Rental Property Buying Checklist for Colorado

Before you analyze the listing, write down what you actually intend to do with the property.

Are you buying:

• a single-family long-term rental
• a condo or townhome rental
• a duplex or other small multifamily property
• a home you will occupy while renting another unit or space
• a property with an existing ADU
• a tenant-occupied rental
• a vacant property you intend to lease after closing

Those plans can require different financing, records, leases, inspections, insurance, association review, and local-rule checks.

Do not let the listing label decide the strategy for you.

A listing may describe:

duplex

ADU

basement apartment

mother-in-law suite

separate rental space

second kitchen

private entrance

Treat those phrases as clues.

They do not, by themselves, establish:

• legal unit count
• permitted construction
• allowable rental use
• separate utility status
• occupancy approval
• financing treatment

For a Denver Property

Start with the official property record and permit history.

Denver's property system lets you search an address for assessment and property information, while the city's e-permits system allows address-level permit and inspection searches.

City and County of Denver · Property Information

City and County of Denver · Building Permit Status

Use those records to identify questions.

Do not assume that finding—or not finding—a permit resolves every legal-use or condition issue.

If the unit count, ADU, conversion, or use materially affects the investment, get the appropriate local or legal answer before relying on the income.

Before relying on existing income, request the available documents that matter to the purchase.

Depending on the property, that may include:

• current leases
• lease expiration dates
• amendments or renewals
• rent roll
• payment records when available
• security-deposit information
• utility responsibilities
• concessions
• parking or storage arrangements
• other recurring charges or credits

Then compare the documents with what the listing says.

Questions Worth Asking

Is every unit occupied?

When does each lease expire?

Are any tenants month-to-month?

Who pays water, gas, electric, trash, internet, lawn care, or snow removal?

Are there concessions that make the headline rent look higher than the effective rent?

Is any income coming from parking, storage, laundry, or another source?

If an existing lease materially affects the purchase, have the appropriate professional review the lease and current Colorado requirements rather than assuming the new owner can immediately rewrite the arrangement.

Colorado landlord-tenant law includes state requirements in addition to the lease itself, and local requirements can add another layer. (Colorado General Assembly)

Rules of thumb can be useful for screening.

They are poor substitutes for the actual property.

Do not decide a Colorado rental solely because it meets:

• a 1% rule
• a cap-rate threshold
• a cash-on-cash target
• another shortcut

Those metrics can help compare possibilities.

They do not tell you whether:

• the rent is real
• the unit is legal
• the roof is near replacement
• the HOA limits rentals
• the sewer needs work
• taxes or insurance are materially higher
• a lease creates an obligation you did not model

Use shortcuts to find questions.

Use property documents and numbers to answer them.

This is a common source of confusion.

Your lender is deciding how much rental income can be used for mortgage qualification.

You are deciding whether the property is a good investment.

Those are different calculations.

For example, Fannie Mae's current conventional guidance generally applies a 75% factor when qualifying rental income from certain leases or appraisal market-rent forms, with the remaining 25% intended to account for vacancy and ongoing maintenance. That is an underwriting rule for applicable Fannie Mae loans—not a universal property cash-flow formula. (Fannie Mae Selling Guide)

Fannie Mae · Current Rental Income Guidance

Your lender decides what applies to your loan.

Bring the Property to the Lender Early

Provide the lender with the property type and intended use.

For a rented or multi-unit property, the lender may need information involving:

• leases
• market rent
• appraisal
• occupancy
• reserves
• existing real estate owned
• property type
• other loan-specific documentation

Do this before writing an offer that depends on rental income being counted in a particular way.

Review the Colorado Mortgage Pre-Approval Guide →

Owner-occupied financing and investment-property financing can be materially different.

If your plan is:

live in one unit and rent the other

or

occupy the home while renting an existing legal unit

tell the lender exactly that.

Do not describe the property as a normal primary residence and explain the rental plan after the offer is accepted.

The occupancy plan can affect:

• financing
• rental-income treatment
• property type
• insurance
• appraisal
• offer structure

Use the Denver House Hacking Guide →

For a duplex or small multifamily property, build a simple worksheet for each unit.

Track:

• current rent
• lease end date
• deposit
• bedrooms and baths
• condition
• utilities
• parking
• appliances
• needed repairs
• market-rent evidence

Then maintain a second list for common property systems.

That helps prevent:

“The building rents for $7,000 per month”

from hiding the fact that one unit needs substantial work, another lease is ending, and the roof serves everyone.

Colorado Duplex and Multifamily Buying Guide →

When you are ready to compare current inventory:

View Duplex and Multifamily Homes →

Do not assume:

“Rentals are allowed because there are already tenants in the complex.”

Review the current association documents.

Questions can include:

• rental restrictions
• minimum lease periods
• caps or waiting lists
• registration requirements
• move fees
• parking
• insurance
• assessments
• owner maintenance responsibilities

A condo with attractive rent and a manageable mortgage can still fail the investment plan if the association restrictions do not fit your intended use.

Denver currently requires a residential rental property license for property offered or operated as a residence for 30 days or more at a time. The city also requires qualifying inspections as part of the licensing process. (Denvergov)

City and County of Denver · Residential Rental Property Licensing

If the Property Is Already Licensed

Check the current license status.

Do not assume the existing owner's license simply solves the issue after ownership changes. Denver states that a residential rental license is valid for four years unless ownership changes. (Denvergov)

If It Is Not Licensed

Find out what the current inspection and application requirements would be.

Make that part of the purchase plan rather than discovering the issue after you expect to place a tenant.

Do not evaluate a Denver property as:

“I can always Airbnb it if long-term rent is weak.”

Denver treats those uses differently.

The city currently requires a short-term-rental license for stays of fewer than 29 nights and requires the short-term rental to be the operator's primary residence. Long-term residential rental licensing applies to rentals of 30 days or more. (Denvergov)

That makes short-term-rental eligibility a threshold issue, not an alternate revenue column you add later.

Check Denver Short-Term Rental Eligibility →

Outside Denver, verify the current rules for the actual city or county.

Buying the property and operating the rental are different stages.

But if the investment only works under assumptions about:

• existing leases
• security deposits
• rent increases
• application criteria
• tenant notices
• habitability
• fees
• lease termination

do not leave those assumptions unverified.

Colorado has statewide landlord-tenant requirements in addition to the lease, and local governments can have additional rules. The Colorado General Assembly's Legislative Council maintains a landlord-tenant law overview, but current statutes and local rules control the particular situation. (Colorado General Assembly)

For a tenant-occupied purchase or a plan that depends on changing an existing tenancy, have the appropriate attorney or property-management professional review the actual circumstances.

The purchase spreadsheet should not depend on a legal assumption nobody has checked.

A rental property is not automatically insured the same way as an owner-occupied home.

Tell the insurer how you intend to use the property.

That becomes especially important with:

• multiple units
• owner occupancy plus tenants
• vacancy during renovation
• older roofs
• foothills properties
• short-term rentals
• association properties

Colorado's Division of Insurance maintains consumer information on homeowners and property insurance, including Colorado hazards such as hail, wildfire, flood, and windstorm. (Colorado Department of Insurance)

The key purchase question is simpler:

Can I insure this property for the use I am underwriting, and what will it cost?

Bring us the address, listing, and investment plan.

Kenna Real Estate Group can help you work through:

• current listing information
• comparable properties
• available leases and rent information
• property configuration
• visible condition questions
• unit and parking setup
• current resale competition
• property-search strategy
• offer structure

We can also help identify which question should go next to the:

• lender
• inspector
• contractor
• insurer
• property manager
• attorney
• tax professional
• city or county

The goal is not for one person to pretend to answer every investment question.

It is to make sure the question gets answered before your return depends on the assumption being right.