What should I calculate before turning my Colorado Springs home into a rental?

Start with the strategy

Rental math depends on what you're trying to do. There are a few common approaches:

• Buy and hold. This is what most military members end up doing, because they buy with a VA loan, live in the home, and keep it as a rental when they move. The goal is cash flow and long-term equity. Keeping your home as a rental and using your VA benefit again covers the VA side.
• Buy low and add value. You buy a home that needs work, improve it, rent it while it's cash flowing well, and sell at a later date.
• Fix and flip. You buy, renovate, and sell without renting at all.

Each one needs its own numbers, so be purposeful about which one you're running. If you're turning your current home into a rental, you're usually in the buy-and-hold lane. Before the numbers, though, I start with the life question: what do you want, and does keeping this home support it? That's the Life → Wealth → Real Estate™ order.

The full cash flow

Rent minus the mortgage isn't the whole picture. Here's the worksheet I recommend filling in for the specific house:

I recommend that reserve because it's not if something happens, it's when. If the numbers only work when nothing goes wrong, they don't work. Why homeowners insurance varies between Colorado Springs houses and what to do if your insurance is non-renewed or too expensive cover the insurance line.

Where new investors get the math wrong

By not doing the due diligence. By not calling in a general contractor they trust. That's why referrals are so important: you want people you trust giving you real numbers, not guesses.

In practice, that means:

• getting actual repair and replacement quotes instead of estimating them;
• looking at the home with fresh eyes, the way a tenant or an inspector would, before you rent it out (a sewer scope and a roof inspection are worth it on an older home);
• and pricing the work honestly if you're buying a home to fix up. Comparing a cheaper home that needs work with a move-in-ready one walks through that math.

Taxes, your loan, and selling later

These are questions for your CPA and lender, but they belong in the numbers before you decide:

• Rental income is taxable, and you can generally depreciate a residential rental over 27.5 years. When you convert a home you lived in, the IRS bases depreciation on the lower of your adjusted basis or the home's fair market value at the time you convert it.
• The home-sale exclusion has a clock. To exclude the gain on a home you lived in, you generally need to have owned and lived in it for two of the five years before the sale. Renting it out long enough can cost you that exclusion. Capital gains when you sell a Colorado Springs home explains the basics.
• Depreciation comes back at sale. Ask your CPA about depreciation recapture and whether a 1031 exchange could fit your plans.
• Check your loan. Owner-occupied loans, including VA loans, come with occupancy terms. Renting the home after you've met them is common, but confirm with your lender.

Colorado landlord rules to know before you sign a lease

• For-cause rules. Under a 2024 Colorado law (HB24-1098), once a tenant has been in the home 12 months, a landlord generally needs a reason allowed by law to not renew the lease. Selling the home or moving back in are allowed reasons, with 90 days' notice (45 days for an active-duty landlord moving back in). If you might sell or return, plan for that timing.
• Other rules. Security deposits, habitability, and notice requirements all have Colorado-specific rules. A property manager or a landlord-tenant attorney can walk you through them.
• Renting by the night is different. A short-term rental in Colorado Springs needs a city permit and has its own rules. Short-term rental rules in Colorado Springs covers them.

Being ready to be a landlord

The money is only half of it. If you can handle the risk financially and mentally, and you believe in the home as a long-term investment, a rental can be a strong play. If you'd worry every time a tenant calls, it's fine to sell instead. Nobody likes to live that way, and the reserve is what lets you handle the calls when they come.

What could change the answer

• Your mortgage rate and how much equity you have.
• The home's age and what's due for replacement.
• HOA rental rules.
• How long you've lived in the home, and how long you plan to rent it.
• Whether you'll manage it yourself or hire a property manager.

When to talk with a professional

A CPA can tell you how renting affects your taxes and the home-sale exclusion. Your lender can confirm your loan's occupancy terms. A property manager can estimate rent and explain Colorado landlord rules, and a landlord-tenant attorney can review your lease. A trusted general contractor can price the repairs and replacements so your numbers are real.