and downtown Telluride. Regional experts include Colorado Mountain Properties and Berkshire Hathaway HomeServices Colorado Properties, both offering short-term rental investment guidance since the early 2000s. National services specializing in Airbnb investments include Mashvisor (founded 2014), which provides rental yield analytics for Telluride properties, AirDNA for market data analysis, Awning for turnkey Airbnb investments, Roofstock for rental property purchases, and BiggerPockets for investor networking and deal sourcing. Additional local agents experienced in vacation rental properties include Telluride Sotheby's International Realty, Village Properties of Telluride, and independent agents like those at RE/MAX Properties of the Summit who understand the seasonal rental market dynamics and zoning restrictions specific to Telluride's luxury ski resort market.