Single Family, Long Term Rental: Current Deal Metrics

[Tony Hibler]

Hi all,

I invest in, and manage, single family long term rentals. I look for 1,700-1,850 sq ft 3/2s in the far north Phoenix/Scottsdale area. Areas like Cave Creek & Carefree Arizona. I am a full time real estate professional always looking at on/off the MLS properties.

I am curious what you all think are good metrics to hit when looking at opportunities in today's market, in this area.  The metrics I look at is cash on cash return, what interest rates you are getting, % down need to close, points that need to be paid, capital improvement cost (if substantial), and what your cash flows are looking like on these new acquisitions (i.e. +$200 a month after all expenses).  I am just trying to ground my expectations...I am concerned I am passing on deals that are "as good as it is going to get" right now.

I don't want to invest out of state (we just sold our last out of state rental (the rental did okay for 7 years, but did not perform as well as I wanted...but again, maybe my expectations are off)

I don't include items like cost seg/accelerated depreciation in 1st year cash on cash calculation...I look at it as the icing on the cake (because if I don't 1031, that depreciation gets recaptured).

...and it goes without saying, if anyone has some opportunities I am always happy to take a look.

Thank you so much, I think this information will be helpful to many of us up here in the North Valley.

[Melissa Justice]

@Tony Hibler,

Thanks for sharing-your approach and focus in the North Valley definitely resonates with me. I’m also based here in Phoenix. I’ve been active in both investing and helping others acquire long-term rentals, so I completely understand the balancing act between waiting for the “perfect deal” and accepting today’s market realities.

I agree that cash-on-cash return, interest rates, down payment requirements, points, and realistic cash flow projections (+$200/month after all expenses) are key. I also look at reserves and long-term appreciation potential, especially in solid submarkets like Cave Creek and Carefree where tenant quality and low vacancy often justify slimmer initial returns.

You're spot on about cost segregation being more of a long-term tax strategy rather than a deal-deciding factor up front. It's great when it enhances your position, but I don't factor it into my initial return metrics either.

Let’s definitely stay in touch-if anything off-market comes across my desk that fits your criteria, I’d be happy to share. Likewise, if you’re seeing any standout properties in our area, I’m always open to collaborating.

Best of luck!