What are your steps if a Tenant doesn't pay rent? What can you do? What should you do? What is the process an owner needs to take in Colorado?
Property Management Blog
The laws pertaining to rental properties are always changing, and when you work with a professional Colorado Springs property management company, you have the benefit of their knowledge. We are always monitoring new and proposed legislation that affects landlords and tenants, and today we want to address a few new things that landlords need to know. Most importantly, a new bill has been passed in Colorado that affects lease violations and how to handle them.
HB 19-1118 – Time Period to Cure Lease Violations
This bill is a mouthful, so to make discussing it easier, you should know that it can also be referred to as a 10 Day Time to Cure or a 10 Day Notice. Previously, this was referred to as a Three Day Notice. This is the notice that’s delivered to a tenant when a lease violation is discovered. That lease violation could be unpaid rent or loud music late at night. It covers unauthorized pets and tenants who are not listed on the lease but living in the property.
Any violation needs to be addressed with a notice. The tenant is required to cure that lease violation or surrender possession of the property to the landlord. If the tenant does not do either one of those, then the landlord can begin the process of eviction. Now, the tenant has 10 days to correct this violation rather than three. That’s the main difference. Regardless of the type of violation, it is a 10 Day Notice.
Impacts of the 10 Day Notice Period
This adds days to the time that a landlord must suffer through a tenant’s lease violation. That’s the largest and most important impact. If you have a tenant who is playing loud and disruptive music in a four-unit building and the other neighbors are complaining, there are 10 full days that the tenants can continue to play loud music without consequence. It’s frustrating.
This new law also extends the amount of time you have to wait to begin eviction proceedings. You can still begin the eviction process if the lease violation is not cured, but you have to wait an extra seven days.
Review Wording and Legal Documents
We definitely recommend that you consult your attorney to discuss how this new law will change the way you write a lease, enforce that lease, and manage your tenant relationship. We recommend that you take some time to review the wording of the actual bill itself. There are some exceptions in there that would only require a Five Day Notice, particularly if you are an independent rental owner.
You also want to do a review of all your legal documents to make sure you are in compliance. You don’t want any leases, addenda, notices, or other paperwork to reflect older laws and regulations.
If you have any questions about what this new law means to you and your rental property, please contact us at Cornerstone Real Estate. We would be happy to serve as your property management resource in Colorado Springs.
If you’re managing your own rental property, there’s a lot to think about. Sometimes, it can seem overwhelming. Today, we’ve put together nine leasing tips that can help you when you decide to rent out your Colorado investment property.
Tip 1: Tenant Screening
Don’t let anyone live in your property without conducting a tenant screening. The goal in renting your property is to find a tenant who is going to pay rent on time and take good care of your property. We recommend that you check credit history, do a background check, and talk to landlord references. You may also want to do a criminal check and possibly confirm their employment. At Cornerstone, we also check the sexual predator database. These things are part of our five main tenant screening checks.
Tip 2: Use Written Agreements
While you can rent a property with only a verbal agreement, we do not recommend it. Everything should be written down in your lease so it is clear. Tenants need to know who is responsible for what. A lease agreement in writing also protects you.
Tip 3: Security Deposit Accounting
You must provide accounting for the tenant’s security deposit. That is the tenant’s money and you are responsible for returning it at the end of the lease. Those funds are to ensure completion of the legal contract you have with the tenant. The money should not be spent on repairs or any other expenses during the course of the tenancy. Most states have requirements on the timeframe you have to return the security deposit to the tenant. In Colorado, you have 30 days to provide the security deposit and the accounting of any funds that you used. If your lease specifies you can have a longer timeframe, you can have up to 60 days.
Tip 4: Making Repairs
You may have heard the phrase “a stitch in time saves nine.” That’s what we recommend for your rental property as well. Taking care of those smaller repairs as soon as you identify them could prevent you from paying for a larger maintenance issues down the road. With a well-maintained property, you’ll attract better tenants and increase your rental value.
Tip 5: Evaluate Your Insurance
If you currently have homeowner’s insurance on your property, you’ll want to notify your insurance company that you are moving from that property and it will be a rental. Then you’ll switch to a landlord policy. This insures the structure but not the belongings inside. The tenant should have a renter’s insurance policy to protect those belongings.
Your rental property is a business, which means you need liability insurance. It will protect you from injury claims and legal disputes if someone gets hurt at your property or sues you.
Tip 6: Maintain a Property Reserve
Whether these are funds that you set aside at the beginning or it’s money you set aside each month from the rent, it’s important to have a reserve. It will pay for any unexpected expenses or any high dollar items you encounter, such as needing a new hot water heater, fixing the air conditioning unit, or making a big roof repair. Those are expensive repairs, so you should have funds set aside for that.
Tip 7: Increase Your Security
Security can be a number of things. You want your tenant to feel safe in your property. So, you could provide some additional exterior lighting. You can also make sure that all the windows have secure locks that function. Even simple landscaping and trimming the hedges and trees will provide better protection for your property and your tenant.
Tip 8: Provide Notice Before you Visit
You own the property, but your tenant possesses it, and that tenant is entitled to privacy and peaceful enjoyment. Don’t drop by the property at random times without providing the tenant with any notice. We recommend that you address this in your lease. You should always provide them reasonable notice (24 hours at least), and you should only visit during appropriate times of the day.
Tip 9: Disclose Any Environmental Hazards
If you know that there are environmental hazards, you should certainly let the tenants know. For example, in Colorado if the property was built before 1978, there is potentially lead-based paint in the property. We would be required to notify the tenants of that fact before they sign the lease.
These are just a few things to consider before you begin leasing your property. If you have any questions or you’d like to hear more, please contact us at Cornerstone Real Estate.
There’s a lot of information to be sure you include in your lease agreement. Today, we want to focus on six of the key lease clauses that you need. If you’re an independent rental owner or a do-it-yourself landlord, you want to make sure you address these six clauses in your lease.
Allocation of Rents
Allocation of rents really means how you allocate the payments you receive. You may have some additional expenses that the tenant is responsible for such as maintenance fees or processing fees or utilities. In your lease, you want to address how those expenses are charged to the tenant and who is responsible for paying them and in what order. That way, when you receive a payment from the tenant, you are able to allocate it to utilities, maintenance, etc. This is important because you don’t want the tenant just to pay rent and not pay for those other expenses.
You should have a detailed paragraph in your lease stating how much the security deposit is, where it is being held, who is holding it, and under what timeline you will return it to the tenant. Most states have specific requirements that tell you how much time you have to return a security deposit to the tenant. In Colorado, we need to provide the tenant with their security deposit and an accounting of how any funds were used within 30 days of the end of the lease unless the lease specifies a longer timeline. In that case, you have up to 60 days to provide this money and information to the tenant.
Routine Maintenance Responsibilities
Your lease should address who is responsible for maintenance issues such as lawn care, landscaping, snow removal, etc. Your lease should also include specifics about filter replacements. Indicate who is responsible for replacing and purchasing these. Do the same with light bulbs. Specify if the tenant or landlord is responsible for replacing them. You also want to address broken windows and, of course, wear and tear. In most states, the tenant is not responsible for basic wear and tear on the property. However, dirt is never considered wear and tear. The tenant should be responsible for cleaning.
Late Fees and Penalties
Your lease is going to address the rent specifics such as amount and due date. It should also include information about when rent is considered late, when late fees begin to accrue, and how much those late fees are. Is there a one-time late fee or reoccurring daily fees? You want to specify all of that so the tenant is aware and expectations are understood.
Right to Entry
You own the property that the tenant is living in. However, by signing the lease, you are giving the tenant possession of the property. The tenant has the right to quiet enjoyment. You want to detail what notification is required prior to you coming into the property. If you need to check on the home, how much notification do you need to give the tenant prior to setting a time or date? Typically, you want your lease to state that you will provide reasonable notification when you want to enter the property. This is usually at least 24 hours. You also want to stress in this clause what to do in cases of emergency. If you are driving by the property and you see water flowing out of the front door, you want to be able to go into the property immediately to prevent further damage.
Severability Lease Clause
This last clause is probably the most important of them all. If any portion or clause in your lease is determined to be not legally enforceable or invalid, a severability clause will prevent the entire document from being determined invalid or not legally enforceable. A severability clause applies to many different types of contracts, so make sure you have this in your lease.
These are the six clauses we highly recommend you address in your lease. If you have any questions about what these things mean or anything about Colorado Springs property management, please contact us at Cornerstone Real Estate.
There are a number of things you should look for in a Colorado Springs property management company, and today we want to share some of the points of difference that you’ll find with Cornerstone Real Estate. What makes Cornerstone different from another property management company?
Single Point of Contact
At Cornerstone, we have a “for you” management motto. That means we have property managers with a number of properties in their portfolios. They are assigned those properties as the single point of contact. That means if you have a question about your property or your statement, you do not need to decide if that question goes to the accounting department or the administration department. You have one point of contact - your property manager.
Strategic Video Marketing
In addition to high quality photos, when we list your property for lease, we also do a video tour. A video tour allows a prospective tenant to see the property through more than just the photos. They can see the layout and the light coming through the windows as if they were walking through the property. This enables us to put your property in front of many more qualified tenants. We attach this video to your listing, and it goes onto our website and multiple other listing sites. It will also go to all our social media accounts.
We are confident in our tenant screening process, and if we put a tenant in your property and they do not stay for the full term of the lease, we will find a new tenant for you and we will not charge you a re-leasing fee.
21-Day Lease Guarantee
As an owner, you do not want your property sitting on the market for 30 or 60 or 90 days waiting for a new tenant. If you enroll in our program, we guarantee that we will lease your property in 21 days. If we don’t, you will receive the first two months of management free.
We have heard that owners with other management companies have to pay a high fee to terminate their contract. They get locked into a long term contract that runs for a year or the length of the lease. At Cornerstone, if you are not happy, we are not happy. You can terminate your contract at any time, without a penalty. All we ask is 30 days of advance notice, and we will terminate your contract.
This is a brand new program. Our screening process includes a screening for pets. If we place a pet and that animal damages your property, we will pay up to $2,000. If the tenant’s pet causes damage to your property, we will cover the cost. It eliminates a lot of the risk that comes with accepting pets.
Cornerstone is Veteran Owned and Operated
We have six military veterans on our team with over 125 years of combined service to our country. We do not take that lightly. The work ethic and skills learned during our time in the military are brought to work each day. We are veterans continuing to serve, and we want to know how we can serve you.
If you have any other questions about finding good property management in Colorado Springs, please contact us at Cornerstone Real Estate. We’d be happy to tell you more.
Most investment property owners understand the value of accepting pets into their rental properties. If you don’t accept pets, you usually face a longer vacancy period. It’s harder to find tenants.
More than half the renters in Colorado Springs have at least one pet. So, when you welcome dogs and cats into your rental property, you’re going to find a good tenant more quickly than if you don’t allow pets. However, we also know that pets come with risks. It’s understandable if you’re worried about your floors being scratched up or your walls being destroyed. Pets can cause unexpected harm.
At Cornerstone Real Estate, we’re excited to share that we have a new way to protect your property from the damage that pets can potentially cause.
Pet Guarantee Program for Colorado Springs Landlords
We have just rolled out our new Pet Guarantee Program, and we think it will deliver a better pet screening process for your tenants and more peace of mind for you.
Our team is already very confident in our screening process. As you probably know, we do a five-part tenant screening for every prospective resident interested in leasing one of our properties. It ensures we place tenants who will pay rent on time, take care of your home, and follow the terms of your lease.
Over the last six months, we have added pet screening to our process. Now, we have a process for screening tenants’ pets prior to approving them and allowing them to move into the property.
How the Pet Guarantee Program Works
Because we are confident in our pet screening process, we can comfortably guarantee that the pets moving in with tenants will not damage your property. Here’s how it works:
- If a pet that we approve causes any damage to your property, we are going to cover it so there’s no expense to you. Cornerstone will pay up to $2,000 towards any pet damage caused by an approved pet.
- We accept all responsibility for the pets living in your property. This removes the risk to you as the owner.
You may have questions about the details of this program, and we’re happy to share them. Since it’s a brand new program, we’re still working some things out. However, we plan to share this guarantee on our website very soon, and if you have any questions in the meantime, we’re happy to answer them.
New owners and properties under management will automatically be enrolled in this Pet Guarantee Program. If you’re currently a client with a property--or properties--under management with us and you’d like to join the program, we can get you set up.
We believe it will make you feel more comfortable with the idea of tenants moving into your home with their furry friends.
If you have any additional questions about pets in your property or anything pertaining to Colorado Springs property management, please contact us at Cornerstone Real Estate. We look forward to helping you with your rental property.
We often have owners or potential clients that want to know what happens if their tenant does not pay rent. Today, we’re briefly talking through the process here at Cornerstone so you can understand what we do to collect past due rent from a tenant.
Rent Collection Policy and Past Due Rent
It’s important to include a rent collection policy in the lease agreement. In our lease, rent is due on the first of the month and we allow the tenants a grace period through the fifth of the month. If a tenant has not paid rent by the fifth, then on the sixth day they begin to accrue late fees. Hopefully within that timeframe we are in contact with the tenant. We are happy to reach out to them and hopefully they have reached out to us.
Many times, they may notify us that their rent is going to be late but promise to pay by a certain date. That communication lets us know that:
- The tenant intends to pay the rent
- It provides us the opportunity to remind them of the lease requirements
The tenant will continue to get late fees and with our lease and our policy there are some more steps we are going to have to take until they are paid in full.
Notice to Pay or Quit
The next step is to provide the tenants with a Three Day Notice to Pay or Quit. It gives the tenant three days to pay up or leave the property. We will post that notice no later than the eighth of the month, provided the tenant is not paid in full.
Scheduling a Court Hearing
Once those three days lapse and the tenant has not paid the rent, we will then be forced to send that paperwork to our lawyer to begin the eviction proceedings. The lawyer will schedule a court date with the magistrate. If the tenant has not paid in full when the court date arrives, the magistrate is going to give possession of the property to us, the management company, on behalf of the landlord.
Possession of Property
Once we have possession of the property, we will schedule a time with the sheriff to do an eviction. We meet the sheriff at the property and remove the tenant’s belongings. Then, we take back possession of the property. We can then get the property in rent ready condition so we can rent it out to the next potential tenant.
Final Rental Accounting
The last step of the process is the final accounting. By Colorado law, we have to provide each tenant with a final accounting of funds. In this case, it would include back rent, late rent, late fees, and legal fees that the owner incurred with the eviction process.
We aim to answer some of the most frequently asked questions, and hopefully this information helps you to understand the eviction process a little better. If your tenant is not paying rent or you have any questions about Colorado Springs property management, please contact us at Cornerstone Real Estate Team.
As an investor, it’s important to maximize the net operating income for your investment property, and we’re talking about that today. There are two main ways to do this; by increasing your income and reducing your expenses.
Reduce Your Vacancy Rate
In order to increase your income, the first thing you must do is reduce your vacancy rate. There are two types of vacancies. You might have a vacant unit which is an actual vacancy or you might have an economical vacancy where you have someone living in the unit but they are not paying rent. If you have a vacant unit, you should do a market survey and find some comparables to help determine why that unit is vacant and why you cannot get a tenant in there. Ask yourself if your rent is above market or if the condition of the property is poor and maybe you need to do some repairs.
Know Your Market
Every time you have a lease coming up whether it is a new lease or a renewing lease, you should do a comparison of the market to find out what the rent rate is for similar units. Here in Colorado Springs, we have seen the rental market increase year over year for the past three years. In some areas of town, the rental market has increased by 10 percent. So, you may be leaving money on the table if you are not doing a good analysis of what similar properties are renting for.
Rent Collection Must Be Consistent
Your lease should plainly detail when rent is due and any late fees that will be applied when the rent is late. It should also list steps that are taken if rent is not paid. We recommend if you have a disciplined rent policy, then you stick to it. We like to say, ‘someone is always training someone’, which means if you are following your policy, then you are training your tenants to pay their rent on time. If you are not following that policy, then it is actually your tenants who are training you to not accept rent on time.
Handle Repairs at Lowest Level
The next part of maximizing your net operating income is to reduce your expenses. The first way to do this is by handling repairs at their lowest level. If a tenant calls in with a request order or there is a problem with the property, always see if you can troubleshoot the problem first. Maybe you can go by and take a look at the issue so you have a better idea of what might be required. Find out if a maintenance guy can handle the repair or if you will need to hire someone outside, which will come at a higher hourly rate.
Qualify Prospective Tenants
We recommend you screen and qualify your prospective tenants thoroughly. A good background screening with a credit check and a minimum income of three times the monthly rate is always encouraged. Make sure you know who you are putting into the property.
Retain Your Good Tenants
Obviously if you have a tenant who pays their rent on time and keeps the property nice and clean, you want to keep that renter as long as you can. If they move out, every transition has a cost. Wear and tear such as new paint and carpets will add expenses. You also have to expect vacancy when a tenant moves out which will be a loss of income. You always want to find those good tenants by screening them well and then try to keep them.
Bill Utilities Back
Many times when we take over the management of a property, we find that the owners have been paying all the utilities and the tenants are not. We found that when you are billing the utilities back it saves the owners money because the owners are not actually using the utilities. It also makes the tenants more accountable. You see the utility bills decrease in cost because the tenants are now aware of their actions and realize they are responsible for the amount of utility cost they use.
Increasing Net Operating Income: An Example
As an example of this concept, we took over an 18-unit apartment complex. When we took it over, it had a 55 percent vacancy which included 11 percent for actual vacant units and a 44 percent for economic vacancy where there were tenants that were there and not paying rent. This led to almost $16,000 in delinquent rent when we took over the property. And the rent income for that unit was just over $10,000.
One of the first things we did to turn this property around was follow some procedures to help the cause. We went and physically introduced ourselves to each tenant and let them see us actually making improvements to the complex. This let them see that we were actually taking care of the property which in turn, would hopefully make them take care of their property.
The next thing we did was actually enforce the lease that was in place. We enforced the quiet hours on the property and the cleanliness and parking on the property. We strictly enforced the rent payment process and made tenants aware again of the procedures. Tenants then either followed suit and began to take care of things as they saw us doing, or they left because they didn’t like the new procedures happening.
With all the delinquent rent that was sitting out there, we then offered each tenant a payment plan to assist in catching up on the rent that was owed. Many of the tenants did in fact get caught up on the rent and were able to stay on the property. Unfortunately for those who didn’t, we did have to turn to evictions and collections.
One year later that property is at 0 percent vacancy and we were able to collect 80 percent of the delinquent rent that was past due. The monthly rent income from the property itself has now gone up over 18 percent to almost $13,000.
Increase your net operating income because it increases your return on investment and of course it also increases your cash flow.
Property owners in Colorado Springs enjoy receiving frequent updates about the rental market and how it’s performing, and today we are sharing some information with you about the market in 2019, and what we expect to see.
Colorado Springs Real Estate Growth
If there is one word that would describe Colorado Springs over the last 18 months it would be growth. We have seen growth in the rental market, the population, and the sales market. For example, our population in 2017 for El Paso County was estimated at just over 460,000 people. Today, that same estimate is just under 700,000 people.
Such population growth drives growth in other areas as well, such as residential building. Last year in 2018, the city issued just over 3,800 permits to build single-family homes. This is a 10% increase over what we saw in 2017. This was also the highest level of permits issued in 13 years.
Building and Development in Colorado Springs
If you are familiar with Colorado Springs on the north end, north of Dublin, we are seeing additional building all along Powers and up through Marksheffel. As you travel south, there is more building to the east and to the south in the vicinity of the airport. A housing development that had been incomplete for years is now built out. Further south of that, two more housing developments have been completed that were once not finished. So, we are seeing quite a bit of growth on the residential, single-family home side.
Apartment Growth and Development
On the apartment side, we are seeing additional apartments going up north and in downtown Colorado Springs. So, between the Airforce Academy and Colorado Springs, over the last year and leading up to the end of 2019, we will see an additional 2,000 multi-family units. North of the Airforce Academy, there are even more apartment buildings being built, and those are being occupied by commuters who live in the north end of Colorado Springs and commute to Denver.
In the downtown area, over the last year we have seen an additional 200 units across three different apartment buildings. There are also two more under construction, and we also have a hotel being converted into condos, and that is going to add another 75-100 units in the downtown area.
Commercial Real Estate Growth
Additionally, we have seen building on the commercial side with hotels. There are several under construction and across town we are seeing both occupation of commercial space that has been vacant for awhile and also the building of new office space.
Cornerstone Real Estate Team
Within Cornerstone, we have also grown.
We are now managing approximately 420 units across Colorado Springs. One-third of those are single-family homes and two-thirds are multi-family units. With that growth of units under management, we have also increased our personnel. So, on the Colorado Springs property management side, our team is 10 people strong and we have two additional property managers, two additional assistant property managers, and several administrative personnel to assist us with the management of those properties.
In January of last year, we also added a sales team. The team has been doing a fantastic job with our clients, and we have had several investors add additional properties. We are now able to assist with both sides of the process – sales and management. In 2018, they sold over 50 properties which ranks them in the top 10% of agents in Colorado Springs.
We intend to provide these updates on a regular basis. Please reach out to any of our team members if you have any questions about the sales or rental markets in Colorado Springs. Feel free to follow us on social media or contact us at Cornerstone Real Estate Team.
All landlords handle maintenance their own way, but these are 3 maintenance tips that every property owner should adopt. We are talking about routine maintenance items that are required to keep your home in excellent condition as well as safety tips that will keep your tenants and your property protected.
Preventative Maintenance Needs
The first tip is to take care of all your preventative maintenance needs on a regular basis.
- Service your furnace once a year to be sure that everything is working properly. Have a tech come out and go over the furnace from top to bottom. This will extend the life of your furnace and ensure that everything works properly. If you have an air conditioning unit, do the same thing for the cooling system.
- Clean out exhaust ducts. This is something that is often overlooked. There’s often a buildup of lint, and sometimes you’ll find a bird’s nest or a squirrel nest. Check and clean these ducts to prevent fire or hazardous situations. Also, it extends the life of your dryer.
- Clean your wood burning chimney and fireplace once a year. Build up can cause an unsafe situation, so have a licensed and insured technician check and clean your chimneys.
- Replace the batteries in your smoke detectors and carbon monoxide twice a year. We do this at daylight savings time and it can be a tenant task if you have it in your lease.
- Change the furnace filters quarterly.
These routine maintenance items reduce your liability and keeps tenants safe. They also contribute to reduced maintenance expenses over the long term.
Protect Against Storm DamageIn Colorado Springs, we often have high winds, especially in the spring and during summer storms. There’s also the threat of hail storms. It’s not a bad idea to have your roof and gutters checked out every year. You don’t want any leaks in the attic and you want to make sure water is being pushed away from the house and foundation.
Clean Out the Gutters
If your property is in an older neighborhood with tall and mature trees, clean the gutters once a year to get rid of leaves, pine needles, branches, or build up. Keeping them clean will ensure they are working effectively.
These are the 3 most important maintenance tips we have for you today. If you need any help, please contact us at Cornerstone Real Estate Team.