Are you still investing in Colorado? Restrictive new law HB 24-1098

[Dee D.]

I keep seeing posts about HB 24-1098 which severely restricts a landlords ability to evict non paying tenants or restricting folks on rental assistance from the government.  

Are you all still investing in Colorado long term rentals?

[Melanie P.]

People still invest everywhere. Even New York where you can't see if the applicant has a history of eviction. You adjust your processes and make it work. 

[Jerrod Rosen]

Hi Dee, This is just adding more logistics to evicting tenants. Colorado loves adding red tape! As always, we need to be qualifying tenants well and following up with prior landlords. We have had very good luck with our systems in place and love the appreciation of the market here but there are always risks in whatever market. 

[Scott Trench]

These policies always weed out competition, ultimately backfiring on the very people they are intended to protect.

I’ll invest as always in CO, and while I won’t vote for people who push such policies, I’ll keep investing, knowing that more government prevents the market from working and introducing supply long-term, limiting my competition and driving up rents and demand from quality tenants ever faster.

[Dee D.]

Thanks @Scott Trench that's a good point. I certainly won't vote for those politicians, just being a bit cautious as my brother ran into a similar issue and it took his property manager 5 months to get the non paying tenant out.  

[Dee D.]

Thanks @Melanie P. and @Jerrod Rosen I like the reframe.

[Steve K.]

I think this is a reasonable law. 

CO landlords can still evict for all of the common grounds for eviction: nonpayment of rent, violation of lease terms, damage to property, disturbing the peace, health and safety violations, illegal activities etc. and can also still evict if they plan to conduct repairs or renovations, property demo or conversion, move in to the unit themselves or have a family member move in, withdraw the property from the rental market, or if the tenant refuses to sign a new lease with reasonable terms. 

Unless you're in the business of evicting tenants without giving them a reason, then your business shouldn't be effected. 

I haven't had an eviction in many years personally. I like to buy in good locations that attract good tenants, screen applicants very well, and retain good tenants. When I have had to evict, I've found the courts and sheriffs here very easy to work with and it has been a quick process (in fact just as quick as any other state which is one reason CO is consistently named in the top 5 landlord-friendly states). Every eviction I've had to do was for a reason that falls under the list of allowable reasons even under the new law. Business as usual here for me! 

[Michael Smythe]

Issue with ALL the new tenant-protection laws being passed is that they put 100% of everything new on the landlords - while not holding tenants accountable for anything new:(

So, a tenant can still move out and break a lease whenever they want, with little repercussions.

[Peter Hu]

If you can find a great long term rental that still cash flows in CO, then I'd say it's still worth it. I've dealt with 2 evictions in my career, but those were due to my own inexperience when vetting tenants. I'm still comfortable with LTR, MTR, and STR here in CO

[Brandon Elliott]

Quote from @Dee D.:

I keep seeing posts about HB 24-1098 which severely restricts a landlords ability to evict non paying tenants or restricting folks on rental assistance from the government.  

Are you all still investing in Colorado long term rentals?

 This is a great highlight video. Sounds like the legislatures are just trying to make being a landlord or PM that much harder. 

I will continue to buy in CO due to the overwhelming positive factors that come with owning homes in CO; Appreciation, strong demand, location preferences, long term trends of CO housing market and strong rent increases. To say a small handful... but will be more cautious of the tenants since they may be staying much longer than a 12 month lease... 

[Bill S.]

@Dee D. You really need to understand the law. As I understand it, HB24-1098 changes the procedures for evictions and creates many more procedural hurdles but I would not say it "restricts a landlords ability to evict non-paying tenants". What the law does do is create tenants in perpetuity which means I can't decide I don't want to continue to rent to a tenant who has lived in the property for over 12 months and tell them to move at the end of their lease. Now I must have a cause to end the lease and that cause must be an evictable violation of the lease or one of the few exceptions stated above. This completely changes the nature of the property rights. I no longer am intitled to the return of my own real property at the end of a residential lease. The tenant can stay as long as they want. This is most restrictive when purchasing a property with legacy tenants from slum lords. In many cases, the old tenant base doesn't fit with the new plan for the property (ie upkeep, cleanliness, and respecting the rights of others). In the past, it was simple to say, "time to move on" to these legacy tenants. Now, they have to violate the lease and we then have to evict them. Lots more brain damage and more evictions which is what the stated purpose of the bill was to avoid.

I would say that SB24-094 has far more impact to the operations of many landlords in Colorado. Most of the details will have to be ironed out in the courts. Again in direct opposition to the stated purpose of "helping" tenants. The attorney's I follow stated that this bill impacts landlords in Colorado in that they are no longer required to uphold a standard of "warranty of habitability" but are now required to "guarantee housing" to those folks renting from them.

Long answer. I am still investing in long term rentals in Colorado. I am of the scale that I can probably deal with these issues by throwing money at the various problems that will arise. I am not sure I would have survived or even started investing being a small time landlord if these laws had been in place when I started investing.

[Dee D.]

Thanks @Bill S. that's a really good synopsis and opinion on it. I will continue to look in the Denver area but will look for more meat in the deal to support the extra headaches that comes with the process.

[Calvin Graves]

I've been sorting out 24-1098 with existing leases at my job, where it's created some difficult knots to untangle with the timing of affordable housing tenant recertifications and the offer/notice timelines.

But that aside, the law just imposes more formality on lease enforcement, whether or not it comes to a forcible eviction. Do what your lawyers say and you should be fine.

Should be noted that the full 90 day nonrenewal requirement only attaches if the tenant has a lease more than a year long, has lived there more than a year, or has refused a reasonable renewal offer. Since most leases expire the day before their anniversary, they are less than one year long and the 28 day requirement would apply unless the lease is terminating for the tenant's refusal to renew. If you offer renewal 104 days before lease end, they'll have 14 days to consider renewal, and if they don't sign, the 90 day period will coincide with the lease end date.

As far as tenancy in perpetuity, I think it's legitimate to wonder why someone should lose their home if they haven't done anything that's incurred an enforcement action. Frankly, a landlord who can't be bothered to enforce their own lease gets the tenants they deserve. If there are expectations you want tenants to meet, put them in the lease so you can enforce them. Treating property management as "passive" income lowers the bar on professionalism and hurts both tenants and properties.

[Bill S.]

@Calvin Graves So I disagree with the concept that the lease covers all bad/undesirable behavior that would cause a "normal" landlord to non-renew. I have had case of tenants, subtly harassing other tenants at multi-unit properties. Also dealing drugs and other criminal behavior. Unless the cops come and arrest them, you really can't write a lease to address these characters. It also makes it challenging when purchasing a property from an estate or other party that hasn't really managed the property well (didn't spend a lot of time screening the current tenants). Bad actors make it into the units. Occasionally I have made a mistake and let some folks in that weren't the best neighbors to the other folks at the property. In our current litigious society it is difficult to get previous landlords (especially big box LL) to give an honest response about the quality of people applying to my units. Based on what I have observed, I do a thorough screening, and still I have had one or two slip through the cracks over the years. Not being able to send them packing at the end of the term is going to make things more challenging not to mention making life miserable to the quality tenants living next to these less than desirable characters.

The law was billed as reducing unnecessary evictions (those without cause). In reality, only a very small portion of evictions (<1%) were without cause (98% were for not paying rent and 2% for violating the lease). It is my humble opinion that the legislator who wrote the law (he represents tenants exclusively), was building a business for himself and trying to create an industry for attorney's to represent tenants. In order to do this, the law has to become complicated and convoluted. 

[Eric DeNardo]

Thanks for the video. I agree with the other sentiments that this law seems reasonable and that it will weed out the investors not willing to go through the processes, making it better for investors who are willing to put in more effort. 

[Jon L.]

Quote from @Scott Trench:

These policies always weed out competition, ultimately backfiring on the very people they are intended to protect.

I’ll invest as always in CO, and while I won’t vote for people who push such policies, I’ll keep investing, knowing that more government prevents the market from working and introducing supply long-term, limiting my competition and driving up rents and demand from quality tenants ever faster.

 Agreed. Good perspective.