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Colorado residents invest in real estate without tenants through five vehicles: public REITs, private syndications, mortgage notes secured by Colorado property, Delaware Statutory Trusts, and turnkey rentals run by a licensed property manager. Each one pays from rent or interest, and none of them puts you on the phone with a plumber at midnight.
This guide gives the minimum dollars for each, what it pays, the Colorado rules that apply, and the checks to run before you wire money. The Kenna Real Estate Group works with investors who own rentals and with investors who never want to. The passive options below are the same ones our clients use when they sell a Denver rental and want to stay in the asset class.
The five passive options side by side
| Option | Minimum | What it pays | How fast you get out | Colorado rule to know |
|---|---|---|---|---|
| Public REIT | Price of one share | Quarterly dividend | Same trading day | Dividends taxed as income at Colorado's 4.4% flat rate |
| Syndication | $25,000 to $100,000 | Quarterly distributions | Locked 3 to 7 years | Most deals are Regulation D and require accredited-investor status |
| Mortgage notes | $1,000 fractional; $50,000 and up for a whole note | Monthly interest | 6 to 18 months on short-term notes | Colorado forecloses through the county Public Trustee, 110 to 125 days after the notice is recorded |
| Delaware Statutory Trust (DST) | $100,000 at most sponsors | Monthly distributions | Locked 5 to 10 years | Eligible for a 1031 exchange when you sell a Colorado rental |
| Turnkey rental with a manager | 20% to 25% down | Monthly rent minus fees | 30 to 90 days to sell | Denver requires a residential rental license; managers charge 8% to 10% of rent |
How does a REIT work for a Colorado investor?
A real estate investment trust owns income property and must pay out at least 90% of its taxable income to shareholders every year. You buy shares in a brokerage account the same way you buy any stock, and you sell the same day you decide to. The SEC's investor guidance on REITs explains the difference between traded, non-traded and private REITs; stick with exchange-traded REITs unless you have read a full prospectus.
Two large REITs are headquartered on the south side of the Denver metro: UDR, the apartment owner based in Highlands Ranch, and National Storage Affiliates in Greenwood Village. Owning shares in either gives you exposure to Front Range rent without a single lease in your name.
- Equity REITs own buildings and pay from rent. They track property values over 5 to 10 years and stock prices over 5 to 10 days.
- Mortgage REITs own loans and pay from interest. Yields run higher and the share price moves with interest rates.
- Taxes in Colorado: most REIT dividends are ordinary income on your federal return and on your Colorado return at the 4.4% flat rate. The federal 20% qualified business income deduction applies to ordinary REIT dividends.
Who qualifies for a real estate syndication in Colorado?
A syndication is a private partnership that buys one property or a small portfolio, such as a 120-unit apartment building in Aurora or a self-storage site in Colorado Springs. A sponsor finds the deal, signs the loan, and runs the building. You buy a limited partner share, receive quarterly distributions, and get a K-1 at tax time.
Most syndications are sold under SEC Regulation D. Rule 506(c) deals are advertised and require every investor to be accredited: $200,000 of income in each of the last two years ($300,000 with a spouse), or $1 million of net worth excluding your primary residence. Rule 506(b) deals accept up to 35 non-accredited investors who already know the sponsor.
- Minimum check: $25,000 to $100,000.
- Hold period: 3 to 7 years, with no way to sell your share early.
- Fees to read for: acquisition fee of 1% to 3% of the purchase price, asset management fee of 1% to 2% of collected rent, and a preferred return of 6% to 8% before the sponsor shares profit.
- Checks: look up the offering's Form D on SEC EDGAR, confirm the sponsor's entity with the Colorado Secretary of State, and ask for two years of actual distribution history on a prior deal.
How do mortgage notes work in Colorado?
Note investing makes you the bank. You buy the loan secured by a house instead of the house, and the borrower pays you monthly interest. Colorado secures loans with a deed of trust, and when a borrower stops paying, the county Public Trustee runs the foreclosure. A residential sale takes place 110 to 125 days after the Notice of Election and Demand is recorded, which is faster than the court-run process in most states.
Fractional platforms let you buy mortgage notes with as little as $1,000, spreading one check across several borrowers and properties. Short-term notes on fix-and-flip projects pay 10% to 14% a year on 6- to 18-month terms, secured by a first lien. Keep the loan-to-value at 70% or lower so a 20% drop in Front Range prices still leaves equity under your lien.
Work only with lenders who put their own money into every loan they sell. A broker who matches buyers to sellers without a stake has no reason to turn down a bad loan. If you already hold a note from a seller-carry sale, read how to sell a mortgage note in Colorado. To understand what the borrower on the other side of a flip loan is doing, read the Denver fix and flip guide.
Is real estate crowdfunding open to non-accredited investors?
Yes. Platforms that sell under Regulation Crowdfunding or Regulation A+ accept investors who are not accredited, with minimums from $500 to $10,000. Equity deals pay a share of rent and sale profit; debt deals pay interest on a loan the platform originated.
- Check the platform: a Regulation Crowdfunding portal must be registered with FINRA, and each deal files a Form C on EDGAR.
- Check the geography: platforms list Colorado deals in Denver, Aurora, Lakewood, Colorado Springs and Fort Collins alongside deals in 40 other states; the platform, not you, picks the market.
- Check the exit: equity crowdfunding shares have no secondary market. Plan to hold until the property sells.
What is a DST and why do Colorado landlords use it to quit?
A Delaware Statutory Trust holds institutional property, such as a 300-unit apartment complex or a distribution warehouse, and sells fractional interests starting at about $100,000. The IRS treats a DST interest as real property, so a landlord who sells a Centennial rental sends the proceeds through a qualified intermediary, identifies the DST within 45 days, closes within 180 days, and defers the entire capital gain.
The result is monthly income with zero management, at the cost of liquidity: DSTs run 5 to 10 years and you cannot sell early. Colorado taxes capital gains as ordinary income at 4.4%, so the deferral saves state tax as well as federal. Before you sell, run the numbers in our home equity and net proceeds guide and read tax-smart strategies for Colorado real estate investors.
What does a turnkey rental with a Denver property manager cost?
Owning a rental and paying a manager is the closest thing to passive ownership while keeping the deed. Denver metro managers charge 8% to 10% of collected rent plus a leasing fee of 50% to 100% of one month's rent each time a tenant turns over. On a $2,400 rental that is $190 to $240 a month, plus $1,200 to $2,400 per new lease.
Denver requires a residential rental license for every long-term rental, with a $50 fee for a single unit and an inspection every four years. Read our rental property checklist for Colorado before you make an offer, and our guide to investment property loans in Denver for the 20% to 25% down payment lenders require on a non-owner-occupied purchase.
Is house hacking passive?
No, and it is the cheapest way in. An FHA loan puts you in a duplex, triplex or fourplex in Denver, Aurora or Lakewood with 3.5% down, and the other units' rent covers most of the mortgage. Colorado's 2024 ADU law, HB24-1152, requires cities in the Denver metro planning area to allow an accessory dwelling unit on single-unit lots, which adds a second house-hack path on a regular lot. Read the Denver house hacking guide and the Colorado duplex and multifamily buying guide.
How to check any sponsor, lender or platform before you invest
- SEC EDGAR: search the entity name for a Form D, Form C or Regulation A offering statement.
- Colorado Division of Securities: the division inside DORA lists enforcement actions and registered broker-dealers.
- Colorado Secretary of State: confirm the entity is in good standing and who the registered agent is.
- County records: for a note seller, search the county Public Trustee's foreclosure records to see how many of their loans went to sale.
- Distribution history: ask for 24 months of actual investor statements on a completed deal, not a projection.
Our post on what Front Range investors should verify before investing covers the property-level checks; the list above covers the people.
Which option fits which goal
- Monthly income now: mortgage notes or a DST.
- Growth with same-day liquidity: public REITs.
- Bigger upside and a K-1: a syndication, if you are accredited.
- Own the deed without the calls: a turnkey rental with a manager.
- Least cash in: house hacking with an FHA loan.
Where to go next
- Colorado real estate investing guide
- Rental property checklist for Colorado buyers
- Denver house hacking guide
- House hacking explained for Colorado homebuyers
- Search every home and multi-unit property for sale in Colorado
- Meet the Kenna Real Estate Group agents
Talk to the Kenna Real Estate Group
We help Colorado investors buy duplexes and rentals, sell rentals they are done managing, and connect the sale to a 1031 exchange when that is the plan. Call or text 303-955-4220. A live person answers. Not a robot, not a phone tree. Or search every home for sale in Colorado to see what a rental in your budget looks like today.
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