How to Buy Your First Rental Property in Colorado Springs

Colorado Springs is one of the most attractive rental markets in the Mountain West. With a growing military population, a steady stream of remote workers relocating from Denver, and home prices that still leave room to profit, the city offers something increasingly rare: an entry point that doesn't require you to be a millionaire.

Still, that doesn’t mean it’s easy, especially if you’re learning how to buy your first rental property in Colorado Springs. There’s more to it than finding a cheap house and listing it on Zillow. The difference between a property that does well and one that drains your savings comes down to preparation, local knowledge, and running the numbers before you sign anything.

This guide walks through what buying your first rental property in Colorado Springs looks like from start to finish. It covers how to set your budget, where to look, how to analyze deals, and what to do once the property is officially yours. Whether you’re active-duty military at Fort Carson, a local professional looking for another source of income, or an out-of-state investor eyeing El Paso County, the process is largely the same. If you get these seven steps right, you can put yourself in a much better position to make a first purchase that pays off. 

Step 1: Get Clear on Your Budget and Goals

A lot of first-time investors jump into the search process before they have fully thought through their goals, which can create confusion down the line. Some investors want immediate cash flow, usually around $200 to $500 per month after expenses. Others are more focused on appreciation and are willing to accept tighter margins now in exchange for long-term growth. When you are buying your first rental property in Colorado Springs, this choice affects everything, including where you buy and what kind of property you look for. 

Once you know your goal, you need to set a realistic budget. In Colorado Springs, a rental property in a desirable area costs, on average, about $450,000. Most investment loans require at least 15% down, but many buyers put down 20% to 25% to get better rates. On a $350,000 property, that means bringing $52,500 to $87,500 out of pocket, plus closing costs, which average $3,479 in Colorado.

You also need savings after closing. Most lenders want to see three to six months of mortgage payments in reserves. On top of that, it is smart to keep another $10,000 to $15,000 set aside for repairs, vacancies, and unexpected costs.

Before you start looking at homes, get pre-approved and talk to lenders who understand investment properties, not just your neighborhood credit union. Knowing your exact budget prevents wasted time and strengthens your offers.

Step 2: Pick the Right Market in Colorado Springs

Part of knowing how to buy your first rental property in Colorado Springs is understanding how much tenant demographics, growth trajectories, and rent prices can vary from one neighborhood (and even street) to the next. Picking the right area to invest in is only half the battle.

The east side of the city, including areas like Stetson Hills and Falcon, attracts military families from Fort Carson and Peterson Space Force Base. These neighborhoods tend to have newer construction, lower maintenance costs, and reliable tenant demand driven by PCS (permanent change of station) cycles. Three-bedroom homes in this area rent for $1,750 on average.

On the west side, near Old Colorado City and Manitou Springs, the market is different. These areas attract more young professionals, creatives, and short-term renters. Homes can rent for more, but they are often older and require more maintenance, and they may have to comply with stricter HOA or zoning rules. 

Central neighborhoods like Downtown, Ivywild, and Knob Hill offer walkability and character, but homes are pricier, and tenants tend to rent here by choice rather than necessity. That can mean pickier tenants and longer vacancies between leases.

For many first-time investors, areas near Powers Boulevard in the northeast and southeast offer a good balance. These neighborhoods tend to have newer homes, good schools, and consistent demand from families and military tenants who often stay for several years at a time.

When you are buying your first rental property in Colorado Springs, it helps to drive the neighborhoods, count the "For Rent" signs, look at rental listings, and talk to local property managers. Real-world observations matter more than general advice.

Step 3: Know the Numbers

When buying your first rental property, your numbers need to be realistic, not optimistic. Start with the price of rent. If similar homes are renting for $1,900 per month, use that number. Do not base your decision on a higher number you hope to get. On a $350,000 property with 20% down at a 7% interest rate, your monthly mortgage payment will usually be between $2,100 and $2,300, depending on taxes and insurance. A standard landlord policy costs between $1,300 and $1,900 in Colorado, while property taxes are relatively low, around 0.37% in Colorado Springs.

Then, add in the other costs:

• Property management: 8% to 12% of rent if you decide to go this route
• Vacancy: 5% to 10% of annual rent, since you’ll have a vacancy sooner or later
• Maintenance: about 1% of the property value per year (a few hundred per month)
• Capital expenses (CapEx): Roofs, HVAC systems, and water heaters don't last forever. Budget another $100 to $200 per month.

When you are buying your first rental property in Colorado Springs, the deal should still make sense after all of these costs. Ideally, you want at least $100 left over each month, preferably more. Some investors accept negative cash flow in high-appreciation areas, but that's a risky bet for your first property. Aim for positive cash flow from day one.

You can also use the 1% rule to help filter through properties faster. Essentially, if a property is priced at $320,000, you’d want to see rent somewhere around $3,200 per month. The 1% rule is hard to hit in this market, but properties that reach 0.6% to 0.7% can still work depending on your strategy.

Step 4: Build a Team That Knows the Market

Every real estate investor needs a well-rounded team in their corner. Trying to do everything yourself is a recipe for expensive mistakes, especially when buying your first rental property. 

Start by finding a local real estate agent who understands investment properties. This is not the same as working with someone focused on primary homes. You want an agent who can talk through rental comps, returns, and what actually performs in the market. If they can’t clearly explain how a deal works from an investment standpoint or they’ve worked with fewer than five investor clients in El Paso County, they’re probably not the right fit.

You’ll also want to line up:

• A lender who has experience with investment loans
• A property manager, even if you don’t plan to work with one right away
• A vetted contractor you can call for maintenance and repairs 
• A title company or attorney to handle closing

Your lender is just as important as your agent. Investment loans come with different requirements than primary home loans, including higher down payments, stricter debt-to-income ratios, and sometimes reserve requirements. A good lender can also walk you through options like DSCR loans, which qualify you based on the property’s income instead of your personal income.

A home inspector is another non-negotiable. You want someone who knows what to look for in Colorado Springs, like expansive soils on the east side, older plumbing in central neighborhoods, and radon levels that frequently test above the EPA action level. Radon mitigation typically costs $800 to $1,500, so you want to know about it before closing. An inspector’s insight will give you a chance to renegotiate or walk away if needed.

It’s also worth connecting with a CPA who understands rental properties. They can help you think through things like depreciation, 1031 exchanges, and pass-through deductions, which can have an impact on your returns.

And even if you plan to self-manage, having a property manager you trust is another smart move. Their local knowledge can help you learn more about rental pricing, tenant expectations, and common issues in the area. If managing the property ever becomes too much, you already have someone who can step in.

Step 5: Analyze and Finance Properties

With your team in place and your budget set, it’s time to evaluate actual properties. Start by setting up alerts through your agent so you’re notified as soon as new properties hit the MLS. At the same time, keep an eye on off-market opportunities. Local investor groups like the Pikes Peak REIA are a good place to start. In Colorado Springs, some of the best deals never make it to Zillow. Wholesalers, estate sales, and landlords looking to offload properties can sometimes offer below-market pricing if you know where to look.

For every property you consider, run a full analysis using the same expense categories from Step 3. A spreadsheet or a tool like BiggerPockets’ rental property calculator can help you stay consistent. Plan to analyze at least 10 to 15 properties before making an offer, and know that most of them won’t be the right fit. The more properties you assess, the better idea you’ll have of what counts as a good deal in this market.

On the financing side, you have a few main options. Knowing how to buy your first rental property in Colorado Springs means being open to options you may not have explored before, such as:

• Conventional investment loans: typically require 15% to 25% down, with interest rates about 0.5% to 0.75% higher than owner-occupied loans
• FHA or VA house hacking: if you’re willing to live in one unit of a duplex or multi-family property, you can put as little as 0% down with a VA loan or 3.5% down with an FHA loan
• DSCR loans: no personal income verification, with approval based on the property’s projected rental income. Down payments usually start at 20% to 25%
• Private money or partnerships: helpful if you can find deals but don’t have the capital, though these come with their own complexities 

Living in a duplex near Fort Carson or around the University of Colorado Colorado Springs (where multi-family properties occasionally pop up under $400,000) can let you get started with much less cash. In many cases, the rent from the other unit can cover a large portion of your mortgage while you build equity.

Step 6: Make an Offer and Close

So, you’ve found a property that pencils out. Now you’re at the stage of buying your first rental property where deals are either won or lost. In Colorado Springs, the market has cooled compared to the 2021–2022 surge, but well-priced properties in strong rental areas still move quickly. Your agent should help you put together an offer that’s competitive without overpaying. 

One thing you don’t want to do as an investor is waive the inspection. Spending $400 to $600 on a thorough inspection can save you $20,000 or more in unexpected repairs. Make sure your offer includes an inspection contingency, and use the results to negotiate repairs or credits. In Colorado Springs, common issues include aging furnaces, which can cost $4,000 to $7,000 to replace, foundation cracks caused by expansive soil, and outdated electrical panels in homes built before 1980. None of these are deal breakers, but they do affect your costs.

Once you’re under contract, stay closely involved with your lender. Investment property loans typically take about 30 to 60 days to close, and it’s common for underwriters to ask for additional documents, such as bank statements, explanations for large deposits, or proof of reserves. Respond quickly, ideally within 24 hours, as delays can put the deal at risk.

Before closing, make sure your insurance is set up. Landlord policies are different from standard homeowner policies and usually cost 15% to 25% more. You’ll also want to open a dedicated bank account for the property and have a plan in place for leasing or property management.

Once you close, your first mortgage payment is already on the clock. The faster you can get the property rent-ready and occupied, the better your numbers will look.

Step 7: Prepare for Tenants

Before you list the property, it needs to be fully rent-ready, with all of your systems in place before the first application even comes in. At a minimum, make sure the unit is clean and functional. That usually means fresh paint in neutral colors, clean carpets (or replacing them if they’re worn), and fully working appliances. 

Double-check all safety items too, including smoke detectors, carbon monoxide detectors, and secure locks on every exterior door and window. Colorado law requires landlords to provide habitable living conditions, and in El Paso County, you’ll also need to handle lead-based paint disclosures for homes built before 1978. These are the details you may not think about when learning how to buy your first rental property in Colorado Springs, but they matter just as much as every other step.

When it comes to pricing, base your rent on current comps, not what you need the property to bring in. Even overpricing by $50 to $100 per month can lead to extra vacancy time, and that lost time usually costs more than lowering the rent a bit. 

Tenant screening is another part you won’t want to skip. Run credit checks, verify income and employment, and aim to find tenants earning at least three times the monthly rent. Take a look at their rental history as well, and contact their previous landlords to hear more about how they were as a tenant. A bad tenant can easily cost thousands in damages, missed rent, and legal fees. While Colorado’s eviction process isn’t the slowest, it can still take months from notice to possession. It’s much easier to avoid that situation than deal with it later.

Finally, make sure you’re using a Colorado-specific lease agreement. Generic templates you find online usually aren’t as detailed as you want to be. Your lease should clearly outline things like pet policies, maintenance responsibilities, late fees (which need to stay within a reasonable range), and renewal terms. If you’re working with a property manager, they’ll typically handle this. If not, it’s worth having a local real estate attorney review your lease before your first tenant signs.

From First Purchase to Long-Term Performance With Evernest

Most first-time investors enter the rental market thinking success means finding a property that checks every box. What matters more is having the right strategy and sticking to it. With the seven steps outlined above, you can ensure you stay on track.

Colorado Springs continues to grow, offering more affordable entry prices than Denver or Boulder while benefiting from a strong military presence that supports consistent rental demand. That creates plenty of opportunities for investors. With the right approach, your first purchase can turn into a long-term investment and, eventually, a growing portfolio.

If you’re still feeling confused about how to buy your first rental property in Colorado Springs, a property manager like Evernest can help. Our local team handles tenant placement, lease management, maintenance, and ongoing operations on your behalf, ensuring you don’t have to figure everything out as you go. Reach out to Evernest today and let us take the stress off your plate.