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Denver homeowners looking to move have at least one thing going for them these days: The city’s short-term rental market is among the nation’s hottest.
That’s according to the housing analytics company Zillow, which analyzed the country’s top 50 markets and released its findings last week. Denver ranked fifth on Zillow’s list, while Oklahoma City, Miami-Fort Lauderdale, Tulsa, and Cincinnati slotted ahead of the Mile High City.
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A short-term, month-to-month rental can be a good—but risky—choice for a homeowner. Zillow reports Denver’s “mom-and-pop landlords” average $355 in monthly profits, or roughly $4,200 a year. The risk is factored in when small-time landlords—often without any background in real estate management—have to figure out how to rent their properties and then keep them occupied. Add in flaky tenants, missed payments, and potential property damages, and the short-term market can be downright frightening. “[M]ost mom-and-pop landlords are primarily concerned with whether or not they can cover their mortgage payment each month—they simply can’t absorb monthly losses like professional investors,” Zillow’s chief economist, Stan Humphries, said in a news release.
Long-term rentals—which Zillow defines as holding a property for at least six years—can be more profitable in the long-term. The five best places for long-term rentals, Zillow reports, are all in California. San Jose tops that list, followed by San Francisco, Los Angeles, San Diego, and Riverside.