Cap Rates in Colorado Springs

[David Long]

Hi There, I'm looking for some insight on average cap rates in Colorado Springs for 2 - 4 unit complexes. I've looked at a bunch of properties that are listed on the MLS, but don't have complete expense data for them yet. I can see that a Rent/Price ratio of 1% plus is likely doable with some negotiation. Taxes appear relatively low in some pockets. Also, any insight on the best neighborhoods to purchase in or neighborhoods to avoid would be helpful.

I'll be traveling there and looking for investment properties next month.  I have family ties there and intend to retire in the area.  Thanks ahead of time for your help.

[Aaron Moore]

Hi David Long ,

You are correct that a 1% ratio is doable for small multi-family in COS. Cap rates in that range are 8-10%, depending on the property, and cash on cash return is better than that if you're financing...usually a little less on duplexes, and can be better on fourplexes. Multi-unit residential is really tight inventory though, so anything in decent shape that falls in those ranges are typically gone within 24-48 hours so you have to just watch and then jump quickly. Property condition/capital investment has a big impact on those numbers, so make sure to factor that in. As for neighborhoods, you will see that multi-unit properties are in pretty defined areas, so you don't have a huge variety of choices. Especially with 3-4 unit properties your tenant pool is pretty similar across the board.