Successful real estate investors are always hunting for the next great investment opportunity. Colorado Springs could provide that opportunity.
Sitting an hour south of Denver, Colorado Springs offers beautiful geography, a robust economy, and a competitive real estate market.
Real estate investors exploring new markets should consider the following benefits of Colorado Springs rental properties:
Real estate can offer steady income — especially when the market heats up.
Currently, Colorado Springs rents are slowly increasing. Property values are growing faster, which could point to continual rental income growth.
Investors can make their rental income more passive by hiring a property manager. The right property manager allows investors to step back and enjoy the fruits of their investment worry-free.
Putting all your capital into one asset class can lead to losses if that asset class declines. That’s why investors expand into real estate, and Colorado Springs is a great market to start in.
However, staying in one real estate market is risky in the same way that staying in one asset class is risky.
Investing in Colorado Springs rental real estate can be a great way to diversify the markets you’re in if you’re expanding your property portfolio.
Investing in Colorado Springs rental property can offer investors various tax deductions. Investors should always consult a tax advisor if they’re unsure whether they qualify, but here are some potential write-offs to look at:
Investors can’t use the same mortgage-interest deduction homeowners use. That’s for property owners who live in their homes.
However, mortgage interest on investment properties may be deductible as a business expense. This is an important distinction because, in most cases, you can only deduct your interest expense to the extent of your rental income.
Many investors find depreciation to be their most significant tax deduction. The IRS lets you deduct depreciation to account for property wear and tear.
You might be able to add costs associated with getting your mortgage to your property’s cost basis. This could let you depreciate a large amount each year for more potential savings.
Most rental property in the US can be depreciated for 27.5 years before the deduction runs out. However, consult with a tax specialist if you’re unsure.
You incur operating expenses managing the property and running your real estate business. The IRS only lets investors deduct expenses considered to run the business.
Some expenses you may be able to deduct include:
Investors can often deduct property taxes and insurance from their rental income taxes. These can offer recurring tax savings alongside other yearly deductions like depreciation.
Investors who travel to manage properties could potentially deduct relevant travel expenses. Some expenses include:
Investors far from Colorado Springs or out of state entirely can save big on taxes if eligible to deduct these expenses.
In 2022, The Milken Institute ranked Colorado Springs 9th out of its 15 best-performing large cities — putting it several places ahead of Denver.
“Colorado Springs reported only a 0.1 percent economic decrease in 2020, faring significantly better than the US metro area average of -3.5 percent,” read part of the report. This is partly thanks to the large number of military and defense businesses deemed “essential” during 2020.
That said, it has a diverse economy beyond military and defense. Education, healthcare, tech, the trades, and business services are some of the area’s largest economic sectors.
Major employers in the area include:
Median household income is $67,719, sitting just above the national median. Meanwhile, the unemployment rate was at 3.6% in July, barely above the US’s 3.5%.
Colorado offers some of the most beautiful geography in the US — and Colorado Springs is right in the middle of it. This draws plenty of outdoors enthusiasts to the area.
The city sits at the eastern foot of the rocky mountains. There are plenty of outdoor activities to do, such as hiking, biking, climbing, horseback riding, and skiing. Mountain climbers can hike up to Pikes Peak, a 14,114-foot summit within Pike National Forest.
Inside the city is the Garden of the Gods, full of mountain views and gorgeous red-sandstone formations. There’s also The Broadmoor luxury ski resort, the Cheyenne Mountain Zoo, and Rocky Mountain Food Tours.
Denver’s an hour north of Colorado Springs. As a result, tenants can take weekend trips to enjoy the big city.
Colorado Springs is not broadly known for the most affordable housing. However, there are numerous deals if you know where and how to find them.
Besides, the booming economy and excellent location spur growth despite higher housing costs. People will move here to take advantage of the job opportunities, mountains, and forests.
Real estate can provide steady income, diversification, and potential tax savings in good markets. Plus, Colorado Springs’ location and resilient economy offer investors excellent opportunities in The Centennial State.
Housing may be pricier, but investors who know where to look and move fast can snatch up deals before they’re gone and take advantage of the city’s steady growth.
That’s where Evernest can help. We help you find great deals to reap the financial rewards of investing in the Colorado Springs real estate market.
Let’s talk — fill out our buyer’s form today to get started.
Taylor Streitmatter is Evernest’s Director of Brokerage. His diverse expertise includes sales, operations, and brokerage management.
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