Negative leverage, and the one number that predicts it
If the cap rate is below the mortgage constant, borrowing makes the return worse. Here is how to compute the threshold in ten seconds, and what it means for a Phoenix panel in 2026.
Research notes
Method, not opinion. Each note explains one piece of arithmetic we use, where it breaks, and what we do instead. No market calls, no predictions.
What a Phoenix condenser actually costs you
Cooling equipment in this climate is a twelve-to-sixteen year asset, not a twenty-year one. That difference is worth about half a point of cap rate on older stock, and most screens ignore it entirely.
Water allocation is a discount-rate question
Colorado River and Central Arizona Project allocation will not change what a Phoenix rental earns next quarter. Over a fifteen-year hold on the metro’s growth edge, it is one of the few genuinely structural risks worth pricing.
The 1% rule is a screen, not an analysis
Rent-to-price is the fastest way to cut five hundred listings to fifty. It is close to useless for choosing between two of them, and here is exactly where it breaks.