Phoenix 2-bed at $1.085m renting for $5,651: does the net yield work?

[anika_vale]

The description has to be resolved before I can trust the numbers: Phoenix is inland, yet this 2-bed is categorised as a coastal home. It is priced at $1,085,000, and projected rent of $5,651 a month gives the stated gross yield of roughly 6.2%.

I have budgeted separately for empty periods, management, ordinary upkeep and major repairs, but service charges, property tax and insurance could still alter the result substantially. My next step is to confirm the location and whether the rent comes from a current lease or a projection. After that, which expense deserves the most scrutiny, and what net cash flow would make the maintenance risk reasonable?

 

[frame.grand]

Start with property tax and insurance using figures specific to this property, not broad estimates. Together they can take a substantial bite out of $67,812 annual gross rent. I’d also separate service charges into recurring fees and possible one-off building costs. Before choosing a target net yield, calculate cash flow both before and after financing.

 

[solid_canvas]

The description needs clarifying first: Phoenix is inland, so what does “coastal home” mean here? Is it simply a listing category, or is the location wrong? Also, is $5,651 supported by an existing lease or merely projected rent? That distinction affects the vacancy and turnover assumptions more than a small change in routine maintenance.

 

[frame.grand]

Agreed on verifying the rent, but I wouldn’t reject the numbers solely because the property description sounds odd. The bigger issue is that 6.2% is gross, not spendable return. Run a downside case with lower rent, extra vacancy, higher insurance and a significant service-charge increase. If financing makes that scenario cash-flow negative, the deal is too sensitive regardless of the headline yield.

 

[paintsAndWall]

The mention of service charges creates another question: is this an individually maintained home, or are there shared obligations behind the apparently sound building?

I would request the charge breakdown, recent statements, planned-work information and the method used to allocate costs. Then treat a tenant change as one combined hit rather than separate small allowances—vacant time, leasing or management fees, cleaning and repairs can all land in the same period. That evidence will make the net cash-flow estimate more useful than another adjustment to the headline yield.

 

[woodworksAndWorkshop]

The downside cases for rent and vacancy are already clear; what remains unresolved is the basis for the $5,651 rent, the service-charge exposure and even the odd “coastal” description for a Phoenix property.

Put confirmed and projected rent in separate columns, then show current and increased service charges under the actual financing terms. Keep property tax, insurance, management and the repair reserve as visible lines. For example, if one tenant change and a charge increase turn the property cash-flow negative, that is harder to undo than choosing a slightly different maintenance assumption. I would settle those source details before deciding what net yield is acceptable.