2 to 4 unit multifamily in the East Valley

Small multifamily is the part of the East Valley market where the listing photo tells you the least. Two to four units in Mesa or Tempe can look like a tired house and pencil beautifully, or look sharp and lose money the first time two tenants leave in the same month. The Arizona forms give you a lot to work with, but only if you know which pieces to demand and how to read them. Here’s the sequence.

Why small multifamily is its own math

A single-family rental has one tenant, one lease, one vacancy risk. A fourplex has four of each, and they don’t move together. That’s the advantage: one vacancy is a quarter of the rent, not all of it. It’s also the trap, because buyers add up four rents and then apply a single-house vacancy number. Run vacancy and turnover per unit, at a month per unit per year as a starting point, and let the units that are month to month carry a higher number than the ones on fresh leases.

Then run the systems as shared. One roof over four leases means a roof reserve funded by four rents. One water line, one sewer lateral, sometimes one electric meter. Under the standard Arizona lease, the tenant pays all utilities except those the lease lists as the landlord’s, so read each lease to find out which meter you’re paying. The lease also puts HOA dues on the landlord, and a checkbox grid decides who handles pool cleaning, pest control and yard care. In a fourplex those boxes often say “landlord.” Price them.

The second disclosure statement

When the Residential Income Property Addendum (1-4 Units) is part of your contract, the seller owes you a second disclosure statement within five days of acceptance, alongside the regular nine-page seller’s disclosure. The income version asks the questions a house form doesn’t:

1. Access and use: easements, shared walls and fences, shared driveways, shared signage, leased parking, grandfathered uses.
2. Compliance with law: any tenant bankruptcy; violations of zoning, building code, OSHA, utility service, sanitary health rules, swimming pool rules, CC&Rs or the ADA; any notice of non-compliance ever received.
3. Contractual obligations: leases and subleases, alarm contracts, management agreements, leased equipment, landscaping and waste contracts, water treatment, cable.
4. Environmental: hazardous materials past or present, high-voltage lines, drywells and their registration numbers.
5. Reports the seller has: soils, survey, flood plain, septic, well registrations, environmental site assessments, title reports.
6. Other: security lighting in parking and common areas, recorded or unrecorded liens, historic district, proposed land-use changes nearby.

Your window to disapprove anything on it is the inspection period or five days after you receive it, whichever is later. It is the seller’s knowledge statement; you sign only to acknowledge receipt.

The seller hands over the business, not just the building

Within the same five days, unless a different number is written in, the addendum requires the seller to deliver current rent rolls, the list of deposits, copies of every lease and rental agreement, the tenants’ applications and move-in forms, any crime-free addenda, service contracts, the most recent rental or transaction privilege tax bill, and any other reports about the property in the seller’s possession. The addendum also states that domain names and signage associated with the property transfer to you as part of the price, and has the seller represent that neither the seller nor any tenant is in bankruptcy, probate or insolvency.

Reconcile the rent roll against the leases and the deposit list line by line; the guide on reading a rent roll walks through that. On a fourplex the mismatches cluster in the same places: a unit shown at a rent the lease doesn’t support, a deposit on the roll that isn’t in the seller’s account, a “tenant” with no application on file.

What to do during the inspection period

The resale contract gives you ten days by default to inspect, and the addendum’s five-day document windows run alongside it. The tenants get two days’ written notice before entry under the lease, so schedule inspections as one coordinated pass. Beyond the standard inspection, the items I push on for small multifamily:

1. Every unit, not a sample. Sellers will offer to show two of four. Say no.
2. The sewer lateral, since one clog is four complaints.
3. Meter count and who is billed for what, matched against each lease’s utility clause.
4. The tax bill the seller delivered, so the property-tax line in your math is the real number.
5. Pool barrier compliance if there’s a pool; the disclosure statement asks about it and the lease has the tenant initial a pool barrier clause.
6. The CC&Rs, if any. The seller’s disclosure asks whether the seller knows of any regulation on rental length, and the CC&Rs can restrict how you operate.

Then deliver one written notice of disapproved items before the inspection period ends. The seller has five days to respond in writing, and silence is a refusal. Talking about it extends nothing; only a signed writing moves a deadline.

Closing mechanics

At close of escrow, collected rents prorate to the closing date, deposits move to you by checkbox (credit against your cash, or paid to you at closing, or as otherwise written), and the seller’s property management agreement terminates. Anything not determinable at closing, like rent that arrives late, is settled between buyer and seller outside escrow; escrow and the brokers are relieved of it. You then have ten days to update the rental registration with the county assessor, and you send each tenant the notice of new management naming who receives rent and repair requests and where the deposit is held.

What the market says right now

Small multifamily trades in a thinner market than houses, so the single-family numbers are context, not comps. The context is tight: Mesa has about three months of single-family supply, the least of the 18 largest Valley cities, and the typical Mesa or Tempe home sells in about 47 days at the median (Cromford Report / ARMLS, data 9/15/26, analysis mine). That means a fourplex listed at a price that pencils won’t sit long, and a fourplex that has sat is probably priced on gross rent someone else already refused to pay.

What I do for you here

I’m an Associate Broker with Keller Williams Integrity First Realty in Gilbert, a former brokerage owner and Designated Broker, with more than 500 closed transactions. On a 2 to 4 unit purchase I attach the income addendum, track its document clocks, walk every unit, reconcile the roll to the leases, and tell you when the per-door math says no. Taxes, entity, and financing are your CPA’s and your lender’s; the Arizona contract says brokers don’t advise on those, and I don’t.

If you want the worksheet run per door on a specific building, text or call (602) 610-3172, or email ryan@ryanharju.com.