El Paso County, CO Cap Rates by Neighborhood

County-Wide Gross Yield: Real but Incomplete

At the county-wide level, El Paso County posts a 4.68% gross yield against a $455,749 median home price and $1,777 median monthly rent. That figure is a starting point, not an underwriting number. It masks a wide spread between asset segments and neighborhoods: a Broadmoor single-family at $528,000 behaves nothing like a workforce rental near Fort Carson at sub-$300K. The 21.4x price-to-rent ratio sits well below Denver and Boulder, which is what keeps gross yields viable here at all, but the aggregate hides where the real cap rate opportunity concentrates.

The right move is to decompose the county number by asset segment, then layer in property taxes, insurance adjustments, and the current price vs. rent dynamic.

Cap Rate Decompression: Prices Are Falling Faster Than Rents

This is the single most useful data point for investors right now. The 2025 full-year median sale price fell 5.2%, and the Zillow ZHVI is down an additional 1.72% year-over-year as of mid-2026. Rents, by contrast, are holding: multifamily average rent in the Colorado Springs metro sits at $1,448 with 90.7% occupancy, and the construction pipeline is slowing. When prices fall and rents hold or edge up, cap rates decompress. Investors who bought in 2021 at 12 days on market are underwater on paper; investors buying today at 57 average days on market and record inventory of 4,039 active listings are acquiring at a better yield than any point since 2020.

The math is simple: the same rental income divided by a lower purchase price equals a higher cap rate. The correction is doing the work for you on the entry side.

Neighborhood and Segment Breakdown

Upper-Tier Neighborhoods: Briargate and Broadmoor

These two submarkets represent the yield-compressed end of the county.

Broadmoor hit a February 2025 median of $528,000, up 20% year-over-year, with one to two months on market. At that price point, even with Colorado Springs' favorable $1,777 county-median rent as a ceiling estimate, gross yield compresses toward 4.0% or below. Net of vacancy, management, and maintenance, you are likely in the low 3% net operating cap rate range. Broadmoor is an appreciation play with income as a secondary benefit.

Briargate posted a $545,000 median in February 2025, up 9% year-over-year, averaging 47 days on market and selling about 1% below ask. Gross yield at $545,000 with county-median rent implies a similar sub-4.5% gross, and net operating cap rates will fall into the mid-3% range once expenses hit. The longer hold periods these neighborhoods require align with an appreciation thesis, not a cash-flow thesis.

Neither neighborhood is a workforce rental target. They serve investors prioritizing price stability, higher-income tenants, and long-term appreciation in a military-anchored metro with 730,323 residents.

Workforce and Small Multifamily: The Cash-Flow Core

The brief identifies a chronic shortage of housing priced under $300,000 alongside an oversupply above that threshold. This is where the county's gross yield story becomes actionable.

A single-family or small multifamily property acquired below $300,000 in workforce-housing corridors carries a different yield profile than the Briargate or Broadmoor comps. Using the county-median rent of $1,777 against a $280,000 acquisition price implies a gross yield of about 7.6%. Even at $320,000, gross yield is roughly 6.7%. These are the numbers that attract buy-and-hold investors who cannot get above 3% in Boulder or Denver.

The military renter base anchors this segment. Fort Carson, Peterson Space Force Base, Schriever Space Force Base, and the U.S. Air Force Academy collectively generate a large population of BAH-eligible renters whose housing allowances are federally funded and recession-resistant. BAH-eligible tenants provide a rent-payment floor that civilian-only markets cannot replicate.

The risk: average weekly wages in the county are $1,369 against a national average of $1,589. Civilian renter purchasing power is capped, which limits rent growth outside of military-adjacent locations. Underwrite rent growth conservatively.

Property Tax Impact on Net Cap Rate

El Paso County's 0.43% effective property tax rate is one of the few structural advantages that holds across all submarkets. At the national median of 0.89%, the gap is real money.

On a $455,749 purchase (the ZHVI median):

That $2,096 in annual tax savings flows directly to net operating income. On a $455,749 property generating $21,324 in annual gross rent ($1,777 x 12), the tax line represents roughly 9.2% of gross revenue at the national rate vs. 4.4% locally. Net cap rates in this market run 35–50 basis points higher than in equivalent-price markets with average tax burdens, for no other reason than state tax structure.

For the 2026 tax year, the residential assessment rate is set at 6.8% of actual value, versus 25% for commercial. Investors running small multifamily as commercial-assessed properties face a higher tax load and should model that separately.

Flood Insurance Adjustment

A preliminary FEMA remapping showed a net decrease in flood-risk areas across El Paso County, with stormwater improvements credited along the I-25 corridor and Manitou Bypass. A handful of properties near East Las Vegas Street and Hancock Drive saw increased risk, and waterway-adjacent parcels remain in the highest tier.

For most buy-and-hold acquisitions in the county, the remapping is a mild positive: fewer properties will face mandatory flood insurance, which reduces annual operating costs and improves net yield. For waterway-adjacent acquisitions, flood insurance should be explicitly modeled before finalizing underwriting. Do not assume the county-wide trend applies at the parcel level without checking the updated FIRM.

ADU Income Layer: Yield Expansion With Conditions

Colorado HB24-1152 requires municipalities to allow at least one ADU on any lot zoned single-family detached. Inside the City of Colorado Springs, the ordinance is operative but carries two binding constraints: no short-term rentals on parcels with an ADU, and no detached ADUs in Wildland-Urban Interface zones. One off-street parking spot is required per ADU.

For investors underwriting a long-term ADU rental strategy, the additional rent from a secondary unit can push effective gross yields on a single-family acquisition toward 7.0–9.0% depending on acquisition price and ADU size. That is a real shift in deal economics.

The constraint: investors targeting unincorporated El Paso County face unresolved legal questions about HB24-1152's applicability as of early 2026. Older family-occupancy restrictions may still apply to some parcels. Parcel-level zoning due diligence is non-negotiable before underwriting any ADU income in unincorporated areas.

Neighborhood Comparison Snapshot

Cap Rate Outlook

The directional case for cap rate improvement over the next 12–24 months rests on three intersecting trends from the brief. First, new multifamily construction is slowing, which tightens the rental supply side as demand from a 730,323-person county and military installations persists. Second, prices have already corrected (full-year 2025 median down 5.2%) but absorption remains active, with days on market at 22 in July 2025 despite record inventory. That combination suggests a floor is forming rather than a freefall. Third, the county's below-$300K housing shortage is structural and is not being resolved by new supply, which preserves workforce rental demand regardless of broader market softness.

The risk to this outlook is debt exposure. A buyer acquiring at today's prices with significant financing assumes price stabilization. If the 1.72% year-over-year price decline continues into late 2026, debt-service coverage ratios tighten on recently originated loans. Cash buyers and investors carrying little debt are best positioned to capitalize on the current decompression without that exposure.

Model your specific deal with our investment property calculator to stress-test cap rates against your financing structure, local tax assessment, and ADU income assumptions before committing.