Phoenix multifamily underwriting looks different from other Sun Belt markets because Arizona's property tax system is structurally different. Maricopa County reassesses every year, but the value that actually drives your tax bill (Limited Property Value, or LPV) is capped at 5% annual growth and doesn't reset on sale.
If you're underwriting Phoenix the way you'd underwrite Dallas or Tampa, you're doing it wrong. Here's the local context that matters most.
LPV vs FCV: which number drives the tax bill
Arizona maintains two values for every parcel:
- Full Cash Value (FCV): the assessor's estimate of market value, updated annually.
- Limited Property Value (LPV): the actual tax base, capped at 5% annual growth from the prior year.
LPV is what determines your tax bill. FCV is informational only and used to calculate the percentage by which LPV is below market. The two diverge over time: in a hot market, FCV moves faster than LPV (which is capped), so the ratio of LPV to FCV gets smaller. This is sometimes called the "assessment ratio in practice."
Your purchase price doesn't reset LPV. There's no sale-triggered reassessment. The LPV that applied to the seller continues to apply to you, growing at 5% per year, regardless of what you paid.
This is the structural advantage of Phoenix multifamily underwriting. The post-sale tax bump that crushes returns in TX and FL doesn't happen here. Your year-1 tax is the seller's tax, give or take 5% inflation.
The assessment ratio: multifamily is Class 4
Arizona applies an "assessment ratio" on top of LPV to compute the assessed value used for tax calculation. The ratio depends on property classification:
- Class 4 (leased or rented residential, including multifamily rental properties of any size): 10%
- Class 3 (owner-occupied primary residence): 10%
- Class 1 (commercial / industrial): 15% as of tax year 2025 (was 16% in past years and has been gradually lowered by the legislature)
Multifamily rental property is Class 4 regardless of unit count. A 3-unit, 8-unit, or 40-unit apartment building all sit at the 10% assessment ratio so long as they're leased residential property.
The mixed-use case is where Class 1 starts to matter. A ground-floor commercial space within a multifamily building may be split-classified, with the commercial portion at Class 1 (15%) and the residential portion at Class 4 (10%). Check the Maricopa County Assessor parcel record for the specific classification on each parcel.
The Phoenix property tax math
Combined millage in Maricopa County is published per $100 of net assessed value (NAV), not per $1,000 like most states. Phoenix proper typically runs $9.50-$12.50 per $100 NAV depending on which elementary school district the parcel sits in. Once you factor in the 10% assessment ratio for Class 4, the effective rate on LPV lands at roughly 0.95-1.25% of LPV per year for standard multifamily, with most parcels around 1.0-1.1%.
Other Maricopa cities run lower: Mesa, Chandler, and Gilbert typically come in around 0.8-1.1% of LPV; Scottsdale is among the lowest at roughly 0.7-0.9% (lower mill rates supported by a wealthy school district base); Tempe and Glendale are higher at roughly 1.0-1.3%.
Properties inside Community Facilities Districts (CFDs), common in newer master-planned suburbs like Verrado in Buckeye, Estrella, Eastmark in Mesa, or Vistancia in Peoria, add another $1.50-$2.80 per $100 NAV, which can push the total to 1.4-1.7% of LPV. CFDs are material to suburban underwriting; check whether a target parcel is inside one.
Compared to TX (2.3-2.8% of FMV, no cap) or FL (1.7-2.2% of FMV, 10% cap), Phoenix multifamily carries a structurally lower effective tax burden, especially over a multi-year hold where LPV stays capped at 5% annual growth.
Permit access through Phoenix PDD
Phoenix permit history is available through the city's Planning & Development Department. Search by parcel through the PDD Online system. Cross-reference broker renovation claims against permit records. See the full guide to checking permit history.
Climate and cooling cost wildcards
Phoenix is a different climate-driven OpEx story than coastal markets. The wildcards:
- Cooling costs: tenants in older multifamily without modern HVAC often face $300-$500/month summer electric bills, which constrains rent levels. Buildings with older or undersized HVAC have meaningful operating risk.
- Roof condition: extreme UV exposure aging asphalt shingles faster than most markets. Older roofs are often more depreciated than year-built alone suggests.
- Wildfire risk in fringe areas: more relevant in north Scottsdale, parts of Cave Creek, and outer fringe communities than in the urban core. Insurance carriers have started looking at wildfire risk on Phoenix-area policies.
The population-growth story is real
Phoenix has been one of the fastest-growing US metros for the last decade. Population growth has supported rent growth, but the supply side has responded: new construction permits in 2021-2023 were at multi-decade highs, and absorption has slowed in 2024-2025 as new units delivered.
Practical implication: be careful with rent growth assumptions in submarkets where new construction has been heavy (parts of central Phoenix, downtown, parts of Tempe). Older Class B/C multifamily in established neighborhoods (Encanto, Sunnyslope, parts of Maryvale) has different supply dynamics than the lease-up corridor.
The standard checklist still applies
The Phoenix-specific items above sit on top of the general pre-offer due diligence checklist. FEMA flood zone (relevant for parts of the Salt River corridor), demographics, debt service stress test, permit history all still matter.
Tax modeling for Phoenix is the easy part once you know the LPV system. Full tax modeling guide.
Or get the Phoenix research done for you
DealBrief pulls Maricopa County LPV and FCV, current combined millage, property classification (Class 4 vs Class 1), sale history, permit records, FEMA flood zone, and the full debt service scenario grid for any Phoenix multifamily address. Your first report is free.