What is the cap rate in Denver, CO?

The median cap rate in Denver, CO is 3.1%. This is based on HUD Fair Market Rents and current home values.

Is Denver a good place to buy rental property?

Denver has a cap rate of 3.1% and estimated cash flow of -$1,542/month. Cash flow is challenging at current prices. Median home price is $546,281 with average 3BR rent of $2,750/month.

What is the average rent in Denver, CO?

The HUD Fair Market Rent for a 3-bedroom in Denver, CO is $2,750/month. This represents the estimated rent for standard-quality housing in the area.

Denver, CO — Rental Investment Analysis

🔴WEAK— appreciation play only

Data: HUD FMR FY2024 + Zillow ZHVI April 2026 + Freddie Mac rates. Last updated June 2026.

Investment Summary

As of 2026, Denver, CO has a 3.1% cap rate, indicating limited cash flow potential at current prices of $546,281 median.

Denver is primarily an appreciation play with limited cash flow potential. At $546,281 median home price, Denver requires significant capital. A 20% down payment alone is $109,256. With 3-bedroom rents around $2,750/month, the 3.1% cap rate tells the story. Cash flow is deeply negative at -$1,542/month with standard assumptions. This market requires appreciation to justify the investment.

At 0.49% on the 1% rule, rents are low relative to purchase prices. You'd need a significant discount from asking price to make the numbers work. DSCR of 0.48 is below 1.0, meaning rental income doesn't cover the mortgage. DSCR lenders will likely decline this market at current prices.

Bottom line: Consider Denver only if you believe in long-term appreciation. The numbers don't support cash flow at today's prices and rates.

Data sources: HUD Fair Market Rents (FY2024), Zillow Home Value Index (April 2026), Freddie Mac Primary Mortgage Market Survey.

Cap Rate

3.1%

Below average

Monthly Cash Flow

-$1,542

After all expenses

Price-to-Rent

17.0

Overpriced for rent

DSCR

0.48

Fails

Key Metrics

Median Home Price: $546,281
Average Rent (3BR): $2,750/mo
Price-to-Rent Ratio: 17.0(high)
1% Rule: 0.49%(fails — need 1%+)
Cash-on-Cash Return: -14.2%
Vacancy Rate: 8.0%

Market Strength

Unemployment Rate: 3.9%(-0.4% vs national)
Rent Growth (YoY): +2.9%(national avg)
Population Growth: +0.9% YoY

Assumptions Used

20% down, 6.52% rate, 30yr, 8% vacancy, 10% maintenance

Customize these numbers →

Property Tax Rate

0.49%

of assessed value (CO avg)

Median Income

$82,254

household (CO avg)

Rent-to-Income

40.1%

Stretched

Section 8 Max Rent

$2,750/mo

3BR voucher payment

CO Investor Climate

Landlord Friendly

6/10

State Income Tax

Has state tax

Property Tax

0.49% effective

Population Trend

+0.9% (3yr)

Population Movement (Tax Year 2021→2022)

Net Migration

-2,291 households

SHRINKING

Total Inflow

315,430

households moved in

Avg Income (New Residents)

$132,199

per household

Where they're coming from:

1.Denver Non-migrants, CO278,185 households · avg $138,427

2.Arapahoe, CO8,000 households · avg $77,741

3.Jefferson, CO5,271 households · avg $66,998

4.Adams, CO3,546 households · avg $52,050

5.Douglas, CO1,632 households · avg $84,510

Where residents are leaving to:

1.Denver Non-migrants, CO278,185 households

2.Arapahoe, CO9,834 households

3.Jefferson, CO8,091 households

4.Adams, CO5,537 households

5.Douglas, CO2,422 households

Net outflow may indicate weakening demand — but can mean lower prices and higher cap rates.

Best Zip Codes in Denver for Investors

80247

Cap Rate: 8.5%Cash Flow: +$467/mo$262,923

80203

Cap Rate: 7.5%Cash Flow: +$331/mo$359,765

80216

Cap Rate: 6.4%Cash Flow: +$13/mo$363,130

All Zip Codes in Denver

Zip	Cap Rate	Cash Flow	Home Price	Rent (3BR)	DSCR
80247	8.5%	+$467	$262,923	$2,730/mo	1.33
80203	7.5%	+$331	$359,765	$3,360/mo	1.17
80216	6.4%	+$13	$363,130	$3,000/mo	1.01
80249	5.9%	-$204	$465,944	$3,580/mo	0.92
80202	5.5%	-$431	$558,018	$4,060/mo	0.85
80239	5.0%	-$513	$430,149	$2,910/mo	0.78
80231	4.9%	-$514	$412,154	$2,760/mo	0.77
80237	4.5%	-$786	$502,336	$3,170/mo	0.71
80223	4.2%	-$860	$461,060	$2,740/mo	0.65
80427	4.2%	-$790	$423,919	$2,520/mo	0.65
80022	3.7%	-$1,085	$478,629	$2,610/mo	0.57
80218	3.6%	-$1,164	$498,835	$2,680/mo	0.56
80219	3.4%	-$1,069	$427,564	$2,210/mo	0.53
80204	3.3%	-$1,364	$534,545	$2,730/mo	0.52
80236	3.3%	-$1,333	$521,477	$2,660/mo	0.52
80221	3.3%	-$1,201	$459,223	$2,310/mo	0.51
80005	3.2%	-$1,760	$654,145	$3,230/mo	0.49
80246	3.1%	-$1,600	$581,723	$2,830/mo	0.48
80205	3.1%	-$1,601	$577,078	$2,790/mo	0.48
80238	2.9%	-$2,201	$767,081	$3,620/mo	0.46
80224	2.9%	-$1,624	$563,416	$2,650/mo	0.46
80222	2.9%	-$1,664	$565,666	$2,620/mo	0.45
80436	2.8%	-$1,484	$489,166	$2,210/mo	0.43
80474	2.6%	-$1,804	$574,288	$2,520/mo	0.41
80211	2.5%	-$2,293	$715,075	$3,080/mo	0.40
80102	2.5%	-$1,708	$522,291	$2,210/mo	0.39
80207	2.5%	-$1,955	$597,980	$2,530/mo	0.39
80230	2.5%	-$2,571	$785,477	$3,320/mo	0.39
80422	2.3%	-$1,915	$566,396	$2,320/mo	0.36
80220	2.2%	-$2,338	$665,741	$2,620/mo	0.34
80212	2.0%	-$2,716	$741,313	$2,780/mo	0.31
80206	1.9%	-$3,261	$863,532	$3,120/mo	0.29
80209	1.7%	-$3,865	$982,341	$3,360/mo	0.26
80210	1.7%	-$3,299	$837,561	$2,860/mo	0.26