Help me evaluate the exit options for an underwater Tempe investment property
I would appreciate a fresh set of eyes on an investment property in central Tempe, Arizona.
I purchased a renovated 5-bedroom, 3-bath, approximately 2,014-square-foot single-family home for about $680,000 near the top of the market. I never occupied it and operated it as a rental for roughly three years. In hindsight, I lost on the acquisition. I accept that; my objective is now to make the best decision from today forward rather than anchoring on my purchase price.
Current numbers:
Current asking price: $625,000
Mortgage payoff: $483,062.74
Monthly carrying costs while vacant/listed: $3,707.62
Located in central Tempe near ASU
Five bedrooms (though one is an Arizona room with a closet), three bathrooms, no HOA
Listed on and off since May without selling
Owner is out of state
I need a plan because I'm holding the property right now and we've gotten almost 0 showings and 0 offers.
Options I am evaluating:
- Replace the listing agent and relaunch at a true price-to-sell number.
- Offer a seller-funded rate buydown or closing-cost concession instead of an equivalent price reduction.
- Target multigenerational buyers, large households, ASU parents and house-hacking buyers more deliberately.
- Explore a lease-option or carefully structured seller-financing component.
- Return it to the long-term or mid-term rental market if the sale economics remain unattractive.
- Convert the layout into a 3/2 main residence and a 2/1 attached ADU, although preliminary estimates suggest a legal conversion could cost $90,000–$160,000.
What exit paths am I overlooking? How would you compare a decisive price reduction with concessions, seller financing or returning it to service as a rental? I’m especially interested in feedback from investors and agents who actively work in Tempe rather than general national-market advice.
Most Popular Reply
If you'd take that big a loss on selling it, you may have to rent it out and ride out the next few years in the market. If you can rent it for even $2000/month, the loss over 4 years is about equal to the loss of you sell it at around $600k. With that as a break even, I would think 4 years from now it'll appreciate enough to break even or close to it. Obviously there are variables here, but what you need to ask yourself is what is most important to you, and operate under that assumption.