742 E Pepper Dr

Casa Grande, AZ 85122

$235,000D-

3 bd · 2.5 ba · 1,609 sqft · Built 1982 · Townhouse · Active · 11 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,995/mo
• Mortgage (P&I): −$1,232
• Tax + insurance: −$143
• HOA: −$100
• Vac / Maint / Mgmt: −$419
• Net cashflow: $101/mo
• Annual: $1,209/yr
• Cap rate: 6.81%
• Cash-on-cash: 1.84%
• DSCR: 1.08
• 1% rule: 0.85%
• Cash to close: $65,800

Investor read

• This is a 3-bed/2.5-bath townhouse listed at $235k.
• At list price, monthly cash flow is $101 ($1k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $200k (15.1% below list).
• Only 11 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $200k (15.1% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k of value loss. Plan a longer hold.
• Location reads 58/100 on livability (#220 in AZ) — a working-class tenant base; expect higher turnover. Strengths: cost of living A+, housing A+; Watch: crime D+, employment D+, amenities F.
• Casa Grande Union High School District (4453) (suburban): math 14% / reading 21% proficiency, ranked #193 of 249 in AZ (top 78%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Zoned schools: Evergreen Elementary School (math 13% / reading 18%, grade F, #864 of 1,109 statewide, top 78%, 51 students, 82% FRL); Casa Grande Middle School (math 7% / reading 12%, grade F, #197 of 218 statewide, top 91%, 645 students, 84% FRL); Casa Grande Union High School (math 18% / reading 25%, grade F, #217 of 381 statewide, top 57%, 2,132 students, 52% FRL).
• Market conditions: Rents rising fast (+4.6%/yr); 632 active listings in the ZIP; 34 comparable units currently listed for rent nearby; rentals at typical pace (median 17d on market — plan ~3-4 weeks tenant-placement turnaround); 9,504 units permitted in Pinal County in 2024 (776 in 5+ unit buildings).
• 13 sale attempts since 22y 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.
• Climate carrying-cost: major wildfire risk; extreme-heat days projected 7→19/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.8% vs local median 4.0% in Casa Grande — 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.
• This rent runs 35% of the median local income ($68k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.
• 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.