Should I sell my Colorado Springs home or rent it out when I move?

Rent it out only if the numbers work and you're prepared, financially and mentally, to be a landlord. Start with the real monthly math: the rent you'd realistically get against your mortgage, taxes, insurance, maintenance, and time between tenants. Then set aside a reserve for the repair that will eventually come. A low mortgage rate can make keeping the home a strong long-term investment, but it isn't enough by itself. If you'd worry every time a tenant calls, or you need the equity for your next home, selling may fit better.

Run the numbers first

The question isn't whether the rent covers the mortgage. It's whether the home earns enough to be worth owning as a business. I recommend writing out every monthly cost:

• mortgage principal and interest;
• property taxes, plus any metro district tax;
• a landlord insurance policy, which usually costs more than a homeowner's policy;
• HOA dues, if any;
• maintenance and repairs, including the big items, such as the roof, furnace, and water heater, and how old they are;
• vacancy, the months between tenants when there's no rent;
• property management, if you won't manage it yourself.

Compare that total with a realistic rent for that specific home today. A local agent or property manager can help you estimate it from recent leases, not asking prices. If the home only works on paper when everything goes right, it may not work.

Set aside a reserve before you rent it out

I recommend setting aside $10,000 to $15,000 in a separate account for the day something breaks. It's a question of when, not if. A furnace in January, a water heater, or a hail claim with a high deductible can all land in the same year.

The reserve isn't only about money. It's what lets you handle a problem calmly: you call a local professional and get it fixed instead of scrambling.

A low mortgage rate is worth weighing, but it isn't the whole answer

Many people want to keep a home mainly because of its rate. That's a fair reason to look closely. In my view, a mortgage rate of 2% to 3% is likely a once-in-a-lifetime opportunity, and historically, real estate has been a strong investment over time.

But a low rate only helps if the rest of the picture works:

• Your next home. If you need the equity for a down payment, keeping this one may mean a bigger loan at today's rates on the next. A lender can show you both scenarios.
• Your loan's occupancy terms. Most mortgages ask you to live in the home for a period after closing, often at least a year. Check your loan documents before you move out and rent it.
• Your insurance. Tell your insurance company before a tenant moves in. A standard homeowner's policy generally isn't written for a rented home.

Being a landlord is a lifestyle decision, too

Life circumstances will often decide this for you. But if you have the choice, be honest about the mental side. If you'd hold your breath every time a tenant calls, nobody likes to live that way, and a rental that pays on paper can still cost you peace of mind.

If you can handle the risk financially and mentally, and you believe in the home as an investment, it can be a strong long-term play. If you can't, it's fine to sell. Renting isn't for everyone.

If you'll be managing from far away, decide up front who will handle showings, repairs, and emergencies. A good property manager costs money, so build that into the numbers rather than assuming you'll do it from another state.

Taxes change when the home becomes a rental

This is a question for a CPA, but it's worth knowing the outline before you decide:

• The home-sale exclusion has a time window. The IRS generally lets you exclude gain on a home you owned and lived in for at least 2 of the 5 years before you sell. Renting the home out for a while can still leave you inside that window, but once you've been gone long enough, you can lose the exclusion.
• Depreciation is taxed when you sell. Once the home is a rental, depreciation you were allowed to take is taxed at sale, even if the rest of the gain is excluded.
• A 1031 exchange may be an option later if the home becomes a long-term investment and you want to trade into another one.

Bring your purchase price, improvements, and moving timeline to a CPA, and ask how long you could rent before selling and what you'd owe. Capital gains when you sell a Colorado Springs home explains the basics.

What's specific to renting out a Colorado Springs home

• Colorado landlord rules. Since 2024, Colorado generally requires a landlord to have a cause allowed by law to end a residential tenancy. Selling the home is one of the allowed reasons, with limits and notice requirements. If you plan to sell in a few years, have a landlord-tenant attorney or a property manager walk you through how that would work before you sign a lease.
• Your tax bill keeps coming. Property taxes, and any metro district tax, continue whether the home is rented or not. Update your mailing address with the El Paso County Assessor so the Treasurer's tax notices reach you after you move.
• Hail and roofs. Many Colorado Springs policies carry a separate or percentage deductible for wind and hail. Know yours, and know your roof's age, before you count on the rental's cash flow. Why insurance varies so much between Colorado Springs homes explains why.
• Short-term rentals are different. Renting by the night in Colorado Springs requires a city permit and has its own rules, so treat that as a separate decision.

If you're military, the same decision has a few added pieces, such as using your VA benefit again; selling or renting your home when you PCS covers them.

Lean on good local professionals

How to decide

• If the rent comfortably covers every cost, you have a reserve, and you're comfortable being a landlord, keeping the home as a rental can make sense, especially with a low mortgage rate.
• If you need the equity for your next home, compare both scenarios with a lender before you decide.
• If the numbers only work when nothing goes wrong, or you'd worry about every call, selling is a reasonable choice.
• If you might sell in a few years anyway, ask a CPA about the home-sale exclusion window, and ask a landlord-tenant professional how a sale would work with a tenant in place.

Whether a Colorado Springs home makes a good long-term rental goes deeper on the investment side.

What could change the answer

• Your mortgage rate, and whether you need the equity for your next home.
• The age and condition of the roof and major systems.
• How long you plan to keep the home, which affects the tax picture when you sell.
• Whether you'll manage it yourself or pay a property manager.
• Your loan's occupancy terms and your insurance options as a landlord.

When to talk with a professional

Talk with a CPA before you rent the home out, about the home-sale exclusion window and depreciation. Talk with a lender about both scenarios for your next purchase. Call your insurance agent about a landlord policy before a tenant moves in. Talk with a property manager, or a landlord-tenant attorney, about Colorado's rules for leases and for selling with a tenant in place. And talk with a local real estate professional about what the home would sell for now, so you're comparing two real options.

Sources

• IRS Publication 523, Selling Your Home (ownership and use tests, depreciation): https://www.irs.gov/publications/p523
• Colorado General Assembly, HB24-1098, Cause Required for Eviction of Residential Tenant: https://leg.colorado.gov/bills/hb24-1098
• El Paso County Assessor: https://assessor.elpasoco.com
• El Paso County Treasurer: https://treasurer.elpasoco.com