Ponderosa Plan

Flagstaff, AZ 86005

$765,000F

3 bd · 2.5 ba · 1,897 sqft · Built — · SingleFamily · Active · 255 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,618/mo
• Mortgage (P&I): −$4,284
• Tax + insurance: −$1,362
• HOA: −$120
• Vac / Maint / Mgmt: −$550
• Net cashflow: $-3,698/mo
• Annual: $-44,375/yr
• Cap rate: 0.86%
• Cash-on-cash: -19.40%
• DSCR: 0.14
• 1% rule: 0.32%
• Cash to close: $228,760

Investor read

• This is a 3-bed/2.5-bath single-family listed at $765k. Condition is rated good.
• At list price, monthly cash flow is $-4k ($-44k/yr) — negative.
• To cash-flow at today's rent, offer at most $282k (63.1% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $262k (65.8% below list).
• It's been on market 255 days — a 12% lower offer ($673k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $262k (65.8% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $6k of loan paydown is wiped out by about $25k of value loss. Plan a longer hold.
• Location reads 61/100 on livability (#167 in AZ) — a middle-class / working-renter tenant base. Strengths: housing B; Watch: employment C-, crime D-, amenities F.
• Flagstaff Unified District (4192) (urban): math 18% / reading 29% proficiency, ranked #158 of 249 in AZ (top 64%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Zoned schools: Manuel Demiguel Elementary School (math 39% / reading 55%, grade D-, #308 of 1,109 statewide, top 29%, 579 students, 19% FRL); Mount Elden Middle School (math 16% / reading 23%, grade F, #134 of 218 statewide, top 63%, 757 students, 51% FRL); Flagstaff High School (math 22% / reading 27%, grade F, #154 of 381 statewide, top 53%, 1,620 students, 25% FRL).
• Market conditions: Rents rising fast (+9.1%/yr); 409 active listings in the ZIP; 4 comparable units currently listed for rent nearby; rentals leasing fast (median 11d on market — plan ~1-2 weeks tenant-placement turnaround); solid renter incomes; 698 units permitted in Coconino County in 2024 (354 in 5+ unit buildings).
• Coconino County population projected at +20% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Climate carrying-cost: severe wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 0.9% vs local median 2.4% in Flagstaff — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.
• This rent runs 36% of the median local income ($88k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

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?
• It's been on market 255 days. Have you received any prior offers? Is the seller open to a 66% concession, seller financing, or rate buy-down credit?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• 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?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• 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.