📊 Rental Property Analysis Generator — Result
Generated on May 3, 2026 · Generate your own →
Rental Property Investment Analysis — Phoenix, AZ
Executive Summary
This single-family residential asset in the Phoenix market represents a high-yield opportunity with an exceptional Cap Rate of 7.88%, significantly outperforming the current market average. Despite a high-interest-rate environment (7%), the property maintains a positive monthly cash flow of $397 and a strong Cash-on-Cash return, making it an ideal candidate for a long-term "Buy and Hold" strategy focused on both yield and regional appreciation.
Key Metrics Dashboard
| Metric | Value | Benchmark (Phoenix Average) |
| :--- | :--- | :--- |
| Purchase Price | $320,000 | $420,000 - $450,000 (Median) |
| Cap Rate | 7.88% | 5.0% - 6.0% |
| Cash-on-Cash Return | 7.44% | 4.0% - 6.0% |
| Gross Rent Multiplier (GRM) | 9.5x | 12x - 15x (Lower is better) |
| Monthly Gross Rent | $2,800 | $2,100 - $2,400 |
| Debt Service Coverage Ratio (DSCR) | 1.23 | > 1.20 (Lender Preferred) |
Cash Flow Analysis
The property demonstrates a healthy margin between operating income and total debt obligations.
* Monthly Gross Rent: $2,800
* Monthly Operating Expenses: ($700)
* *Includes: Taxes, Insurance, Maintenance, and Management.*
* Monthly Net Operating Income (NOI): $2,100
* Monthly Debt Service (P&I): ($1,703)
* Total Monthly Net Cash Flow: $397
* Annual Net Cash Flow: $4,764
Investment Returns
The 7.88% Cap Rate is the standout metric for this deal. In a market where most investors are struggling to find properties that "pencil out" at 7% interest rates, this asset provides a spread above the cost of capital.
The 9.5x GRM indicates that the property is priced attractively relative to its income-generating potential. Typically, a GRM under 10x in a high-growth market like Phoenix suggests either an underpriced asset or a high-demand rental area. The 7.44% Cash-on-Cash return is robust, especially considering the 20% down payment was made into a high-rate mortgage environment.
Market Assessment: Phoenix, AZ
Phoenix remains one of the fastest-growing metropolitan areas in the United States.
* Demand Drivers: The "Silicon Desert" effect continues to draw tech employers (TSMC, Intel, Apple data centers), creating a steady influx of high-income renters.
* Vacancy Rates: Phoenix maintains a stable occupancy rate. While new multi-family inventory has increased, single-family rentals (SFRs) remain in high demand due to limited supply and high barriers to homeownership for locals.
* Rent Growth: While the rapid 20% year-over-year spikes have cooled, Phoenix is projected to maintain a steady 3–4% annual rent growth, outpacing the national average.
Risk Factors
1. Interest Rate Sensitivity: At 7%, the debt service consumes a large portion of the NOI. A decrease in market rents could quickly compress margins.
2. HVAC & Maintenance: Phoenix properties face extreme heat. HVAC systems have a shorter lifespan and higher repair frequency, which must be accounted for in the $700 monthly expense budget.
3. Property Tax Adjustments: Arizona’s property tax assessments can shift upon sale; ensure the $700 expense figure accounts for the "stepped-up" tax value based on the $320k purchase price.
4. Institutional Competition: Phoenix is a favorite for institutional "Build-to-Rent" funds, which may impact future exit cap rates.
Investment Recommendation: BUY
This is a high-conviction BUY.
Reasoning:
Finding a property in Phoenix with a Cap Rate near 8% while utilizing 7% financing is a rarity. The deal is "self-sustaining" from Day 1, meaning the tenant is paying down your principal and covering all expenses while still leaving a ~$400/month buffer. As interest rates eventually soften, a future refinance could significantly boost the Cash-on-Cash return into the double digits.
5-Year Projection
*Assumes 3% annual rent growth and 2% annual expense growth.*
| Year | Annual Gross Rent | Annual Expenses | Annual NOI | Annual Debt Service | Annual Cash Flow |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Year 1 | $33,600 | $8,400 | $25,200 | $20,436 | $4,764 |
| Year 2 | $34,608 | $8,568 | $26,040 | $20,436 | $5,604 |
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