Rents have been on the rise in Denver over the last few years, and most tenants expect to see their rent increase from year to year when their leases expire and it’s time to decide whether to renew or move on.
For Denver landlords, raising the rent has to be strategic. Today, we’re sharing some tips on what you need to know before you ask your tenants to pay more in rent.
Evaluate the Denver Rental Market
Before you raise the rent on your rental property, make sure the market can support it. If you raise your rent too high and tenants know they can find a better value elsewhere, they will likely move. You won’t have much luck finding new tenants at the price you’re asking if it’s higher than what the market is demanding. Do some research and establish a fair rental value that’s competitive and consistent with homes in your area that are similar in size and condition.
It’s also important to factor in the cost of turnovers. While you might see an opportunity in asking for more rent, losing a good tenant will cost you a lot more than it would have cost if you left the rent where it was. You’ll need to repaint the home, take care of minor maintenance issues, and invest money in marketing your vacant property and finding a new tenant. These costs plus the vacancy expense are often far higher than the cost of keeping your rent stable or raising it just a little bit.
Provide Your Tenant with Notice
There is no limit to the amount you can raise the rent in Denver. But, you are required to give tenants at least 10 days of notice before you implement a rent increase.
While 10 days is the legal requirement you’ll need to meet, let’s be realistic. It’s probably not enough time for most tenants. If they decide they can’t afford your rental increase and they want to move out, 10 days is not much time to organize all of that. Even if they decide to stay and absorb your rental increase, the 10 days does not give them a lot of time to budget or plan.
We recommend providing your tenants with a 30-day notice period before you raise the rent. Put the notice in writing, and if you’re worried they’ll push back, include the research you’ve done to establish the new rent. It’s hard to argue with documented facts and figures.
Document the Rental Amount in the Lease
As a landlord, documentation is your best friend.
Make sure your lease agreement references all of your rent collection policies, including your policy for increasing the rental amount. There should be information about what happens at the end of a lease; whether it goes to a month-to-month contract or whether a renewal is negotiated. You’ll also want to document how rental increases are communicated and implemented. This will ensure your tenants have all the information they need, and it will protect you from potential conflicts and confrontations.
For more information on effectively raising the rent in Denver, contact us at Walters & Company.