Colorado law allows you to only raise the rent on your tenants once a year. This is true whether you have a 12-month lease in place or a tenant who is renting from you on a month-to-month basis. You have one shot to increase your rent, and you want to be prepared.
That doesn’t mean you should feel free to raise the rent unreasonably once you finally have the opportunity. That’s a good way to chase tenants out of your property, leaving you with an expensive vacancy and endless turnover costs.
There’s a good way to raise the rent on your Golden, CO investment property, even in a rental market that already seems too expensive for a lot of tenants. We’re telling you how to raise the rent and which legal requirements need to be met in order to do it lawfully.
Evaluate the Golden, CO Market and Your Tenants
As you begin to think about raising the rent, you need to decide how much is reasonable. You also need to think about the timing. Typically, the rental increase goes into effect at renewal time.
Before you offer a new lease to your tenants with a higher rental amount, think about whether you want to keep your tenants in place. If they have a record of paying rent on time, taking care of the property, and being easy to work with, you’ll certainly want to keep them in place. Retaining good tenants allows you to earn more money and have a pleasant rental experience.
When you know you’re going to make an offer of renewal, decide how much you’ll offer as a new rental amount. To decide where you should fall, we recommend that you take a look at the market and see what similar homes are renting for.
Most tenants expect that their rental amount will go up from year to year. The trick is to set it at an amount that gives you both an advantage. Tenants are going to do their research just like you are. They’ll know what the market demands, and they won’t be willing to pay more than they have to.
When you want to keep your tenants in place, it makes sense to set the new rent just below what the market demands. Here’s why this works for both you and your tenants:
- Your tenants are not paying as much as they’d have to pay if they moved out and rented a similar property.
- You’re still getting more rent.
- You’ll avoid an expensive turnover and vacancy period.
- Your tenants will feel comfortable that they’re still getting value by renewing the lease agreement.
Rental rates have risen across Golden, Colorado, and while they are finally reaching their peak, you’re likely going to charge more rent than you did when your tenants initially moved in. That’s good news for you. But, you have to balance those extra earnings against the needs of your tenant and the competition on the market.
Well-qualified tenants will not stay in a place that they cannot afford.
There isn’t any rent control in Colorado, which means your increase can be as large as you want. But, you have to think about remaining competitive.
Put the Rental Increase in Writing
You’ll need to comply with the notice requirements.
There are no specific laws surrounding notice periods for written lease agreements, although it’s recommended that landlords provide reasonable notice before raising the rent. Your lease may state how much notice you’re required to give. Check that first, and if you don’t have anything in your lease about how rent is raised and the notice that you’ll provide tenants, consider adding the language to future lease agreements.
When there’s not a written lease in place, you need to provide the tenant with at least 60 days of notice before the rent is raised. We recommend you follow the same notice period even with your written lease agreement.
Offer your tenants a lease renewal in writing with the new proposed rent. You can explain how and why you arrived at this new rent and point out that it’s still lower than similar homes in the Golden, CO rental market. Your tenants will likely do their own research. They’ll know that you’re offering them a reasonable and generous rental amount, even if it’s an increase on what they’re currently paying.
Give your tenants a specific amount of time to respond. You’ll want to know as soon as possible if you’re renewing the lease or preparing for a turnover.
When Can You NOT Raise the Rent in Golden, CO?
There are a few scenarios that prohibit landlords from increasing the rent. For example, if you’re renting a property to a tenant who has government assistance through a Section 8 program or something similar, there are likely to be additional steps that you need to take before you increase the rental amount.
You also cannot increase the rent as a discriminatory or retaliatory measure. The Federal Fair Housing Act doesn’t allow landlords to discriminate based on a person’s:
- Gender
- Age
- Race
- Religion
- Familial status
- Nationality/Origin
- Disability
If you raise the rent on one tenant but not another, there may be a good reason for it. Just make sure it’s a documented reason. Otherwise, it may look like you’re discriminating against the tenant who is getting an increase in rent.
As for retaliation, landlords can’t increase the rent as a retaliatory measure for a tenant’s action, such as putting in a maintenance request or filing a complaint.
Rent Increases and Economic Realities
As you think about raising your rent, you need to make sure you’re not out of touch with the current economic realities facing your tenants. Rents are higher, thanks to inflation and the housing market, which is keeping a lot of would-be buyers from being able to afford a home. There’s a huge demand for well-maintained rental housing, and that’s driving prices higher.
You want to raise the rent in order to earn more on your rental property, but you don’t want to put your tenants in a position where they won’t be able to pay.
Working with a Golden, CO property manager can provide you with some resources and expertise when it comes to rental increases. We are constantly studying the rental market. We are analyzing its trends and its shifts and use priopritary software to analyze the rental market. We know what tenants are looking for and what they’re able to pay. We also understand the competing properties and what they’re renting for. We know how long properties are vacant before tenants are willing to rent them.
All of this expertise can help you more effectively raise the rent on your own property. Please contact us at Laurel Property Services, Inc. In addition to providing property management in Golden, we also serve Wheatridge, Morrison, Lakewood, Arvada, and Genesee, CO.
