Prepared for Dan DeCarlo · James Burbank, eXp Realty · August 31, 2026

Trade two tired rentals for one trophy asset

Your Surprise and Goodyear houses have done their job. Here is what they are worth, what you keep by exchanging instead of selling, and how we get you into the Mesa property well below what your future neighbors are asking.

$730,360Net proceeds from both homes, before any loan payoffs
$160,000Federal and state tax the 1031 exchange defers
$135,000Day-one equity if we land Mesa at our target price

What the two houses are worth

Eleven closed sales in the last seven months support these values. For Goodyear, one of them is the identical floor plan at the same square footage — it closed at $429,000, which is as clean a comp as you will ever get.

Line	Surprise	Goodyear	Combined
Sale price, as-is	$388,000	$398,000	$786,000
Listing fee — my 1% flat	−$3,880	−$3,980	−$7,860
Buyer broker compensation	−$9,700	−$9,950	−$19,650
Title, escrow, HOA, recording	−$2,875	−$2,925	−$5,800
Concessions & repair credits	−$9,700	−$9,950	−$19,650
Prorated taxes & warranty	−$1,255	−$1,425	−$2,680
Net to you	$360,590	$369,770	$730,360

My 1% listing fee puts about $11,790 more in your pocket than a standard 2.5% listing across the two sales. Arizona charges no transfer tax, so nothing is deducted for it. Figures are before mortgage payoffs.

Skip the renovation. Sell them as they sit.

About $27,000 of paint and flooring across both houses buys roughly $34,000 of price. That $7,000 spread is not worth the six weeks it costs you — and the exchange clock makes speed worth far more than the last few thousand dollars. Light make-ready only: deep clean, touch-up, haul-away, yard. Roughly $4,000 each, priced to sell in 30 days.

Why the exchange is the whole point

You bought Surprise for $108,000 in 2011 and Goodyear for $97,000 in 2010. That is roughly $591,000 of gain sitting there. Sell outright and a meaningful share of it goes to the IRS and the state. Exchange, and all of it goes to work in the next property.

$22,700Depreciation recapture avoided

$100,100Federal capital gains deferred

$37,200Net investment income tax and Arizona tax deferred

~$160,000Stays in the deal instead of going to tax

Estimates for scale, based on purchase prices and holding periods. Your CPA runs the real numbers off your depreciation schedules and current bracket. The direction is not in question: the exchange is worth roughly a sixth of the entire portfolio value, which is why protecting the timeline matters more than anything else in this transaction.

The property

5345 E McLellan Road #119, Mesa

Alta Mesa Estates — gated, adjacent to Alta Mesa Golf Club · 4 bed, 3.5 bath · 3,057 sf · 0.388 acre · built 1994

+ Detached guest casita — own living area, bath, wet bar, steam shower

+ Pool with rock waterfall

+ Putting green and built-in barbecue

+ Premium cul-de-sac lot, mature shade trees

+ Three-car side-entry garage with built-ins

+ Chef's kitchen, island, high ceilings, private den

+ Gated community, low $258 quarterly HOA

+ Nine-tenths of a mile from Falcon Field, minutes to the 202

This is a genuinely rare configuration. A detached casita with its own bath and wet bar is the single hardest amenity to find in this price band, and it is what lets one property serve as both an income asset and a place you can host family without giving up the house. Add a resort backyard on nearly four-tenths of an acre inside a gated golf community, and there is nothing else like it currently listed in Alta Mesa Estates.

Your buying position

Here is the part that makes this deal worth doing. The house has been on the market 372 days and the seller has already come down $200,000. Meanwhile, look at what the rest of the community is asking right now:

Also for sale in Alta Mesa Estates	Size	Asking	$ / sf
#27 — on the 8th fairway, 16,017 sf lot	3,764 sf	$1,100,000	$292
#35 — on the 9th fairway	—	$1,050,000	—
#5 — golf course lot, $100K exterior update	—	$1,000,000	—
#123 — new roof, new HVAC, updated flooring	3,530 sf	$984,000	$279
#114 — corner cul-de-sac, 12,358 sf lot	3,569 sf	$785,000	$220
Our target on #119	3,057 sf + casita	$900–925,000	~$260

Buy at $915,000 and you own it for less than the community is asking

Adjusting for the casita's usable space, our target lands around $260 per foot — comfortably under the $279 and $292 the updated and golf-frontage homes are asking. An independent valuation model puts the house at $883,587, which tells us the ask has been stretched and the seller knows it.

I would open at $865,000 and expect to settle between $900,000 and $925,000. A seller thirteen months in with a $200,000 reduction behind him has already shown us where the leverage sits. That spread against the neighbors is equity you own the day you close.

The comparison above is against active asking prices. Before we write, I will pull twelve months of closed sales inside the gate from ARMLS so the offer is built on what buyers actually paid, not what sellers are hoping for.

The income, side by side

The fair question is whether this trade costs you income. Run both on the same basis — self-managed, tenant responsible for grounds, realistic vacancy — and the answer is that it does not.

Annual	Surprise + Goodyear today	Mesa at $915,000
Gross rent	$51,600	$52,800
Property tax	−$3,555	−$7,400
Insurance	−$2,600	−$1,800
HOA	−$1,392	−$1,032
Vacancy	−$4,128	−$2,640
Repairs	−$4,128	−$3,168
Capital reserve	−$2,064	−$2,112
Net income	$33,733	$34,648

Same income. One property instead of two.

You net about the same dollars either way — but you go from two aging tract homes with two tenants, two roofs and two vacancy cycles to a single asset in a gated golf community. Plus roughly $160,000 of tax that stays in the deal and about $135,000 of equity the day you close.

Both columns assume you manage the properties yourself and the tenant handles landscaping and pool, which is standard in this price band. Mesa gross assumes $4,400 a month — supportable for 3,057 square feet with a pool and separate casita behind a gate. Surprise vacancy is set at 8% because that house has needed three-plus months to lease in each of its last two cycles; Mesa is set at 5%.

What it takes to get there

At $915,000 against $730,360 of exchange proceeds, you would bring roughly $185,000 in cash or new financing. That is the real cost of the upgrade, and it is worth naming plainly: you are putting in more capital for similar income, and buying a materially better asset with it. If you finance the gap, budget the debt service against the $34,648 above — the interest is deductible, but it comes out of cash flow.

If you want the flexibility instead

You mentioned wanting room to move as the market shifts. Furnished stays of 30 days or more give you exactly that, and they skip Mesa's 14.27% transient lodging tax, skip the city short-term rental license, and skip residential rental TPT entirely. Snowbirds fill November through April across east Mesa, and Banner Baywood and Banner Desert draw travel nurses on 13-week contracts year-round. A four-bedroom with a separate casita suits both unusually well.

Mesa strategy at $915,000	Gross	Operating costs	Net income	Setup cost
Standard 12-month lease	$52,800	−$18,152	$34,648	$0
Furnished, 30+ day stays	$56,000	−$33,472	$22,528	$35–45K
Nightly short-term rental	$65,000	−$49,700	$15,300	$65–90K

Furnished and nightly both gross more and net less, because you pick up utilities, grounds, pool, linens and far more turnover management. Read the gap as a price tag rather than a verdict: furnished costs roughly $12,000 a year against a straight lease, and what you buy with it is a calendar you control and the ability to use the house yourself between bookings. Some owners consider that a bargain. That is your call, and you can start with a 12-month lease and convert later — nothing about this decision is permanent.

One item to clear first. Arizona prevents cities from banning rentals but leaves the rules to the HOA. I am ordering the Alta Mesa Estates CC&Rs this week to confirm the minimum lease term in writing before we write an offer. If it is 30 days, the furnished plan works as designed. That is exactly the kind of thing you want found in week one rather than after close.

How we run it

Both houses go on the market together. The 45-day identification and 180-day closing clocks start at the first closing, so the two sales need to close within two or three weeks of each other. This is the single most important piece of scheduling in the deal. James — list within 21 days of your go-ahead
Qualified intermediary in place before either house goes under contract. If proceeds touch your account, the exchange is gone. I have two I trust and will make the introduction. Dan — this week
Send me both leases and your payoff amounts. Lease end dates set the listing calendar, and every number here is before debt. Dan — this week
Loop in your CPA. Basis and depreciation turn the $160,000 estimate into a real figure, and they should confirm the holding-period requirements on the replacement property. Dan & CPA — this week
I order the Alta Mesa CC&Rs and pull twelve months of closed sales inside the gate. Both before we write. James — this week
Let's walk #119 together. Thirteen months on market means we can take our time and inspect properly. I will also identify a backup property so the exchange is protected no matter how the negotiation goes. James & Dan — this week