The greater Denver area is a popular, fast-growing area, which means that competition for great rental properties can be fierce. As a landlord, you started renting your property to make a profit, and increases in your costs can leave you with the choice between making less profit or passing on some of the costs to your renters. What is a fair cost-of-living increase for your tenants?
Know the Law
Colorado state law regulates how you can raise the rent and how much notice you must give tenants. The law requires you to give month-to-month tenants 10 days (or more) of notice before raising rent. If you have yearly tenants, you cannot raise the rent during the term of the lease unless that provision is specifically noted in the lease. You can raise the rent when the lease is up for renewal.
Is There a Maximum You Can Increase the Rent?
In short, no! Colorado state law does not define what a fair cost-of-living increase is. You can raise the rent as much as you would like, but it’s important to consider what an appropriate rent is for your property and location. Average rent increases are approximately 3% a year, so keep that in mind when determining a fair cost-of-living increase. Rent gouging is a serious problem, so be wary of making dramatic adjustments without dramatic changes to your property, like renovations and appliance upgrades in between tenants.
Take a Look Around
One of the most critical factors when calculating a fair cost-of-living increase is your surroundings. What are units comparable to yours priced at? How long does the average property sit vacant before finding a new tenant? Working with an experienced property management company like All County Denver Metro Property Management can limit the vacancy period, but raising your rent too high could be an obstacle to rapid turnover.
Finally, landlords should also consider the tenants currently in the property. If your expenses have not increased and you have fantastic tenants who always pay on time and care for the property, a fair cost-of-living increase might be lower than it would be for tenants that take poor care of things or always pay late.
All County Denver Metro Property Management Can Help You Find a Fair Cost-of-Living Increase
All County Denver Metro Property Management offers all property owners competent and honest property management services. From rental market evaluation to tenant placement, we can assist with all of your needs. Our team of real estate professionals looks forward to hearing from you about how we can make your investment a stress-free asset and keep your tenants happy. Call us at (720) 575-6100 for a free quote.