Choosing where to buy a rental property in Colorado depends on the type of investment you are trying to build. Some markets may fit a long-term rental strategy better, while others may look more appealing for appreciation potential or for very carefully researched short-term rental use.
This guide is designed to help investor-borrowers compare Colorado cities more effectively before making an offer. Instead of focusing only on popular places, it looks at the decision criteria that matter when you are trying to match a market to your rental strategy, local rules, and financing comfort level.
When investing in Colorado rental properties – whether it’s in Colorado Springs, Denver, Boulder, or Aurora – choosing the right location can make all the difference. Here are some factors to consider before investing in CO real estate.
Before you buy a property in a particular area, look into whether or not there is any future development slated to take place. While certain types of development may be good for a neighborhood or city – such as new infrastructure (as long as it’s not abutting your property) – other types of development may be bad for business.
Ideally, there should be signs that the area is growing and up-and-coming. Anything that will improve the livability of the area and increase the value of properties is a good thing for you as a real estate investor in Colorado.
As a real estate investor and landlord, the last thing you want to see is a high rate of vacancy in the city you plan to invest in. If your method of real estate investing involves buying a rental property and renting it out to tenants, you ideally want to make sure that you can find a good tenant who will stick around for the long haul.
A high rate of turnover is not a good thing for any investor. This can waste a lot of time, effort, and money marketing their places for rent, screening prospective renters, and getting your units ready for occupancy. What you want to see is a relatively low number of listings.
This is also good for competition. If there aren’t as many places available for rent, there will be less for tenants to choose from. In this case, you may have more negotiating power and may also be able to fill your unit quickly without having to compete much with other investors.
Just keep in mind that there may be seasonal cycles taking place, which could skew the numbers.
There are plenty of expenses related to owning property in Colorado, and that includes property taxes. Ideally, the property tax rate in the area you are buying in will not be too high. Expenses like these can creep up on you and eat into your profits.
Before you buy, make sure you fully understand what the property taxes are like for the property you wish to purchase and see if you can find out if there are any increases in the world in the near future.
Having said that, high property taxes may also mean that the area is desirable and in high demand. If that’s the case, your property can be considered of high value and may also see value appreciation over the short- and long-term, which is obviously a good thing.
Just make sure all your expenses work out with your revenues so that you still profit handsomely after all is said and done.
The way that you will make a profit on your investment rental property is by charging a rent amount that will more than cover your expenses and leave you with sufficient funds after all is deducted.
As such, you want to make sure that the going rent in the city you are looking to buy in is high enough. Otherwise, you could find yourself in the red every month.
You may want to charge a certain rent amount for your unit, but if the surrounding neighborhood does not command such a price, you could be out of luck. Instead, look at the average rent price for a unit that you are planning to buy to gauge what you can realistically charge.
Consider the rent price relative to the price you pay for the property and the operating expenses. For instance, a $1,200 rent might not sound like much for a $500,000 property, but it should be plenty for a property worth $250,000.
Before comparing cities, decide what you are actually trying to optimize for. If your goal is long-term rental stability, focus first on tenant demand, turnover risk, and whether the rent can realistically support the payment and operating costs. If your goal is appreciation-oriented buy-and-hold, you may accept thinner monthly cash flow in exchange for a market with strong long-term desirability and employment depth. If you are researching short-term rental potential, start with legality before revenue assumptions, because local licensing, owner-occupancy rules, zoning limits, and permit caps can eliminate a market quickly.
This matters because the same city can look attractive under one strategy and impractical under another. A high-price market may still fit an appreciation-minded buyer, while a more affordable city may be easier to underwrite for long-term cash flow. Likewise, a tourism-driven area may seem promising for vacation rentals, but only if the specific property can legally operate that way.
Before buying any Colorado property with short-term rental income in mind, verify the rules at the exact property address, not just at the state level. Colorado does not have a single statewide short-term rental operating license. Rentals of lodging units for fewer than 30 days are treated as short-term rentals under state law, but local authorization is the decisive step. The state imposes a 2.9% sales tax on lodging, and additional county and municipal taxes may apply.
In Denver, a short-term rental requires a city-issued business license and a Lodger’s Tax account, and the property must be the host’s primary residence. Investment properties, second homes, and non-owner-occupied properties cannot legally operate as short-term rentals there. A host may hold only one active STR license, stays of fewer than 30 consecutive days trigger the licensing requirement, and the city actively audits compliance.
In Boulder, owners must obtain a rental housing license before advertising. The property must be the owner’s principal residence, meaning the owner resides there more than half the year. Licenses run for four years but require an annual affidavit and fee. Stays are limited to 29 consecutive days or fewer per stay, and ADUs are generally not eligible unless the permit predates 2019.
In unincorporated Boulder County, all short-term and vacation rentals must be licensed regardless of prior land-use approvals. Applications are reviewed for zoning, parking, septic, building safety, and occupancy compliance, and some sub-areas impose additional restrictions or prohibitions.
Colorado Springs uses a two-tier permit system. Owner-occupied short-term rentals are allowed in all residential zones, including single-family neighborhoods. Non-owner-occupied permit applications submitted after December 26, 2019, are prohibited in single-family zoning districts and, in other zones, must maintain a 500-foot separation from another non-owner-occupied STR. Annual permits are required.
Manitou Springs is especially restrictive. The city caps STRs at 2% of all residential structures, requires new STRs to be owner-occupied for at least 185 days per year, requires Planning Commission approval, and enforces a 500-foot separation rule. Permits are owner-specific, non-transferable, and expire upon sale or transfer.
For New Castle, the town’s official website does not publish a standalone STR ordinance with clearly codified rules accessible online. Buyers considering short-term rental use there should contact the Town directly at 970-984-2311 and review the current municipal code before assuming STR viability.
Also remember that HOA rules are separate from city or county permission. Even where a local jurisdiction allows short-term rentals, an HOA may prohibit them or impose minimum rental periods that effectively block vacation-rental use. Long-term rentals of 30 days or more are generally treated differently and usually face fewer licensing hurdles, but investors should still review landlord-tenant obligations and any HOA rental restrictions before buying.
As a practical process, identify the exact governing jurisdiction for the parcel, read the current ordinance directly, confirm zoning, verify any owner-occupancy standard, check whether permit caps or spacing rules apply, review whether a license transfers at sale, request HOA documents, and confirm local tax registration requirements before closing.
There are a number of Colorado markets worth comparing, but they do not all fit the same type of investor. Use the city examples below to match your strategy with likely demand, rule constraints, and underwriting practicality.
| Median home price | $538,992 |
| Price change over the past year | -3.4% |
| Average rent for a one-bedroom apartment | $1,450 per month |
Best fit: Denver is generally better suited to long-term buy-and-hold investors and owner-occupant house-hackers than to pure short-term rental investors.
Demand profile: Denver has a diversified economy across aerospace, technology, healthcare, government, and professional services. The city has more than 37 million square feet of downtown office space and a population of over 700,000, which helps support long-term rental demand from professionals and relocating households.
Rule caveat: Denver restricts short-term rentals to the host’s primary residence only. Non-owner-occupied investment properties, second homes, and investor-owned STRs are prohibited, and the city actively audits compliance.
Financing and cash-flow concern: If you are buying a non-owner-occupied property in Denver, underwrite it using long-term rental comparables only. STR income should not be part of the investment case for a non-primary-residence purchase here.
Denver home values were down 3.4% year over year as of 6-30-2026.
| Median home price | $450,254 |
| Increase in price over the past year | -1.8% |
Best fit: Colorado Springs is one of the more practical featured markets for investors researching either long-term rentals or non-owner-occupied short-term rentals, though parcel-level zoning matters.
Demand profile: The aerospace and defense industry accounts for more than 40% of the Colorado Springs economy, with more than 200 space, aerospace, cybersecurity, and defense companies employing approximately 111,000 people and generating annual economic impact above $10.2 billion. The region also includes five military installations, about 45,000 active-duty military, Guard, and Reserves, around 90,000 veterans and retirees, UCCS demand, and steady tourism tied to Pikes Peak, Garden of the Gods, and the U.S. Olympic Museum.
Rule caveat: Owner-occupied STRs are permitted in all residential zones. Non-owner-occupied STR permit applications submitted after December 26, 2019, are prohibited in single-family zoning districts and must maintain a 500-foot separation from another non-owner-occupied STR in other zones. Annual permits are required.
Financing and cash-flow concern: Investors should verify zoning before underwriting any non-owner-occupied STR income. For long-term rentals, the relatively lower entry price compared with Boulder may make the market easier to model, but the payment still needs to work against realistic rent and reserve assumptions.
The average home price was down 1.8% over the past year.
| Median home price | $972,493 |
| Price change over the past year | -0.9% |
| Average rent | $2,350 |
Best fit: Boulder may fit owner-occupants, academics, or professionals who want to offset carrying costs, but it is less practical for pure investment-property STR buyers.
Demand profile: The University of Colorado Boulder has over 38,000 students and is the city’s largest employer with more than 9,600 employees. Boulder also hosts more than a dozen national research labs, around 120,000 jobs, more than 7,000 businesses, and strong industry clusters in aerospace, bioscience, cleantech, IT, natural products, and outdoor recreation.
Rule caveat: Short-term rentals are limited to the owner’s principal residence. ADUs are generally not eligible unless permitted before 2019, and licenses are issued for four years with an annual affidavit and fee.
Financing and cash-flow concern: Boulder’s high entry price means investors should stress-test payment, reserves, and realistic rent assumptions carefully. Even with strong rent demand, many buyers will need to model the property primarily as a long-term rental rather than rely on short-term income.
As of 6-30-2026, Boulder home values were down 0.9% year over year.
| Median home price | $657,600 |
| Increase in price over the past year | +4.3% |
| Average rent | $2,503 |
Data note: New Castle average rent is as of June 30, 2026, and home value figures are as of 6-30-2026. Best fit: New Castle is a smaller market that may interest investors willing to do more direct local verification rather than rely on broad published market guidance.
Demand profile: New Castle is a home-rule municipality in Garfield County with a 2020 census population of approximately 4,923. It functions as a residential community in the Roaring Fork and Colorado River valley corridor, but employment demand drivers are not well documented in official economic development publications at the town level.
Rule caveat: No verified, current official STR ordinance text was retrievable from the Town’s official website. Investors should contact the Town of New Castle directly before assuming any short-term rental viability.
Financing and cash-flow concern: Because the local STR framework is not clearly published online, buyers should underwrite a New Castle purchase using long-term rental income only unless they have confirmed STR eligibility directly and in writing.
The average rent in New Castle is $2,503 as of June 30, 2026, and Zillow’s home value index for the city was $657,600 as of 6-30-2026. Zillow reported that New Castle home values were up 4.3% year over year as of 6-30-2026.
| Median home price | $557,121 |
| Increase in price over the past year | 0.5% |
| Average rent | $1,300 |
Best fit: Manitou Springs is highly constrained for STR investors and is generally a better fit for buyers who value the tourism-adjacent location but are prepared for strict rules.
Demand profile: Tourism is the mainstay of the local economy, and the city is positioned near Pikes Peak and Garden of the Gods. It is also recognized locally as a historic arts, culture, health, and wellness destination.
Rule caveat: STRs are capped at 2% of residential structures, new permits require owner-occupancy for at least 185 days per year, Planning Commission approval, and a 500-foot separation from any other STR. Permits are non-transferable and expire upon sale.
Financing and cash-flow concern: Do not underwrite STR income here unless you have first confirmed that permit capacity is available and that the property can satisfy the spacing and occupancy rules. For many buyers, the safer analysis is long-term rental use only.
As of 6-30-2026, home values in Manitou Springs were up 0.5% year over year. The city’s average rent is $1,300.
Even if a city looks attractive on paper, the financing side can make a property more or less practical. Investment properties typically require more money down than primary residences, and lenders may also expect stronger reserves. That means a high-price market can strain liquidity faster, even when rent demand is solid.
Rate and payment sensitivity also matter. A market with expensive homes or thin rent-to-price ratios may leave less room for taxes, insurance, maintenance, vacancy, and management costs. In that case, a less expensive city or a different property type may be easier to underwrite comfortably.
Projected rent should also be treated conservatively. If the property only works with aggressive rent assumptions or with seasonal short-term income that may be restricted locally, the deal may be weaker than it first appears. As you compare Colorado markets, look at whether the purchase price, expected payment, reserves, and likely rent all fit your borrowing plan, not just whether the city is popular.
If you want to buy an investment property in Colorado for investment purposes, a mortgage will likely be needed to help you finance this expensive purchase. If so, Sammamish Mortgage is here to help. We are a family-owned Mortgage Company that has been providing borrowers in Washington, Oregon, Idaho, Colorado and California with many mortgage programs with flexible qualification criteria since 1992. Get in touch with Sammamish Mortgage today, or visit our website to get an instant rate quote!
Colorado can be attractive for rental property investment, but the right market depends on the strategy. Some cities may fit long-term rental stability better, while others may be more appealing for appreciation potential or carefully researched short-term rental use.
Markets featured here include Denver, Colorado Springs, Boulder, New Castle, and Manitou Springs. The best fit depends on whether the goal is long-term cash flow, appreciation, or a property that may qualify for short-term rental use under local rules.
Single-family homes, long-term rentals, and some owner-occupied or carefully vetted short-term rentals may fit different Colorado markets. Performance depends on purchase price, realistic rent, operating costs, and whether the intended rental use is legal at the property address.
Urban markets may offer deeper long-term rental demand, while smaller or tourism-oriented markets may appeal to buyers researching appreciation or short-term rental potential. The better choice depends on local rules, financing comfort, and whether the numbers work for the intended strategy.
Average rent varies by city and property type. Examples mentioned here include about $2,350 in Boulder, $2,503 in New Castle, and $1,300 in Manitou Springs.
Look at vacancy and turnover risk, local employment depth, future development, property taxes, and whether average rents can support the payment and operating expenses. It also helps to compare price trends and verify whether local rental rules could limit the strategy.
Demand may be stronger in tourism-driven areas, but legality comes before revenue assumptions. Cities such as Denver and Boulder restrict short-term rentals to a primary or principal residence, while other areas may use permit caps, spacing rules, zoning limits, or owner-occupancy requirements.
Yes, but remote buyers should verify the exact governing jurisdiction, zoning, HOA rules, permit requirements, and local tax registration before closing. Conservative underwriting is especially important when the buyer cannot easily confirm on-the-ground conditions personally.
Start by deciding what the property needs to do. For long-term rentals, focus on tenant demand, turnover risk, and whether rent can support the payment and operating costs. For short-term rentals, verify legality first, including licensing, zoning, owner-occupancy rules, spacing requirements, and permit caps.
Investment properties typically require more money down than primary residences, and lenders may expect stronger reserves. Buyers should also use conservative rent assumptions, because a high-price market or thin rent-to-price ratio can leave less room for taxes, insurance, maintenance, vacancy, and management costs.
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