337 Smelter Ave

Patagonia, AZ 85624

$227,000C+

2 bd · 2.0 ba · 1,512 sqft · Built 1935 · SingleFamily · Pending · 25 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,062/mo
• Mortgage (P&I): −$1,190
• Tax + insurance: −$622
• HOA: −$0
• Vac / Maint / Mgmt: −$433
• Net cashflow: $-184/mo
• Annual: $-2,210/yr
• Cap rate: 7.57%
• Cash-on-cash: 4.58%
• DSCR: 1.20
• 1% rule: 0.91%
• Cash to close: $63,560

Investor read

• This is a 2-bed/2.0-bath single-family listed at $227k.
• At list price, monthly cash flow is $-184 ($-2k/yr) — negative.
• To cash-flow at today's rent, offer at most $194k (14.3% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $206k (9.2% below list).
• It's been on market 25 days — a 2% lower offer ($224k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $194k (14.3% below list) — sets the bar for cash-flow.
• In year one you build about $18k of equity ($2k loan paydown + $16k appreciation (7.2% local appreciation)).
• Location reads 68/100 on livability (#56 in AZ) — a middle-class / working-renter tenant base. Strengths: health & safety A+, cost of living B+; Watch: crime D+, amenities F, commute F.
• Patagonia Union High School District (4462) (rural): math 25% / reading 25% proficiency, ranked #152 of 249 in AZ (top 61%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Zoned schools: Patagonia Union High School (math 24% / reading 24%, grade F, #154 of 381 statewide, top 53%, 79 students, 58% FRL).
• Watch-outs: flood insurance adds $427/mo; built in 1935 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 86 active listings in the ZIP; 340 units permitted in Santa Cruz County in 2024 (0 in 5+ unit buildings).
• Santa Cruz County population projected at -22% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 3 sale attempts since 7y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Current owner paid $170k; 34% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• By year 3, paydown + projected appreciation supports a ~$44k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: in FEMA flood zone AE (mandatory federal flood insurance); major wildfire risk; extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• Built in 1935 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.