There’s risk with every investment you make. Usually, the rewards far outweigh the risk, and you make the moves that are necessary to help you reach your investment goals.
With Denver rental real estate, the stakes are often especially high because you’re not only trying to protect your valuable property, you’re also required to protect the tenants who live in that property. Risk management requires extra tools and resources.
Managing any risk starts with good insurance. Once you know that’s in place, you can focus on keeping your tenants safe, following all the laws that pertain to your rental property, and ensuring that your residents help you maintain and protect your investment.
Here are some of the risk management tips we provide to landlords in the Denver rental market.
Insure Your Denver Rental Property
Adequate insurance coverage starts with protection for your property and the systems inside of it as well as protection against liability.
You’ll need some extra insurance, too, especially to cover things like loss of rent. What if your rental home becomes uninhabitable and your tenants need to move out while it’s being repaired or rehabbed? There will be a loss of rental income as well as potential hotel bills.
Make sure your insurance policies are up to date. There’s a good chance that the value of your property has increased over the last year or two. That means you’ll need extra insurance to ensure that all of your repair or replacement costs are met if there’s a covered loss.
To further protect yourself and your property against risk, you’ll want to require renters insurance from your tenants so they’re fully covered. Many residents don’t realize that their personal belongings are not covered by your policy if there’s a problem or a loss. They’ll need their own insurance.
Tenant Safety and Risk Management
There’s hardly anything more important than your tenant’s safety. You’ll want to make sure they’re safe from any potential dangers inside or outside of the property. Here’s what we recommend you look at when you’re ensuring that you’re renting out a safe and habitable Denver rental property:
Make sure the home is structurally sound. Conduct thorough inspections before move-in.
Change the locks so the tenants don’t have to worry about other people having a copy of their key.
Correctly install and test smoke detectors and carbon monoxide detectors.
Provide bolts on all exterior doors.
Ensure there’s enough lighting outside of the home.
Keep parking areas and common areas safe, free from hazards, and well-lit in multi-family properties.
Tenants won’t move into a home where they don’t feel safe. Spend some time upgrading the safety features at your rental home to ensure there aren’t any dangerous conditions. Allow them to install a security system, an alarm, or a video doorbell if these things help them feel safer.
Comply with State and Federal Rental Laws
Risk management includes protecting yourself from expensive legal mistakes. You cannot effectively and safely rent out a property if you don’t understand your responsibilities on a federal and state level. For example, you’ll need to understand Colorado’s security deposit laws. If your tenant isn’t paying rent, you cannot simply change the locks and kick them out. There’s an eviction process that needs to be followed.
On the federal level, you have to understand:
The Federal Fair Housing Act
The Americans with Disabilities Act
The Fair Credit Reporting Act
You need to know the difference between a pet, a service animal, and a companion animal. You also need to know what you’re required to do with all of the personal and financial information you collect on applicants during the screening process.
Your lease must be legally compliant and enforceable in Colorado. There are disclosures that need to be made, and tenant protections in place that prevent you from showing up at the home unannounced.
If you don’t know the laws that pertain to you and your rental property, we recommend you work with a Littleton property manager who does. It’s too easy to unintentionally make a mistake.
Protecting Your Property from Bad Tenants
Working around bad tenants can be frustrating and expensive.
It can also be risky.
A bad tenant may:
Pay rent late.
Not pay rent at all.
Violate the lease agreement with unauthorized pets, moving in additional residents who have not been screened, or changing the property.
Damage your rental property.
Break the lease agreement.
Be difficult, combative, or prone to conflicts and disputes.
Renting to a bad tenant can lead to eviction, lawsuits, and attempts to recover the cost of repairing whatever damage was left behind.
Protect yourself against bad tenants with a robust, consistent screening process. Conduct inspections while the property is occupied, and work hard to develop a positive and professional relationship with your resident.
Work with Littleton Property Managers
There are many good reasons to work with a local property management company in Littleton. One of the best reasons, perhaps, is that you’ll limit your risk and liability. When you partner with a management company, you don’t have to worry about staying up to date on the laws and rental requirements. You don’t have to stress about placing the wrong tenant in your property or making a mistake with the security deposit. You don’t have to chase down late rent or hold your tenants accountable.
Your property managers do all this for you, and they do it expertly.
Hand the leasing, management, and maintenance processes over to a property manager who can be trusted to deliver the best outcomes for you, your property, and your tenants. We know how to protect your investment and your financial interests. Risk management is part of what we do.
If you’d like to hear more, we’d love to discuss how we can lead you towards a better investment experience. Please contact us at PURE Property Management of Colorado, Denver property management experts serving residential landlords in West Denver and the surrounding areas, including Littleton, Golden, Wheat Ridge, Arvada, and more.