Two Phoenix tenant-occupied condos, 4.6%–7.6% cap — sanity check my numbers?
Gilbert, AZ · Member since 2026 · 1 post · 0 votes
Hey BP community,
I'm a broker in the Phoenix/East Valley market with two small investment condos I'm listing directly, and I'd love a sanity check from people who buy this asset class regularly — am I pricing these right, or is there something I'm missing?
Property 1 —
Price: $159,000 (appraised at $160,000)
2bd/1ba, 924 sqft
Long-term tenant in place, $1,300/mo month-to-month (slightly under market)
HOA: $287/mo
Recent updates: new AC, upgraded flooring, partial kitchen/bath
NOI: ~$12,156/yr → ~7.6% cap rate
Property 2 —
Price: $189,000 (appraised at $190,000)
2bd/2ba, 792 sqft
Long-term tenant on active annual lease, $1,075/mo (also under market)
HOA: $348/mo
Recent updates: new flooring, updated kitchen, newer roof
NOI: ~$8,724/yr → ~4.6% cap rate
Both are tenant-occupied with a solid pay history, so no vacancy risk or lease-up costs for a buyer — you're cash-flowing from day one. No showings needed either since it's all numbers/document-driven due diligence up front.
Genuinely curious what this community thinks — good buys at these numbers, or would you want to see rent pushed closer to market first before pulling the trigger?
Condos don't trade on a cap rate, they are based off comps and an investor is going to want to get a discount vs the appraised value unless you are offering a special financing incentive. Personally I look at price to rent ratios because seller advertised cap rates don't usually have any expenses accounted for in the NOI. Yes you should increase rent before selling, but you will sell for the most money if you get the tenants out and sell them vacant. Based on your numbers I'd value the first one at $130k and the second one at $95k. I came to those by taking the rent and subtracting out the hoa and then dividing by 9%, this will get you roughly to a 7 cap if you account for taxes, insurance, maintenance, repairs, and property management. A real 7 cap is what makes sense when interest rates are at about 7%. I hope this is helpful.
I agree with @Josh Young about selling vacant and it would probably be worth paying a skilled, local Realtor. You will have a larger pool of buyers. In my area, most investors righfully so, don't mess with condos and even if they did a month to month tenant with rent below market isn't at all appealing.
The first thing I’d fix is the cap-rate math.
Right now, both “NOI” figures appear to be gross rent minus HOA only:
Property 1: $15,600 rent − $3,444 HOA = $12,156.
Property 2: $12,900 rent − $4,176 HOA = $8,724.
That means the quoted 7.6% and 4.6% are not really cap rates yet. You still need property taxes, landlord insurance, repairs/maintenance, management if applicable, and some normalized allowance for vacancy/turnover. Once those are included, the actual yields will be materially lower.
I’d also push back on “no vacancy risk.” An occupied unit reduces immediate lease-up risk, but the first property is month-to-month and both rents are below market. A buyer still has to underwrite what happens when that tenant leaves—or what it costs to move rent to market.
For condos, I’d want the HOA documents almost as much as the property financials: current budget, reserves, recent/expected special assessments, insurance, rental restrictions/caps, litigation, delinquency rate, and anything affecting lender warrantability.
Of the two, Property 1 is clearly the more interesting starting point because there is enough spread to investigate. Property 2 at a stated 4.6% before the rest of the operating expenses is going to be difficult to make compelling as a cash-flow investment unless there is meaningful and defensible rent upside.
And I would still inspect the units. “Numbers/document-driven” diligence is useful, but a tenant-occupied condo can hide a very expensive physical problem.
If you want, connect with me and send the actual taxes, insurance, HOA docs and market-rent support. I’d be happy to run both through a clean apples-to-apples underwriting and tell you where I think the pricing really lands.
Hey BP community,
I'm a broker in the Phoenix/East Valley market with two small investment condos I'm listing directly, and I'd love a sanity check from people who buy this asset class regularly — am I pricing these right, or is there something I'm missing?
Property 1 —
Price: $159,000 (appraised at $160,000)
2bd/1ba, 924 sqft
Long-term tenant in place, $1,300/mo month-to-month (slightly under market)
HOA: $287/mo
Recent updates: new AC, upgraded flooring, partial kitchen/bath
NOI: ~$12,156/yr → ~7.6% cap rate
Property 2 —
Price: $189,000 (appraised at $190,000)
2bd/2ba, 792 sqft
Long-term tenant on active annual lease, $1,075/mo (also under market)
HOA: $348/mo
Recent updates: new flooring, updated kitchen, newer roof
NOI: ~$8,724/yr → ~4.6% cap rate
Both are tenant-occupied with a solid pay history, so no vacancy risk or lease-up costs for a buyer — you're cash-flowing from day one. No showings needed either since it's all numbers/document-driven due diligence up front.
Genuinely curious what this community thinks — good buys at these numbers, or would you want to see rent pushed closer to market first before pulling the trigger?
@Tricia Manara, one thing I would add from working with buyers, sellers, and landlords is that with a tenant-occupied property, I pay just as much attention to the tenant file as I do to the income number. If I were advising a buyer, I would want to see the signed lease, rent ledger, security deposit records, any notices, repair history, and clear proof of what the tenant is actually paying today. If the rent is below market, I would also want to understand how much flexibility the buyer really has after closing before I give much value to the “upside.”
I've seen deals get more complicated when the financial story looks clean, but the lease file is not. A buyer wants to know exactly what rights and obligations they are stepping into, not just what the property could earn later. I would make the tenant and HOA documents very easy to review so the buyer can see the full picture up front. Since this is Arizona, I would still have local counsel confirm anything specific to the lease transfer, deposits, or tenant rights.
I sent you a connection request as well. I like how you laid the numbers out and asked for a real sanity check instead of just trying to defend the listing. I’d be glad to stay connected and keep up with what you’re working on.
Agreed that those are gross-minus-HOA, not NOI - you still need property taxes, insurance, vacancy, maintenance/capex, and management before the cap rate means anything. On Property 1, knocking off 5% vacancy, 8% management and 10% maintenance/capex takes $15,600 down to about $8,600 before taxes and insurance, so the real NOI is roughly 70% of the $12,156 figure and the cap drops proportionally. Pull the actual Maricopa County tax bill and an insurance quote for each unit rather than using a rule of thumb, since condo HOAs sometimes cover exterior insurance and that swings the comparison between the two.