1638 S 5th St

Phoenix, AZ 85004

$529,000D

None bd · 1.0 ba · 2,464 sqft · Built 2006 · MultiFamily · Active · 35 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,159/mo
• Mortgage (P&I): −$2,774
• Tax + insurance: −$332
• HOA: −$0
• Vac / Maint / Mgmt: −$873
• Net cashflow: $179/mo
• Annual: $2,152/yr
• Cap rate: 6.70%
• Cash-on-cash: 1.45%
• DSCR: 1.06
• 1% rule: 0.79%
• Cash to close: $148,120

Investor read

• This is a 2 × 2-bed/1-bath units multifamily listed at $529k.
• At list price, monthly cash flow is $179 ($2k/yr) — positive. Per door: $90/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $416k (21.4% below list).
• It's been on market 35 days — a 3% lower offer ($513k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $416k (21.4% below list) — sets the bar for 1% rule.
• In year one you build about $8 of equity ($4k loan paydown + $-4k appreciation (-0.7% local appreciation)).
• Location reads 75/100 on livability (#16 in AZ, #3,924 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, housing A+; Watch: health & safety C-, crime F.
• Phoenix Union High School District (4286) (urban): math 10% / reading 15% proficiency, ranked #224 of 249 in AZ (top 90%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Market conditions: Rents soft (-2.3%/yr); 76 active listings in the ZIP; 6 comparable units currently listed for rent nearby; rentals leasing fast (median 2d on market — plan ~1-2 weeks tenant-placement turnaround); 36,011 units permitted in Maricopa County in 2024 (12,801 in 5+ unit buildings).
• Maricopa County population projected at +38% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 21 sale attempts since 20y 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 $380k; 39% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: extreme-heat days projected 7→19/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.7% vs local median 3.3% in Phoenix — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• At $4,159/mo this rent would consume 68% of the median local household income ($74k/yr) (locally 1285% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 35 days. Have you received any prior offers? Is the seller open to a 21% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Crime grade is F 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.
• 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.