Key Points
- Offering a short term or even 6-month lease term does not increase applicant interest and typically reduces the pool of potential renters.
- Short term leases generally decrease rental pricing power, as tenants expect a discount for reduced stability.
- Colorado law limits rent increases to once per 12-month period, regardless of lease length, reducing the benefit of shorter leases.
- Just cause eviction rules are complex, and short-term leases do not necessarily provide flexibility to bypass these requirements.
- The most effective strategies to improve rental outcomes include focusing on location, property type, quality, competitive pricing, and pet policies.
Overview of Short term or Six-Month Lease Challenges
Many landlords and small real estate investors consider offering six-month leases as a potential solution when a property is difficult to rent. Common questions include:
- Will a short-term lease attract more applicants?
Experience shows that most renters seek stability and a longer term home. While some tenants are looking for transitional housing, this group is relatively small. Offering a six-month lease is unlikely to expand the applicant pool and may actually reduce interest. - Does a shorter lease help increase the rental rate?
Tenants often perceive shorter terms as less secure and expect lower rent in exchange for flexibility. Renters typically desire a long term fixed rental rate. - Can I increase the rent at renewal time?
Colorado law limits rent increases to one time per 12-month period, even on shorter leases, further restricting potential pricing advantages.
- Can a six-month lease help me navigate lease-renewals and just cause eviction rules?
Colorado’s just cause eviction regulations are complex, and certain short-term leases may interact differently with these requirements. While a lease under 12 months can sometimes change notice requirements, landlords must still comply with all legal obligations, and flexibility is not guaranteed. Click here to view our analysis of Colorado just cause eviction rules. - Will a short-term lease make it easier to rent my property overall?
Data and experience indicate that short term leases often lead to longer market time, reduced interest, and lower effective rent, making the property harder to rent.
Practical Strategies for Getting Your Property Rented Fast:
- Location: Markets differ significantly, and submarket performance impacts vacancy and rent levels. Investors may consider reallocating assets to stronger markets. Currently demand is stronger is suburban areas.
- Property Type: There is more renter demand for single family homes. Single family home rentals also provide greater stability and faster turnover time as compared to condos, townhomes, or multifamily units.
- Property Quality: Well maintained properties with clean interiors, fresh paint, and functional amenities are essential to attracting a quality tenant. A rule of real estate investing – the quality of the property is directly proportional to the quality of the tenant it will attract.
- Competitive Pricing: Align rental rates with current market conditions. For example, Denver rents are down approximately 5% year-over-year, requiring aggressive pricing adjustments to remain competitive.
- Pet Policies: Allowing pets expands the potential renter pool and increases interest in the property.
At Grace Property Management, we believe that when property management is performed with integrity and transparency, both tenants and landlords benefit. Property management is not just our business - it is a relationship between us, our owner-clients, and our tenant-residents.
If these are important to you, we may be a good fit to provide you, your property, and your tenant-resident with our full-service property management services.
Feel free to reach out to us for assistance.
Grace Property Management & Real Estate
Serving real estate investors and residents since 1978.
www.RentGrace.com
303-255-1990
