What Price Cuts in Phoenix and Denver Could Mean for DSCR Rental Investors

DSCR loans in Arizona and Colorado may deserve a fresh look in 2026, as Phoenix and Denver combine frequent price cuts with relatively low effective property tax rates. In September, 32.1% of Denver-area listings and 29.0% of Phoenix-area listings carried a price reduction, according to Realtor.com. Rents in both metros remained below year-ago levels in August, though Phoenix vacancy and leasing times improved over the past year, per Apartment List's renter's market analysis.

What Makes DSCR Loans in Arizona and Colorado Worth a Look Now?

Phoenix and Denver may offer rental investors more negotiating room than they have had in previous years, alongside property tax bills that could keep the monthly DSCR payment lighter.

Source: Realtor.com, September 2026

What these numbers may signal for a real estate investor:

• More listings and more price cuts could mean more room to negotiate on price, terms, or both.
• Denver showed 4.7 months of supply in August, with homes selling at 95.7% of list price, according to the Homes.com Denver housing market report.
• Mortgage rates rose nearly 40 basis points in the four weeks before Realtor.com's September report, which may thin out competing buyers.
• Rental investors who arrive with financing lined up could be in a stronger position to negotiate.
• Kiavi's funded DSCR volume in Arizona held roughly flat year over year in H1 2026, per Kiavi funded loan data.

How Could Low Property Taxes Help Your Rental's DSCR Math?

Low property taxes could help a DSCR by keeping the tax escrow small, which may leave more rent available to cover the loan payment. County data from the Tax Foundation's 2026 property tax analysis shows rates well under 1% across the major counties in both states.

Source: Tax Foundation, 2026 (effective rates); monthly amounts are hypothetical calculations, Kiavi, October 2026

How that may compare and what to consider watching:

• At a New Jersey-level rate of 1.88%, the highest in the nation according to the Tax Foundation, the same rental's tax bill could run near $627 a month.
• That gap of roughly $480 a month could be the difference between a DSCR above 1.0 and one that falls short.
• These rates reflect owner-occupied homes, so a rental's actual bill could run somewhat higher.
• Rates may vary within a county, so the parcel's own record is the number to underwrite.

How Can Rental Investors Use Price Cuts When Making an Offer?

Price cuts may give rental investors in Phoenix and Denver real leverage, though turning a listing discount into a stronger DSCR could depend on how the offer is built.

1. Check the listing history. Price reductions and days on market may show how motivated a seller could be.
2. Lean on closed sales over list prices. Recent sold comparables could show where the market actually is.
3. Work backward from the DSCR. Running the ratio at your target price before offering may show how much discount a deal needs.
4. Ask for terms if price will not move. Seller credits toward repairs or closing costs could help preserve cash for reserves.
5. Get pre-qualified first. A ready financing picture may make an offer more credible to a seller weighing options.
6. Protect your inspection time. Confirming repair costs before closing could keep the purchase price discount from disappearing into the rehab.

Kiavi Tip: Asking the listing agent how long the property has been on the market, and how many price changes it has had, could help frame a stronger first offer.

What Could a 5% Price Cut Do to a Rental Property's DSCR?

A modest price cut could lift a DSCR on two fronts at once, shrinking the loan payment and, in many jurisdictions, the assessed value behind the tax bill.

Example: A rental investor negotiates 5% off a $400,000 list price. Both scenarios assume the same loan terms, $2,500 in monthly rent, a 0.45% effective tax rate, and $160 in monthly insurance.

Source: Hypothetical example, Kiavi, October 2026 - Actual terms vary by lender, market, and deal specifics.

What stands out in this example:

1. The $20,000 discount could cut PITIA by about $107 a month.
2. If rent came in 3% lower at $2,425, the discounted purchase could still land near 1.10.
3. That cushion may matter while rents in both metros are still adjusting.

How Should You Set Rent Assumptions in Phoenix and Denver?

Rent assumptions may call for some caution in both metros, since rents were still below year-ago levels in August, though the trend lines point in different directions.

Source: Apartment List, August 2026

How these trends may differ:

• Tucson and Phoenix were the only two of 14 renter's markets where both vacancy and leasing time fell over the past year.
• Tucson's annual rent decline narrowed from 4.2% to 0.6%.
• Apartment List's September National Rent Report notes that declines in Denver and Phoenix are smaller than at the start of the year.
• The same report notes rising mortgage rates could keep some would-be buyers renting longer.

A simple process may help set a defensible rent number:

1. Pull three to five comparable rentals with similar size, layout, and condition.
2. Check how long each comparable has been listed.
3. Use a typical rent from that group, leaning away from the highest asking rent.
4. Build in a vacancy allowance that reflects local leasing times.
5. Rerun the DSCR at 3-5% lower rent to see how much cushion the deal has.

Kiavi Tip: For more on rent research, the post on steps to buy a rental property that cash flows walks through rental demand analysis.

How Do Phoenix and Denver Compare With Tighter Northeast Markets?

Phoenix and Denver may offer a different trade than tighter Northeast markets, where limited supply could support rents but may push prices and competition higher. The New York metro had the lowest price-cut share among the 50 largest metros at 10.3% in September, per Realtor.com, and its inventory sat 30.7% below pre-pandemic levels in August, according to the Homes.com New York housing market report.

Kiavi funded loan data reflects that contrast. In New York, comparing H1 2026 with H1 2025, Kiavi's DSCR activity shifted toward fewer, larger loans.

• Average DSCR loan size rose about 19%
• The number of funded DSCR loans fell about 17%
• Funded DSCR dollar volume held roughly flat, down about 1%

That pattern may be consistent with a supply-constrained market where fewer properties trade at higher prices.

Source: Realtor.com, September 2026; Apartment List, August 2026; Kiavi funded loan data, H1 2026

The better fit could depend on whether a rental investor prefers to win on purchase price now or on rent over a longer hold.

Kiavi Tip: Looking for more information on PITIA? Check out our PITIA guide on what it means, how to calculate it, and how it could impact your DSCR loan qualification.

Could a Bridge-to-DSCR Path Work in Arizona and Colorado?

A bridge-to-DSCR path could work for some rental investors in these markets, since a discounted purchase plus renovation may create room for a stronger coverage ratio after refinance. Kiavi's Arizona financing page notes that many Arizona real estate investors use bridge financing to acquire and then refinance into a DSCR loan at stabilization.

1. Find a discounted property that needs work.
2. Finance the purchase and renovation with a bridge loan.
3. Estimate the after-repair value with an ARV estimator before committing to a scope of work.
4. Lease the property at market rent.
5. Refinance into a long-term rental loan, as covered in the guide to using a DSCR loan for BRRRR.

Questions that could be worth answering before you start:

• Will the property's rent support the refinance DSCR at current rates?
• How long could the renovation and lease-up realistically take?
• What happens to the plan if rents soften another 3-5%?

The comparison of build-to-rent vs. BRRRR may help weigh a renovation path against newer construction. Colorado rental investors can find bridge and rental options on Kiavi's Colorado lending page, and Kiavi's DSCR loans qualify on the property's rental cash flow, with pre-qualification available online.

Kiavi Tip: Underwriting the refinance DSCR before buying, using conservative rent and current rates, could reduce the chance of a shortfall later.

Final Thoughts

Phoenix and Denver currently offer something many markets do not, which is negotiating room paired with relatively light tax bills. Conservative rent assumptions could help that advantage hold through the current rent adjustment. Rental investors exploring DSCR loans in Arizona and Colorado can check DSCR loan options online.

Sources

• September 2026 Monthly Housing Trends Report, Realtor.com, September 2026
• Which U.S. Metro Areas Are Renter's Markets? (2026), Apartment List, September 2026
• Property Taxes by State and County, 2026, Tax Foundation, March 2026
• Apartment List National Rent Report, Apartment List, September 2026
• Denver Housing Market Report, Homes.com, September 2026
• Taxes in New Jersey: 2026 New Jersey Tax Rates, Collections, and Burdens, Tax Foundation, May 2026
• New York Housing Market Report, Homes.com, September 2026