Buying Colorado Rentals in an LLC: Series LLCs Are Allowed Here
Program and regulatory figures verified July 24, 2026. Details change; confirm your scenario with us.
Colorado investors hold rentals in LLCs for liability separation, and a lot of them get one fact backwards: Colorado does authorize series LLCs. Here's how the financing actually works, at closing, after closing, and at renewal time.
Closing in the LLC, at the table
On a DSCR loan, the LLC takes title at closing. No workarounds, no deed shuffling afterward: the purchase contract, the loan, and the deed all run to the entity, and you sign a personal guaranty as the member. Colorado closes through title companies, and they handle entity purchases every day: bring the articles of organization, the operating agreement, and a certificate of good standing, and the closer does the rest. The LLC takes title at closing, which is a core reason serious Colorado landlords reach for DSCR over conventional once the portfolio matters: how DSCR qualifying works.
Does Colorado allow series LLCs? Yes, since 2021
This is a genuine corrective, because a lot of investor content assumes only states like Texas, Delaware, and Illinois offer series LLCs. Colorado does too. Colorado adopted the Uniform Protected Series Act, effective January 1, 2021, codified at C.R.S. §7-80 Part 12 (HB20-1096). A single parent LLC can establish multiple protected series, each holding its own assets and liabilities with a horizontal shield separating each series from the others' debts. That puts Colorado in the series-LLC column, unlike California, North Carolina, Georgia, and Maryland, which do not authorize domestic series LLCs. Our lending-side note: program acceptance of series vesting varies. Some DSCR programs lend to a series directly, others want a standalone LLC per property or the parent entity on title. Structure the series with a Colorado attorney first, then bring us the org chart and we'll tell you which programs match it. This is lender-guideline information, not legal advice.
What does a Colorado LLC cost?
Very little, and here's the corrected number, because the internet is wrong about it. Forming a Colorado LLC is a $50 one-time filing for the Articles of Organization with the Secretary of State, and keeping it in good standing costs $25 a year for the periodic report, filed in a five-month window around your anniversary month (a $50 late fee applies if you miss it). Colorado charges no state franchise tax on the entity. You may have seen a "$10 formation" figure circulating; it's stale or conflates an old promotional rate, and no current Secretary of State schedule supports it. Budget $50 to form and $25 a year to maintain.
The due-on-sale question, answered with the actual rule
Conventional loans are the mirror image of DSCR: Fannie Mae and Freddie Mac loans must close in your personal name. So what happens when you later deed the property to your LLC? The internet's answer is "the bank calls your loan." The actual rule is friendlier: Fannie Mae's Servicing Guide (D1-4.1-02) treats a transfer to a limited liability company as an exempt transaction, not grounds for due-on-sale enforcement, when the loan was acquired by Fannie on or after June 1, 2016 and the borrower controls or majority-owns the LLC. Freddie Mac maintains a similar provision. Two caveats: confirm which agency owns your loan before deeding, and know you'll generally need to deed back to your personal name to refinance conventionally later. Your attorney papers the transfer; the tax picture is in rental property taxes.
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Frequently asked questions
Can I buy a rental property in an LLC in Colorado?
Yes: DSCR loans close with title vested in the LLC at the table, personal guaranty behind it, and Colorado title companies treat entity closings as routine. Conventional loans can't close in an entity, so investors who want LLC title from day one use DSCR or other business-purpose financing.
Does Colorado allow series LLCs?
Yes. Colorado authorizes protected-series LLCs since January 1, 2021 under the Uniform Protected Series Act (C.R.S. §7-80 Part 12, HB20-1096), where one parent LLC holds multiple protected series with separate liability. That puts Colorado ahead of California, North Carolina, and Georgia, which don't. Lender acceptance of series vesting varies by program, so confirm the structure with us and an attorney first.
How much does it cost to form and maintain a Colorado LLC?
A $50 one-time filing for the Articles of Organization, then a $25 annual periodic report, with no state franchise tax. The report has a five-month filing window around your anniversary month, with a $50 late fee if missed. The "$10 formation" figure some sources cite is stale; the current Secretary of State fee is $50.
Will transferring my rental into an LLC trigger the due-on-sale clause?
For Fannie Mae loans acquired on or after June 1, 2016, a transfer to an LLC the borrower controls or majority-owns is an exempt transaction under Servicing Guide D1-4.1-02, not a due-on-sale event. Freddie Mac has a similar rule. Confirm which agency owns your loan first, and use an attorney for the deed work.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content, not a loan commitment and not legal or tax advice. City and county STR rules, tax figures, and filing fees change; verify current requirements with the city or county, the HOA or metro district, your CPA, or a Colorado real estate attorney before you buy. Loans are subject to buyer and property qualification.