Should You Turn Your Colorado Springs Home Into a Rental Property?

Turning your Colorado Springs home into a rental property works when your mortgage payment is low enough that achievable rent covers it with room left over, and you have cash set aside for vacancy and repairs. If you bought recently at a higher rate, positive cash flow is harder to reach — so run your actual payment, not an average.

Most people ask me this after getting orders, taking a job elsewhere, or buying a second house. The answer turns on your payment, your achievable rent, and your reserves — not on whether rentals are "a good investment." Here's how I'd walk through it.

Rent Vs. Sell in Colorado Springs: The Comparison at a Glance

If you're still weighing the sale side, my How a Home Seller Can Prepare a Home for Sale and Maximize Value walks through what actually moves the needle on price.

Can a Colorado Springs Rental Property Actually Cash Flow Right Now?

Sometimes. It depends almost entirely on when you locked your rate.

Rents here have been flat to slightly down. The Pikes Peak Housing Network reported average Colorado Springs rent of $1,410 in Q1 2026, up from $1,395 the prior quarter but below the $1,460 average of Q1 2025. Vacancy that quarter was 7.27%.

For a size reference point, RentCafe reported an average of $2,063 for three-bedroom apartments in Colorado Springs as of August 31, 2026. That's apartment data — a single-family home rents on its own merits, so pull rental comps for your actual address before you plan around any citywide number.

Now the payment side. Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed at 6.71% as of September 3, 2026.

Bought today. $450,000 purchase, 5% down, $427,500 over 30 years at 6.71% = about $2,761 principal and interest. Add roughly $170/month property tax and an estimated $200/month landlord insurance: about $3,130 all-in, before HOA. Against $2,063, that's a gap near $1,070 a month.

Bought in 2021. A $400,000 VA loan at 3.25% = about $1,741 principal and interest, or roughly $2,110 all-in with the same tax and insurance estimates. That's near breakeven on the mortgage — but not on the business, once management, vacancy, repairs, and turnover come out.

A low rate is often the single biggest variable in whether this works. It doesn't finish the math by itself.

Estimates only. The tax figure uses an effective rate in the 0.4%–0.5% range typical of El Paso County; the El Paso County Assessor sets the 2026 residential assessment rate at 6.8%, and your actual bill depends on your mill levy. Look up your address, and get a real insurance quote.

What Renting Out Your House Actually Costs

The mortgage is the number everyone runs. These are the ones that get skipped:

• Property management: Colorado Springs firms commonly quote 8%–12% of collected rent plus a one-time tenant-placement fee. On $2,063, 8%–10% runs roughly $165–$206 a month.
  
  
• Vacancy: Colorado Springs vacancy was 7.27% in Q1 2026. That's a market snapshot, not your property's schedule — build a vacancy reserve based on your home's price point, condition, and demand.
  
  
• Maintenance and replacements: furnaces, roofs, water heaters. A common rule of thumb is 1% of the home's value each year — around $4,500 on a $450,000 house. It's a budgeting rule, not a market statistic.
  
  
• Landlord insurance: a dwelling policy often costs more than an owner-occupied homeowners policy. Get an actual quote before you run cash flow.
  
  
• Turnover: paint, carpet, cleaning, and re-listing between tenants.
  
  
• HOA rules: some Colorado Springs HOAs cap the number of rentals or require registration. Check your covenants before you sign a lease.

Add those up and a house that "breaks even" on the mortgage is often losing money in reality.

The Tax Clock Most Homeowners Don't Know About

This is the part that costs people real money, and it's the reason I'd rather you read this before you rent it out than after.

Under IRS Section 121, if you owned and lived in the home as your main residence for two of the last five years, you can exclude up to $250,000 of gain if single, or $500,000 if married filing jointly. The details are in IRS Publication 523.

Here's the timing piece: rental use after you move out doesn't count against you the way rental use before you moved in does. For most homeowners who move out and don't move back, selling within roughly three years of the move-out date preserves the two-of-five test.

Military exception — this one matters. Qualifying members of the uniformed services on qualified official extended duty may elect to suspend the five-year test period for up to 10 years, which can stretch the effective lookback to 15. If you're PCSing, do not assume the three-year shortcut applies to you. Confirm with a tax professional.

One more: once it's a rental, you depreciate the building (not the land) over 27.5 years. That's a deduction now. At sale, the portion of gain attributable to depreciation allowed or allowable can't be excluded under Section 121 and may be taxed as unrecaptured Section 1250 gain at a maximum federal rate of 25% — whether or not you actually claimed it.

I'm a REALTOR®, not a CPA. Run your numbers past a tax professional first. It's usually a one-hour conversation that changes the answer.

If You Have a Va Loan, Read This before You List It for Rent

You can rent out a VA-financed home. The rules are about when.

• Occupancy: VA requires a good-faith intent to occupy the home as your primary residence, generally within 60 days of closing. Details are on VA.gov's home loans page.
  
  
• No blanket 12-month rule: VA's published occupancy guidance doesn't establish a required period you must keep living there after you move in. Individual lenders may apply their own overlays — ask yours.
  
  
• PCS orders: orders to a duty station you can't commute from are a common, well-documented change in circumstances. Keep a copy with your loan file and tell your lender or servicer.
  
  
• Entitlement: keeping the loan generally leaves entitlement charged to it until it's restored — usually at payoff, at sale, or when a qualified veteran assumes the loan and substitutes entitlement.
  
  
• Remaining / second-tier entitlement: you may still buy at the new duty station, though available guaranty and any required down payment depend on your COE and the county loan limit.

What Being a Landlord in Colorado Actually Asks of You

Owning a rental is a small business. The job includes:

• Keeping the home compliant with Colorado's warranty of habitability
  
  
• Using written, consistently applied screening criteria that comply with federal fair housing law and Colorado's Rental Application Fairness Act — the Colorado Attorney General has enforced this against landlords using third-party screening companies
  
  
• Following federal fair housing rules on advertising, screening, and showings — HUD's Fair Housing Act overview is the plain-language starting point
  
  
• Handling security deposits, notices, and lease terms correctly under Colorado law
  
  
• Taking the 9 p.m. call about the furnace

Plenty of people do this well. But if you're moving out of state and don't want a manager taking 10%, be honest about who's driving over when the water heater goes.

When I'd Rent It Out, and When I Wouldn't

I'd lean toward keeping it as a rental if:

• Your rate is under roughly 4.5% and market rent covers the full payment
  
  
• You have six months of expenses in reserve for that property
  
  
• You plan to hold it at least five years
  
  
• You expect to come back to Colorado Springs

I'd Lean Toward Selling if:

• You'd cover a monthly shortfall you can't comfortably absorb
  
  
• You have no repair reserve
  
  
• You're inside the three-year Section 121 window with meaningful gain
  
  
• The house needs work you've been putting off
  
  
• Managing it from a distance would keep you up at night

Key Takeaways

• Your interest rate is often the single biggest factor in whether a Colorado Springs rental property cash flows, but rent, operating costs, and reserves decide the full picture.
  
  
• Three-bedroom apartments averaged $2,063/month as of August 31, 2026, and citywide vacancy was 7.27% in Q1 2026 — single-family rents vary by property.
  
  
• Budget beyond the mortgage: management, vacancy, maintenance, landlord insurance, and turnover.
  
  
• Many homeowners have roughly three years after moving out to preserve the Section 121 gain exclusion, but qualifying service members on extended duty may have more time.
  
  
• Gain attributable to depreciation may be taxed as unrecaptured Section 1250 gain at up to 25%, and Section 121 does not exclude that portion.
  
  
• VA borrowers can rent, but occupancy rules, PCS documentation, and entitlement all need to line up first.

Frequently Asked Questions

How much rent can I get for my house in Colorado Springs? It depends on size, condition, and location. RentCafe put three-bedroom apartments at an average of $2,063 as of August 31, 2026, and the Pikes Peak Housing Network reported an average rent of $1,410 in Q1 2026. Those are reference points, not house rents — get comps on your address.

Can I rent out my house if I bought it with a VA loan? Yes, once you've satisfied the occupancy requirement. VA generally expects move-in within 60 days and looks for good-faith intent to occupy, not a fixed minimum stay afterward. Individual lenders may apply their own overlays, and PCS orders are a common documented change in circumstances.

Will I owe taxes if I rent my home and sell it later? Possibly. Selling within roughly three years of moving out generally preserves the Section 121 exclusion of up to $250,000 or $500,000 of gain, and qualifying service members on extended duty may suspend that clock for up to 10 years. Gain attributable to depreciation is taxed regardless.

Should I use a property manager or self-manage? Self-managing saves that 8%–12% if you're staying local and comfortable with maintenance calls. If you're moving out of state, a manager is usually worth it — a mishandled deposit or screening violation costs more than a year of fees.

Have Questions About Your Specific Situation?

Every one of these decisions changes with your rate, your equity, and your timeline. If you want someone to run the numbers on your actual house instead of an average, reach out.

• Call or text: (719) 413-6610
  
  
• Email: [email protected]

No pressure, no pitch. If selling is the better call, I'll tell you that.

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