Short answer: In Tempe, AZ, the median home value is $488,600 and the median 3-bedroom rents for $2,072/mo (Census ACS 2024). That's a rent-to-price ratio of 0.42%, so it misses the 1% rule and would place #33 among the 50 largest US rental markets (Tempe is the #85 US city by renter households). With 20% down at 7.32%, FirstDoor scores a median-priced home Pass (−$1,409/mo cash flow).
Key numbers
The 1% rule in Tempe
Before running a full analysis, many investors check whether rent is at least 1% of price. This is where Tempe lands.
Across all rentals (not just 3-bedrooms) the ratio is 0.37%. A home renting for the median 3-bedroom rent would need to cost about $207,000 or less to pass.
A typical Tempe home, scored
We took a home at the median value, gave it the median 3-bedroom rent, and ran it through the same math as the FirstDoor calculator: 20% down, a 30-year loan at 7.32%, the city's median tax rate, and standard expense budgets.
| 3-bedroom rent (median) | $2,072 |
| Property tax ($1,893/yr, local median) | −$158 |
| Insurance ($2,440/yr, assumed) | −$203 |
| Vacancy 8% · Maintenance 5% · Management 8% | −$435 |
| Net operating income | $1,276 |
| Mortgage (P&I on $390,880 at 7.32%) | −$2,685 |
| Monthly cash flow | −$1,409 |
What price works in Tempe?
Same rent, different prices. Here's the most you could pay in Tempe for each result, keeping the median 3-bedroom rent and local tax rate.
Takeaways
- Tempe's 0.42% ratio is far below the 1% rule (it would place #33 among the 50 largest). Most investors here are betting on appreciation, not monthly income.
- A median-priced home here would cost you about $1,409/mo out of pocket after the mortgage and every expense. To break even you'd need to pay about $263,000, 46% below the median.
- Prices are outrunning rents: home values rose 3.9% from 2023 to 2024 while 3-bedroom rent rose 0.9%. The 1% math got tougher.
- Rental vacancy is high at 8.1% (US: 5.7%), so we budgeted 8% vacancy instead of 5%. Price in a longer wait for tenants.
- Property taxes are light: the median bill is $1,893, about 0.39% of value versus 0.89% nationally.
Frequently asked questions
Does Tempe pass the 1% rule?
No, on typical numbers. The median 3-bedroom gross rent is $2,072/mo and the median home value is $488,600 (Census ACS 2024 1-year), a ratio of 0.42%. To pass at that rent, a home would need to cost about $207,000 or less.
What is the typical rent for a 3-bedroom in Tempe?
The median gross rent for a 3-bedroom in Tempe, AZ is $2,072 a month, and $1,818 across all rentals (Census ACS 2024 1-year). Gross rent includes utilities the renter pays, so the landlord's share can be a bit lower. The 3-bedroom median rose 0.9% from 2023.
Can you cash flow a rental in Tempe?
At the median price, not easily. With 20% down at 7.32% and realistic expenses, a $488,600 home renting for $2,072 loses about $1,409/mo. It breaks even at roughly $263,000.
How much cash do you need to buy a typical rental in Tempe?
About $112,420: a 20% down payment of $97,720 plus closing costs we assume at 3% ($14,700). Lenders often also want several months of reserves. Investment loans commonly need 15–25% down.
Is Tempe a good place to buy a first rental?
FirstDoor scores a median-priced home in Tempe as Pass (0 of 8 points). That's a starting point, not a verdict on every listing: neighborhoods vary, and buying below the median changes the math. Run any listing through the free calculator.
Compare similar markets
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Sources
Data: U.S. Census Bureau, 2024 American Community Survey 1-year estimates (released September 2025); year-over-year changes compare with 2023. Mortgage rate: Freddie Mac PMMS, week of October 22, 2026. Retrieved October 15, 2026. Insurance ($2,440/yr), closing costs (3%), maintenance (5%) and management (8%) are FirstDoor assumptions, not local data. Investment-property loans often price above the PMMS average. Medians describe the whole city, not any one home. Educational content, not financial advice.