Thinking about buying a condo in LoHi and wondering if it will actually perform as an investment? You are not alone. LoHi’s walkability, dining, and quick commute to downtown make it a favorite with renters and buyers, but returns depend on the specific building, HOA, and your rental strategy. In this guide, you will learn what drives rents in LoHi, how to underwrite a condo, what rules to check, and how to decide between long‑term and short‑term rental use. Let’s dive in.
Why LoHi draws renters
LoHi sits next to downtown Denver and offers a dense mix of restaurants, nightlife, and daily conveniences. These amenities support strong rent and resale demand compared to the broader metro. The neighborhood includes older conversions, historic rowhouses, and newer condo buildings, which means pricing and rents vary widely by unit size, age, and amenities.
Renter demand typically skews toward young professionals, singles and couples. One‑bedrooms and two‑bedrooms often see the most consistent interest from this group. If you match the right unit features to this tenant profile, you can improve rentability and reduce vacancy.
Rent comps that actually matter
Good underwriting starts with solid comps. Local MLS rental listings are the most accurate for current asking rents. Aggregators can help with trend context, but always verify against live listings and recent leases.
When you build your comp set, match on:
- Unit type and size, including bedrooms, bathrooms, and square footage.
- Floor level and building type, for example walk‑up versus elevator building.
- Parking and storage, assigned garage spaces and storage often command a premium in LoHi.
- Lease terms and concessions, prioritize achieved rents over listings with heavy move‑in specials.
If you are evaluating short‑term rentals, use platform calendars to sample nightly rates and apply a realistic 12‑month occupancy. Include cleaning, utilities, supplies, platform fees, and lodging taxes to get to effective revenue.
HOA dues and building risk
HOA dues in LoHi vary by building age and amenity level. Newer luxury buildings often have higher dues. Since HOA dues hit your operating expenses directly, they can materially compress your net operating income and your cap rate. For smaller condos, HOA dues can be the largest line item after your mortgage and taxes.
Complete these HOA checks before you commit:
- Review the current budget and operating cash flow.
- Review the reserve study and funding level, low reserves increase special assessment risk.
- Ask about pending or recent special assessments and litigation.
- Confirm what dues cover, such as water, heat, building insurance, and maintenance.
Parking and storage premiums
Assigned indoor parking and secure storage add both rent and resale value in LoHi. Units without parking can face slower absorption or require tenants to rent spaces elsewhere. Quantify the premium by comparing rent comps with and without parking and by reviewing recent sales in the same building.
Insurance and the master policy
Understand the HOA’s master insurance policy. Many condo owners carry an HO‑6 policy for interior finishes, personal property, and to cover master policy deductibles. Replacement costs and underwriting shifts after 2020 have pushed premiums higher in many markets, so get quotes early.
Financing and condo project approval
Lenders often require condo project approval. Common restrictions include investor concentration limits, litigation, or inadequate reserves. Conventional programs can be strict on project standards. Portfolio lenders or local banks may be more flexible, but often at higher rates. If you plan to house‑hack, owner‑occupant loans usually offer better rates and lower down payments than investor loans.
STR rules and HOA restrictions
Denver requires short‑term rental hosts to register or permit and remit lodging taxes. The city has tightened rules in recent years, and updates occur periodically. Even if municipal requirements are met, many HOAs restrict STRs with owner‑occupancy requirements or minimum lease terms. Always confirm the most current municipal guidance with the City and County of Denver and review your HOA’s covenants, bylaws, and rental policies before assuming STR eligibility.
Run the numbers with simple metrics
To keep your analysis consistent across buildings and strategies, start with these core metrics:
- Net Operating Income, NOI, equals gross potential rent plus other income minus vacancy and operating expenses, exclude the mortgage.
- Cap Rate equals NOI divided by purchase price, a financing‑agnostic yield.
- Cash‑on‑Cash Return equals annual pre‑tax cash flow divided by cash invested.
- Debt Service Coverage Ratio, DSCR, equals NOI divided by annual debt service.
- Gross Rent Multiplier, GRM, equals purchase price divided by gross scheduled rent.
Interest rates affect your returns even if the cap rate formula does not include debt. Higher rates increase mortgage payments, reduce cash‑on‑cash returns, and can lead to cap rate expansion in market pricing, which may pressure values.
A quick sensitivity example
Here is an illustrative scenario to show how small changes can swing outcomes. Assume a $400,000 purchase, $2,200 monthly rent, 6 percent vacancy, and $8,000 annual operating expenses. In this case, NOI would be about $16,768 and the cap rate about 4.2 percent. If HOA dues rise by $150 per month, NOI could fall to roughly $14,968 and the cap rate to about 3.7 percent.
If you finance the same purchase at a higher interest rate and the same loan‑to‑value, your annual debt service increases, and your cash‑on‑cash return falls, even though the cap rate itself does not change. For condos with lower absolute NOI, modest shifts in HOA dues, vacancy, or rates can flip cash flow from positive to negative.
Long‑term rental vs STR
Short‑term rentals can produce higher gross revenue, but they also come with higher turnover costs, platform fees, utilities, supplies, and seasonality. Management can run about 20 to 35 percent of gross for full service. For STR to work, you need HOA and municipal approval, realistic occupancy assumptions based on 12‑month data, and a full accounting of extra operating costs and lodging taxes.
Long‑term rentals typically have lower turnover and simpler management. For LoHi investors who want steadier income and reduced operational intensity, a well‑priced one‑ or two‑bedroom with parking can be a practical path.
Your pre‑offer due diligence
Use this checklist to lower risk and improve outcomes:
- Rent and STR comps
- Pull active and recently leased MLS rentals in the same building and nearby.
- Sample STR calendars and nightly rates for similar units and apply realistic occupancy.
- HOA and building
- Get CC&Rs, bylaws, recent meeting minutes, budget, reserve study, insurance, and litigation disclosures.
- Ask about special assessments, deferred maintenance, and planned elevator or roof projects.
- Confirm investor‑owned percentage and rental caps.
- Financials and expenses
- Verify utilities responsibility by line item, owner versus tenant.
- Get the current property tax bill, insurance quotes, and HOA breakdown.
- Model conservative vacancy and rent growth.
- Regulatory and parking
- Confirm Denver STR registration and lodging tax obligations.
- Check any parking permit zones that affect tenant demand.
- Review zoning and any short‑term rental caps.
- Financing and inspection
- Pre‑qualify with a lender that reviews similar condo projects.
- Confirm house‑hacker loan options versus investor financing and DSCR requirements.
- Inspect for noise exposure, HVAC age, plumbing and electrical condition, and water intrusion.
Pros and cons for LoHi condos
Consider these tradeoffs as you decide if a LoHi condo fits your goals:
- Pros
- Strong neighborhood amenities and walkability that support rent and resale demand.
- Consistent demand for urban one‑ and two‑bedroom units.
- Potential for higher rent per square foot than broader Denver.
- Cons
- High or rising HOA dues and special assessments can compress NOI.
- HOA rules may restrict rentals and STR activity.
- Financing constraints and investor caps can limit your buyer pool at resale.
- Small units have lower absolute NOI, which increases sensitivity to expenses and rates.
- Parking and storage scarcity can reduce rentability without a solution.
Bottom line
A LoHi condo can be a solid investment if you buy the right unit, in the right building, with realistic numbers. Focus on verified rent comps, HOA health, parking, and current STR and lending rules. Build a conservative pro forma and stress test for interest rates, HOA changes, and vacancy.
If you want help sourcing the strongest buildings and running side‑by‑side scenarios for long‑term versus STR, reach out to Chriss Bond. You will get neighborhood‑driven guidance, lender and property management referrals, and a smooth, full‑service experience from search to close.
FAQs
What makes a LoHi condo competitive for renters?
- Proximity to downtown, strong walkability, assigned parking, and modern finishes tend to drive demand among young professionals seeking one‑ or two‑bedroom units.
How do HOA dues impact condo investment returns?
- HOA dues flow directly into operating expenses, lowering NOI and cap rate. In smaller units, dues can be the largest cost after mortgage and taxes, so even modest increases matter.
Are short‑term rentals allowed in Denver condos?
- Denver requires STR registration and lodging taxes, and many HOAs restrict STRs with minimum lease terms or owner‑occupancy rules. Always verify both city rules and your HOA’s documents.
What financing hurdles should I expect with condos?
- Lenders may require project approval, minimum owner‑occupancy ratios, adequate reserves, and no litigation. Conventional programs can be strict, while portfolio loans may be more flexible at higher rates.
How do I build accurate LoHi rent comps?
- Start with local MLS rentals in the same building and nearby, match on size, bathrooms, parking, and amenities, and prioritize achieved rents over listings with concessions.
