Colorado investor guide
How to read the numbers
(and the Colorado fine print)
Every metric the calculator produces, explained like a friend would — followed by the things that are specific to buying rentals in Colorado.
The metrics
Eight numbers, one honest picture
Net operating income (NOI)
Effective gross income − operating expenses
Everything the property earns after vacancy and every operating cost, before the mortgage. NOI is the number lenders and appraisers anchor on because it describes the property, not your financing.
Cap rate
Annual NOI ÷ purchase price
The unleveraged yield. Useful for comparing two properties head-to-head. Front Range long-term rentals often trade in the mid single digits; higher cap rates usually mean more risk, more work, or a smaller market.
Cash flow
NOI − mortgage payment
What actually lands in (or leaves) your account each month. The calculator deducts a vacancy allowance and a maintenance budget before calling anything cash flow — because the roof does not care that you skipped the line item.
Cash-on-cash return
Annual cash flow ÷ total cash invested
Your first-year cash yield on the down payment, closing costs and rehab you put in. It ignores appreciation and principal paydown, which is exactly why it is a useful gut-check on a leveraged deal.
DSCR
Annual NOI ÷ annual debt service
Debt service coverage ratio. 1.00× means the property exactly covers its mortgage; many investor loan programs want roughly 1.20–1.25× or better. Below 1.00× you are subsidizing the property from your own pocket.
Rent-to-price & GRM
Monthly rent ÷ price · Price ÷ annual rent
Screening shortcuts. The old "1% rule" (monthly rent at least 1% of price) is rare on the Front Range today; 0.7–0.9% is more typical, which is why the full expense model matters more than the rule of thumb.
Total return & CAGR
Appreciation + principal paydown + cash flow
Cash flow is only one of three ways a rental pays you. The projection adds loan paydown and appreciation to get your total investment gain, then expresses it as return on investment and a compound annual growth rate (CAGR) over the years you own it.
Break-even occupancy
(Operating expenses + mortgage) ÷ gross income
The share of scheduled rent you must actually collect to cover every bill. Above 100% means the property loses money even fully rented at the rent you entered.
Colorado specifics
What's different about buying rentals here
General information, not legal or tax advice. Rules vary by city, county and district and change — confirm the current version with the municipality, your CPA and your attorney.
How Colorado property tax works
Your bill is the county assessor’s actual value × the residential assessment rate × the local mill levy. For tax year 2026 the residential rate is 7.05% for school-district mills and 6.8% for other local-government mills (which also take 10% off the first $700,000 of value). A rental is assessed at the same residential rate as an owner-occupied home, and effective rates are among the lowest in the country — roughly half a percent of value statewide — but they swing widely with the mill levy. Values are reset in odd-numbered years. Pull the parcel from the county assessor and enter the real number; a seller’s senior or veteran exemption will not carry over to you.
Metro districts and HOAs
Many newer Front Range subdivisions sit inside a metropolitan district that financed the roads and utilities with bonds — and repays them with extra mills on your tax bill, sometimes doubling it versus an older neighborhood nearby. Check the mill levy on the parcel, not the city average. Colorado HOAs can also restrict or cap rentals; read the covenants before you close, and put the dues in the HOA line.
Rental licensing and short-term rentals
Colorado has no statewide landlord license, but cities do. Denver requires a residential rental license for any home rented for 30 days or more, with a passing third-party inspection; Boulder licenses rentals too. Short-term rentals are a separate world: Denver generally licenses them only in your primary residence, and many mountain and Front Range communities cap, zone or license them. This tool models long-term rental income with a vacancy allowance; it is not an STR calculator.
No rent control, but real tenant law
State law bars cities and counties from enacting rent control, so there is no local cap on what you charge. That is not the same as few rules: Colorado now requires cause to evict or decline to renew most leases, limits rent increases to once in a 12-month period, caps late fees, enforces a warranty of habitability, and tightened security-deposit rules on January 1, 2026. Have a Colorado attorney review your lease.
Hail, wildfire and the insurance line
Colorado homeowners premiums are among the highest in the country, and the state Division of Insurance attributes roughly a quarter to half of a typical premium to hail. Wind and hail deductibles are often a percentage of the dwelling value rather than a flat amount, and an older roof can change the quote or the coverage. In the foothills and mountains, confirm the property is insurable for wildfire before you are under contract. Get a real landlord-policy quote for the address.
House-hacking a 2–4 unit
Live in one unit and rent the rest, and owner-occupied financing with a much lower down payment may apply. The calculator models a pure investment purchase; for a house-hack, enter only the rent you will collect from the other units and ask your loan officer which programs fit.
Before you write the offer
A six-line checklist
- Real rent, not Zestimate rent. Pull three comparable leases, or ask a local property manager what the unit rents for today.
- Real tax, not the seller's tax. Look up the parcel and its mill levy — metro district included.
- An insurance quote for a landlord policy on that address, wind/hail deductible included — not a guess.
- Reserves you'd actually keep. Lenders will want to see them after closing anyway.
- The DSCR line. If it's under 1.0×, the property is a bet on appreciation. Know that going in.
- A loan officer's eyes on the PDF. The Fairway Colorado team will tell you what a lender will actually do with these numbers.
Numbers look good? Get them financed.
A spreadsheet can’t tell you what a lender will actually approve. The Fairway Colorado team can — pick your loan officer, download the PDF, and bring the numbers to a real conversation.