If you own a home in Denver, Colorado, that you don’t currently live in, are about to move out of, or in the process of rehabilitating, then you’re probably considering whether you should convert it into a rental property.
When done right, having a Denver rental property can be a great means of passive income – especially since the city was ranked seventh for increased metro housing prices in 2022.
Plus, if you plan to move back into your property at a later time, housing a tenant can ensure the property is taken care of while essentially paying for itself.
However, there are several critical steps involved in the rental process. Securing a quality tenant, protecting yourself financially, and meeting government requirements can all help determine whether you end up as a success story.
In this article, we’ll go over everything you need to know in order to rent your house in Denver.
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There are basic, necessary steps that any landlord needs to take to begin the rental process.
These are fundamental procedures that will protect you from getting into trouble when renting your property.
If you don’t protect yourself, you could be facing a future eviction process at best and a lawsuit or a major financial loss at worst.
However, with the right coverage, you can move forward with confidence.
If you’ve been living in the property previously, the same insurance that you use to live in your house is not the same as the insurance you need when renting out your property.
To make sure you’re covered all the way, you may want to explore landlord insurance.
This is because landlord insurance includes protections for renting-specific circumstances that are not covered in basic homeowners insurance.
For example, if the tenant injures themself on the property and you are found liable or are faced with a lawsuit, landlord insurance can cover you.
Additionally, if a tenant causes damage to the property, your equipment, or furnishings, that may also be covered.
There’s also the ability to receive coverage for loss of rental income. This can save you during times of unexpected vacancies.
To learn more about landlord insurance, we suggest you read this article: What Does Landlord Insurance Cover?
In Denver, Colorado, it’s important that an attorney either writes or thoroughly reviews the lease.
There’s a number of pre-written options that you can find online, but it’s still critical to have an attorney who is well versed in Colorado landlord-tenant law review it.
Judges don’t look kindly on leases that are written against that law, and they know when you don’t know what you’re talking about…
This will be a major disadvantage if you ever go to court. Having an attorney review your lease will save you a potential court-nightmare in the future.
When leasing their house for the first time, one of the main pitfalls that landlords fall into is not establishing detailed screening criteria.
While it’s important to remain objective and also be mindful of laws, such as the Fair Housing Act, that protect against unjust discrimination, it’s still critical to set up criteria to screen your applicants to avoid an eviction process down the road.
Some qualifications you can set include:
Essentially, any requirement that is set for strictly business purposes is one you can consider.
As a best practice, set your screening criteria upfront, and then use that to find your resident.
Now that you’ve gotten your metaphorical house in order, it’s time to take care of your literal one.
Does your house need new carpet? Does it need new paint? What can you do to make your house attractive?
If somebody walks in, are they going to be as excited about your house as you are?
The rental market is becoming very competitive, and you want to make sure that your house is one of the first that rents.
The best way to boost your property’s aesthetic appeal is by looking at it objectively. Remove emotions from the mix and try to look at it through another person’s perspective.
It may be helpful to get a second or third opinion from someone who is seeing the property for the first time. An experienced property manager who deals in leasing can provide even deeper insight into what attracts residents.
We’ll go over the specifics of acquiring a Devner rental property license in the next section, but the first hurdle is passing a required property inspection.
In recent years, many cities have tightened up their regulations and inspection processes, and Denver is no exception.
Some notable categories are:
If you’re planning to rent out your property, ensuring it meets all of the criteria to pass an inspection is vital. Without this, you will not be able to get the required permit or be able to house a tenant legally.
In order to legally rent your Denver home as of 2021, you MUST have a residential rental property license issued by the local government. If you do not and still choose to rent out your property, you could face fines.
In order to apply, you must first pass an inspection.
Then, within 90 days you can submit an application to attain a license.
The application fee is $25 if submitted before 2024. However, it’s noted that after that it will cost $50. A license fee per license term is also $50. But there are circumstances in which those fees can be waived.
The next step is marketing your property. If you don’t let people know that your property is for rent and, most importantly, why they would want to rent it, then no one is going to apply.
However, it’s not as simple as staking a “For Rent” sign in the front lawn – although that step is important – and posting a quick picture to promote it on Facebook. In order to successfully promote your property and attract quality tenants, there’s some strategy involved.
The first step to marketing is utilizing curb appeal.
This comes into play no matter what your main marketing strategy is.
Anyone who drives by and sees the “For Rent” sign out front will be judging the interior by the exterior.
The same goes for any online or other type of marketing. If you upload photos, that’s going to play a role in how your property is perceived. For any potential applicants who decide to take a look at the property in person, it will be even bigger.
As with any aesthetic updates, the key is objectivity. Does this look like a place where someone wants to live? Does the exterior present as clean, well-kept, and organized?
Here is a list of questions to help get you started:
Once you’ve covered that list, you can move on to the next step.
When it comes to online marketing options, the most popular are Zillow and Trulia. However, Facebook marketplace and other social platforms can be helpful places to promote your property, as long as you have a system in place for collecting information about applicants.
Around 80-90% of people are going to see your house online first. This means you’ve got to make a fantastic impression by both showing and telling them all the reasons why they want to rent your house.
Listings are made out of two key components: photos and a description.
The cover photo that you upload for your listing will be potential renters’ first impressions. It will ultimately decide if they click to learn more or keep scrolling.
Taking high quality photos that bring out the very best in your property will allow you to put your best foot forward and attract the right attention. Some best practices here are to take photos in landscape mode, during the day, and with a wide-angle lens if possible.
The next critical piece is the description. What does your property have to offer? Why is it a place that anyone would dream to live in?
Mention the amenities, but don’t stop there! Share all of the benefits as well. A detailed and lively portrayal of the property can spark excitement in a prospect and cause them to imagine what it would be like to live there.
If you’d like a more in-depth look at marketing rental properties, then we recommend this article: 7 Amazing Strategies to Market Your Rental Property
Now that you’ve created a killer listing that’s drawing in an array of applications, it’s time to screen them.
This next step is one of the most important in determining long-term success with your rental.
As a landlord, your goal is to get a tenant who pays rent on time and will stay in your rental for many years to come.
Choosing the wrong resident can have a multitude of consequences. Damaged property, lost income through refusal to pay rent, legal trouble, and a possible eviction.
The difference between a nightmare scenario and a profitable experience comes down to how thoroughly a tenant is screened.
Here are some essential screening criteria:
If you want to read about this topic in more detail, we recommend this article: How to Screen Potential Tenants
Once you’ve found the perfect tenant, it’s time for them to sign a lease and pay a security deposit. Do not let them sign a lease and not provide a security deposit!
If they don’t have the money for the security deposit, don’t get into a situation where you’re basically financing the security deposit.
Make sure they have enough money to pay in full for the deposit and any set months of rent that they need to be paid in advance.
It’s important to remember that the security deposit is still the resident’s money. It’s not your money until the end of the lease or the resident, in writing, gives you that money.
The rental process doesn’t stop once you’ve secured a tenant. In fact, it’s only the beginning.
Both the property and the resident require maintenance to ensure long-term success.
If the property is left unattended, damage can be left unnoticed and turn into a money-pit.
Likewise, if the tenant feels neglected or is not satisfied with their living conditions, they’ll want to leave the moment that the lease term expires, leaving you with lost rental income and having to restart the rental process all over again.
To avoid these scenarios, proactive maintenance and organized processes are the key.
The regular tasks of a property manager include:
When considering how to rent your house in Denver, Colorado, there are many steps to take before you can sign a lease and start receiving cash flow.
First, you must get your house in order by ensuring the legal side is handled. Then, repairs may be needed before you can order an inspection and apply for a license. After that, the marketing and tenant screening process come into play.
There are many processes involved, and it can be overwhelming for first-time investors to manage.
If you’d like to have a trusted property management team on your side, come talk to us!
We offer leasing services that include both the marketing and tenant screening processes. They’re designed to work together for a short vacancy and long-term occupancy.
Once the tenant is placed, our property managers can handle everything from accounting and rent collection, to inspections and coordinating our in-house maintenance team for repairs.
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