Average CoC % & good Cap Rate

[Tatiana Conta]

What is the average CoC % deal & what's a good cap rate for rental properties in Phoenix AZ currently ?

[Ryan Swan]

@Tatiana Conta your actual current CoC return on a duplex would definitely be negative because the single rental unit wouldn't offset your mortgage and other expenses. It might still be negative if you moved out and rented both units...remember you're trying to get a return on an asset that you might own 3.5% of while the lender "owns" 96.5%. I have FHA clients getting positive current CoC return on fourplexes once they move out of the 4th unit, but I think it's simply impossible with anything < 4 units.

However, your long term CoC return on sale could be through the roof since we are experiencing +18% year over year appreciation. 

There aren't many unfinished livable basements in Phoenix....I've only seen one out of hundreds of properties that had the ceiling height to be converted to an extra bedroom or bonus room. 

I have many clients doing very well with House + ADU strategies. Honestly, that's probably your best bet in this current competitive market.