Peoria, AZ Cap Rate 3.00%
Peoria is a West Valley Phoenix suburb that's grown rapidly over the past two decades — anchored by suburban-school appeal, the broader West Valley economic base, and the Peoria Sports Complex (the dual spring-training home of the San Diego Padres and Seattle Mariners). The 3.00% cap rate at a $445,000 median price keeps the 0.39% rent-to-price ratio close to functional than Scottsdale or central Phoenix. Population growth at 1.8%/yr is among the stronger Sun Belt numbers.
Employment is anchored by the broader Phoenix metro commuter base (most working Peoria residents commute to the central Phoenix or West Valley professional employment centers), the broader Banner Boswell Medical Center and the broader Sun Cities medical complex (Sun City to the south is one of the original master-planned US retirement communities), the Peoria Sports Complex (the dual spring-training facility for the Padres and Mariners — produces seasonal STR demand each February-March), the broader Glendale-area Luke AFB-adjacent commuter activity, the broader Peoria Unified School District, and a meaningful retail-and-services base supporting the West Valley population. Submarkets stratify cleanly: the historic Old Town Peoria area is walkable urban with strong appreciation; the broader West Wing and Vistancia master-planned communities are premium suburban-school zones drawing professional family rentals; the broader Peoria extends with newer construction; the broader Sun Cities to the south have distinct retirement-community dynamics.
Arizona property tax at 0.62% is among the lower rates nationally. AZ state income tax is moving toward a flat ~2.5%. Insurance is reasonable but verify monsoon / hail deductible structure. The structural advantages: sustained Phoenix metro in-migration; AZ tax structure is genuinely landlord-favorable; cost basis is materially below Scottsdale or central Phoenix; spring training STR upside (Padres/Mariners co-tenancy produces ~5 weeks of premium nightly rental demand each spring); broader West Valley premium-suburban appeal. The structural risks: Phoenix metro water access is a long-term variable; summer heat extremes have meaningful operational implications; the broader West Valley population trajectory depends on continued Phoenix metro health. For investors who want West Valley Phoenix exposure with spring-training STR upside, Peoria is the most underrated West Valley option.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Peoria
Peoria's 0.4% rent-to-price ratio is well below the 1% rule. At median prices of $445,000, the $1,720/mo rent produces only $1,111/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
At current rates, a 20% down conventional loan ($89K at 7%) would result in approximately $-1,256/mo cash flow — negative at median prices. Larger down payments, seller financing, or buying 15–25% below median are strategies to turn the numbers positive.
The 21.6x gross rent multiplier and 4.8% vacancy rate position Peoria as a growth-dependent market. With annual appreciation at 3%, total returns (cash flow + equity growth) run approximately 6.0% before financing leverage.
Deal Modeling & Scenarios for Peoria
All figures below are computed from Peoria's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 0.62% effective rate on the $445,000 median price, the annual tax bill is $2,759 — that's below national average (-42% vs the national average of ~1.06%). Verify the actual assessed value before purchase; sale-triggered reassessments can push the bill higher than the seller's current statement.
5-Year Cap Rate Trajectory
If Peoria continues appreciating at 3%/yr while rents grow at a conservative 3%/yr, cap rate holds roughly steady as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $445K | $1,720 | 3.0% |
| Year 1 | $458K | $1,772 | 3.0% |
| Year 2 | $472K | $1,825 | 3.0% |
| Year 3 | $486K | $1,879 | 3.0% |
| Year 4 | $501K | $1,936 | 3.0% |
| Year 5 | $516K | $1,994 | 3.0% |
Three Financing Scenarios
Same median-priced Peoria property — different capital structures. All-cash maximizes cap rate. Leverage trades cash flow for higher cash-on-cash return when the spread between cap rate and borrowing cost is positive.
| Scenario | Cash Invested | Monthly Cash Flow | Annual CF | Cash-on-Cash |
|---|---|---|---|---|
| All cash | $445K | $1,111 | $13,330 | 3.0% |
| 20% down conventional @ 7% | $102K | $-1,257 | $-15,079 | -14.7% |
| 25% down DSCR @ 8.5% | $129K | $-1,456 | $-17,468 | -13.5% |
Three Price Tiers: Below, At, and Above the Median
Properties don't always trade at the median. Lower-priced units typically offer higher cap rates but harder operations; higher-priced properties tend to compress cap rates while attracting better tenants. All-cash assumptions below:
| Tier | Price | Rent/Mo | NOI/Yr | Cap Rate | Monthly CF |
|---|---|---|---|---|---|
| Below median (~75% price) | $334K | $1,462 | $10,491 | 3.1% | $874 |
| At median | $445K | $1,720 | $11,808 | 2.7% | $984 |
| Above median (~125% price) | $556K | $1,978 | $13,125 | 2.4% | $1,094 |
Total Return Over a 5-Year Hold
Cap rate is just one piece. Real estate returns come from four sources: cash flow, appreciation, principal paydown, and tax benefits. Assuming 20% down conventional financing at 7% and a 5-year hold at Peoria's historical appreciation rate of 3%:
On a $89K down payment, that's a 24.9% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Peoria
Automated checks against the underlying data — surface only the risks that actually apply to Peoria, not generic boilerplate:
Cap Rate Calculator — Peoria
Pre-filled with Peoria medians. Adjust to match a specific property.
Cash-on-Cash Return — Peoria
Factor in financing to see your actual return on invested capital in Peoria.
Is Peoria a Good Place to Invest in Rental Property?
Peoria, AZ has a population of 195,000 and has been growing at 1.8% annually — above the national average, suggesting steady demand pressure on housing. The median home price of $445,000 paired with median rents of $1,720/mo produces an estimated cap rate of 3.00%.
Property taxes at 0.62% are well below the national average of ~1.1%, providing a meaningful cash flow advantage many investors overlook. The vacancy rate of 4.8% is impressively low, indicating tight rental supply and strong tenant demand — favorable for landlords.
At a price-to-income ratio of 6.1x, homes cost about 6.1 times the local median income of $72,400. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. Home values have appreciated at roughly 3% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: At current median prices, Peoria is challenging for pure cash flow investing. Consider BRRRR strategies with below-market purchases, or look at neighboring metros with stronger price-to-rent ratios.