18 Colorado cities ranked by estimated cap rate. The average cap rate across Colorado markets is 2.7%, with median home prices averaging $611K and rents averaging $2,042/mo. Sterling leads with a 4.3% cap rate at a $250K median price. Colorado's low average property tax rate of 0.51% gives investors a significant cash flow advantage.
Colorado offers 18 investable rental markets tracked by CapRateCity. The state average cap rate of 2.7% is near the 3.81% national average. No cities pass the 1% rule at median prices, so value-add strategies are essential.
Prices and rents: Colorado home prices average $611K, which is 83% above the national average of $333K. Rents average $2,042/mo.
Taxes and costs: Property taxes average 0.51% across Colorado, below the 1.08% national average — a meaningful cash flow advantage that adds roughly $3,482 per year to NOI on an average-priced property. Colorado Springs has the lowest rate at 0.49%.Vacancy averages 4.9%, tighter than the national average — favorable for landlords.
Growth outlook: Population growth across Colorado averages 1.28% per year, led by Colorado Springs at 1.8%. Home values are appreciating at 2.5% annually on average. Strong population growth is driving housing demand and supporting both rent increases and price appreciation across the state.
Bottom line: Colorado is primarily an appreciation market. Cash flow investing requires below-median purchases or value-add strategies. Consider whether the growth and appreciation potential justifies tighter margins.