3320 E Merlot St

Gilbert, AZ 85298

$564,500D

5 bd · 4.0 ba · 2,529 sqft · Built 2005 · SingleFamily · Active · 88 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,407/mo
• Mortgage (P&I): −$2,960
• Tax + insurance: −$430
• HOA: −$103
• Vac / Maint / Mgmt: −$715
• Net cashflow: $-802/mo
• Annual: $-9,625/yr
• Cap rate: 4.59%
• Cash-on-cash: -6.09%
• DSCR: 0.73
• 1% rule: 0.60%
• Cash to close: $158,060

Investor read

• This is a 5-bed/4.0-bath single-family listed at $564k.
• At list price, monthly cash flow is $-802 ($-10k/yr) — negative.
• To cash-flow at today's rent, offer at most $423k (25.1% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $341k (39.6% below list).
• It's been on market 88 days — a 6% lower offer ($531k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $341k (39.6% below list) — sets the bar for 1% rule.
• In year one you build about $51k of equity ($4k loan paydown + $47k 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.
• Chandler Unified District #80 (4242) (suburban): math 49% / reading 57% proficiency, ranked #31 of 249 in AZ (top 12%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Riggs Elementary (math 56% / reading 63%, grade B-, #148 of 1,109 statewide, top 15%, 833 students, 12% FRL); Arizona College Prep Middle School (math 88% / reading 87%, grade A+, #1 of 218 statewide, top 0%, 744 students, 4% FRL); Dr. Camille Casteel High School (math 45% / reading 53%, grade D, #43 of 381 statewide, top 11%, 3,140 students, 12% FRL) — zoned schools average 9% FRL vs 25% district-wide (16 pts lower); this property's tenant base skews higher-income than the district average.
• Zoned-school proficiency averages 65% at this address vs 53% district-wide (+12 pts) — the actual schools serving this property are materially stronger than the Chandler Unified District #80 (4242) average implies; a family-tenant draw the district grade alone would hide.
• Market conditions: Rents rising fast (+4.3%/yr); 339 active listings in the ZIP; 19 comparable units currently listed for rent nearby; rentals leasing fast (median 13d 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.
• 2 sale attempts since 17y ago; this cycle's ask has dropped $30k (5%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $205k; list at $564k implies a 175% gain — meaningful room to come down on a strong offer.
• By year 2, paydown + projected appreciation supports a ~$82k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• 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 4.6% vs local median 3.2% in Gilbert — 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.

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 88 days. Have you received any prior offers? Is the seller open to a 40% 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.
• 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.