3938 E Sourwood Dr

Gilbert, AZ 85298

$664,900D+

5 bd · 4.0 ba · 2,905 sqft · Built 2016 · SingleFamily · Active · 24 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,605/mo
• Mortgage (P&I): −$3,487
• Tax + insurance: −$482
• HOA: −$135
• Vac / Maint / Mgmt: −$757
• Net cashflow: $-1,256/mo
• Annual: $-15,077/yr
• Cap rate: 4.03%
• Cash-on-cash: -8.10%
• DSCR: 0.64
• 1% rule: 0.54%
• Cash to close: $186,172

Investor read

• This is a 5-bed/4.0-bath single-family listed at $665k.
• At list price, monthly cash flow is $-1k ($-15k/yr) — negative.
• To cash-flow at today's rent, offer at most $443k (33.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $360k (45.8% below list).
• It's been on market 24 days — a 2% lower offer ($655k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $360k (45.8% below list) — sets the bar for 1% rule.
• In year one you build about $60k of equity ($5k loan paydown + $56k appreciation (8.4% local appreciation)).
• Location reads 87/100 on livability (#1 in AZ, #240 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, employment A+, housing A+; Watch: health & safety C-, cost of living F.
• Higley Unified School District (4248) (suburban): math 56% / reading 58% proficiency, ranked #21 of 249 in AZ (top 8%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 15% free/reduced lunch — higher-income household profile.
• Zoned schools: Power Ranch Elementary (math 55% / reading 61%, grade C+, #172 of 1,109 statewide, top 16%, 623 students, 26% FRL); Sossaman Middle School (math 59% / reading 60%, grade B, #4 of 218 statewide, top 1%, 1,043 students, 13% FRL); Higley High School (math 49% / reading 47%, grade D, #46 of 381 statewide, top 12%, 2,137 students, 12% FRL) — zoned schools at 17% FRL track the district average.
• Market conditions: Rents rising fast (+4.3%/yr); 340 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals leasing fast (median 4d on market — plan ~1-2 weeks tenant-placement turnaround); high-income renter base; 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.
• 3 sale attempts since 10y 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 $359k; list at $665k implies a 85% gain — meaningful room to come down on a strong offer.
• By year 2, paydown + projected appreciation supports a ~$96k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: moderate wildfire risk; extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 4.0% vs local median 3.2% in Gilbert — meaningfully above typical; check what's discounted (condition, days-on-market, listing class) to confirm the premium yield is real.

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?
• 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 A-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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.