How to Start an Airbnb in Arizona in 2023

Published in

Mashvisor

14 min readJul 3, 2023

Arizona is a top tourist destination. Want to know how to start an Airbnb in Arizona? You need to find the best cities for vacation rentals first.

The ideal short term rental market continuously attracts visitors all year round. The US, in general, is a lucrative market for vacation rentals. After all, tourists from around the world constantly visit the country at any time of the year. However, there are some states that are more frequented by visitors than others, and Arizona is one of them.

In fact, Arizona is considered one of the in the US. With a consistently high demand for vacation rentals, there’s no wonder why many real estate investors are looking to invest in the Arizona Airbnb market. According to best short term rental markets Green Living Magazine, Arizona welcomes more than 40 million visitors in a year, which is one of the reasons why it’s a great place for Airbnb investing.

In Arizona, the climate is mostly clear and warm year-round. People coming from cold places who want to escape the gloomy climates would definitely love the almost perpetually sunny weather in The Grand Canyon State.

Aside from its breathtakingly beautiful desert landscapes and cacti, Arizona is also known for its rich history and culture. Arizona is a dream destination for adventure-seekers-with its many national parks, hiking trails, and numerous outdoor activities, there’s something to keep everyone entertained and in awe.

Note, however, that not all Arizona cities are optimal for short term rental investing. To be profitable, it’s vital to find the right location for your Arizona vacation rental property.

Is Airbnb Profitable in Arizona?

Since The Grand Canyon State is an ideal investment location for short term rentals, many investors are wondering how to start an Airbnb in Arizona. But before we discuss the process of starting an Airbnb, let’s first take a look at the detailed short term market data for the state.

Here is Arizona’s real estate data and analysis based on Mashvisor’s analytics report as of April 2023:

Median Property Price: $624,285
Average Price per Square Foot: $347
Days on Market: 87
Number of Long Term Rental Listings: 11,622
Monthly Long Term Rental Income: $2,614
Long Term Rental Cash on Cash Return: 3.40%
Long Term Rental Cap Rate: 3.44%
Price to Rent Ratio: 20
Number of Airbnb Listings: 20,623
Monthly Airbnb Rental Income: $2,526
Airbnb Cash on Cash Return: 2.26%
Airbnb Cap Rate: 2.29%
Airbnb Daily Rate: $172
Airbnb Occupancy Rate: 45%
Walk Score: 44

Based on the above data and real estate analysis, the Arizona housing market is generally lucrative. Its median property price is relatively lower compared to other equally popular states, like California and Florida.

Arizona is also an excellent investment location for those looking to venture into long term rentals. With a high price to rent ratio of 20, residents in Arizona would rather rent than buy a home of their own. It opens more investment opportunities to long term rental owners. Plus, with a cap rate of 3.44%, Arizona rental owners will definitely earn high returns on their investment.

The Arizona short term rental market is also doing good. While the average Airbnb occupancy rate is below 50%, there are Airbnb markets with higher occupancy. So, to be a successful Airbnb owner, it’s crucial to choose the right city to invest in.

Reasons Why Arizona Is an Optimal Airbnb Location

The short term rental figures above only prove that there is a positive opportunity for Airbnb rental investors in Arizona. With affordable housing options and attractive monthly short term rental income, investors will surely generate high returns from investing in Arizona Airbnb. Plus, its cap rate signifies plenty of opportunities and lower risks.

In addition, there are several other reasons why short term rental investors should consider buying an Airbnb for sale in The Grand Canyon State, including the following:

High Airbnb Demand

As mentioned, Arizona attracts a significant number of visitors throughout the year. The state is strategically located and is relatively near California and Nevada, both of which are popular tourist destinations. Because of its location, Arizona also benefits from the influx of tourists in these two states, as most visitors who go to California and Nevada often also drop by Arizona.

Diverse Tourist Attractions

Arizona boasts a strong tourism industry, making it the best place for rentals. Being known as home to the world-famous Grand Canyon, Arizona is now considered one of the go-to destinations for visitors from other states and around the world. Also, the state’s natural attractions, cultural sites, and outdoor activities make it a popular destination for travelers.

Arizona offers a diverse range of attractions that persistently pique the interest of visitors. With its various tourist attractions like the famous road known as Route 66, the White Mountains, Sedona, Tucson, and Phoenix, Arizona offers something to tourists with different tastes and interests.

Favorable Short Term Rental Laws

Arizona is home to generally favorable rules and regulations for short term rentals. While specific rules may vary across cities and counties, the state generally allows short term rentals and imposes minimal restrictions. In fact, the regulatory law for short term rentals in Arizona is mostly considered positive, providing stability and flexibility for vacation rental owners.

Friendly Year-Round Weather

Arizona’s pleasant weather throughout the year makes it an attractive destination for travelers, regardless of the season. Unlike some locations that are heavily dependent on seasonal tourism, Arizona’s short term rental market is not that affected by weather seasonality. Because of warm and friendly weather, vacation rental owners enjoy a year-round high potential for bookings.

Relatively Low Taxes

Arizona boasts reasonably low property taxes compared to other equally popular states. In fact, its property tax is way below the national average. In addition, its sales tax and income tax rates are also relatively low compared to other areas in the country. It means real estate investors can get to keep more of their profits, increasing their potential for gainful returns.

Short Term Rental Regulations in Arizona

In Arizona, short term rentals refer to stays of less than 30 days. The short term rental regulations vary by local level. Each city and/or county may impose its own rules and local ordinances regarding the operation of short term rentals. In general, Airbnb laws in most Arizona cities are investment-friendly; that’s why The Grand Canyon State is favorable to Airbnb investors.

Here are some general aspects of Arizona’s short term rental regulations that you should know about if you plan on running an Airbnb in the state:

Permit or Licensing Requirements: In order to start a short term rental business in most Arizona cities or counties, vacation rental hosts need to obtain a business permit or license. It also involves registration with the local government.
Building and Housing Standards: To register your Arizona short term rental business, you must meet specific criteria, such as safety and health standards, building codes, and insurance requirements.
Usage: Short term rentals must not be used for non-residential purposes, such as for operating a business, holding illegal activities, or making a sober living home. Holding events may be allowed, but it requires a permit or license that adheres to the city’s ordinance or state law.
Occupancy Limits: Depending on which city your short term rental is located, there might be regulations on the maximum number of guests allowed to stay in a property at a given time. Such limits are often based on the size of the property and existing zoning codes.
Taxation: Short term rental hosts are required to collect and remit applicable taxes. They include state and local transient occupancy taxes, transaction privilege tax, county excise tax, and sales taxes. The specific tax requirements can vary depending on your city.

How to Start an Airbnb in Arizona in 6 Steps

We’ve established that Arizona is one of the best places to invest in short term rentals due to the influx of visitors in the state almost all year round. Its fine weather conditions, scenic attractions, recreational activities, and breathtaking landscapes are among the many reasons why Arizona is frequented by visitors at any time of the year.

Do you want to take advantage of the relatively affordable housing and high demand for vacation rentals in Arizona but don’t know how to begin? The following step-by-step guide will help you through the process:

Step 1: Determine the Best City in Arizona for Airbnb Investing

Before you try to find the best short term rentals for sale, you should first determine which city in Arizona is most optimal for short term rental investing. While Arizona is a great location for vacation rentals, some areas may not be as profitable as others. To maximize your profitability, it’s vital to find the right investment location first.

You need to conduct thorough research and study the market to help you find the right city to invest in. However, doing a manual short term rental analysis may consume a lot of your precious time, not to mention that it can also be prone to error. Fortunately, there are other ways that can help you find the Airbnb best markets in Arizona without doing manual research.

Using Mashvisor’s Market Finder

The best way to do it is by using Mashvisor’s Market Finder tool. The tool allows you to view the top markets in Arizona for investing in short term rentals based on the cap rate, rental revenue, crime rate, and Mashmeter score. You can select your desired criteria, and you will then see the top cities for buying vacation rentals for sale .

The tool helps you find the best place to buy properties right now. You can even narrow down your search by selecting your desired cities. Then, you will see the top neighborhoods for vacation rentals based on the above-mentioned criteria. With Market Finder, you can also filter your search further based on your preferences using the following:

Mashmeter Score
Home Value
Property Type
Occupancy Rate
Monthly Income
Regulatory Law
School Rankings
Crime and Safety

Using Mashvisor’s Market Finder tool makes it easier for you to find the right location for your Arizona vacation rental. It will also help save you time on manual data gathering and research, reducing the risk of errors.

Sign up for a 7-day free trial with Mashvisor to experience how Market Finder can help you find the best Airbnb market in Arizona and anywhere in the US.

Mashvisor’s Market Finder tool tool helps you find the best place to buy short term rental properties right now, based on your preferred criteria.

Step 2: Know the Airbnb Laws

The next important step after you decide on your investment location is to determine whether or not operating a short term rental business is allowed in your desired city. In general, Arizona Airbnb laws are reasonable and relatively favorable to short term rental hosts.

Knowing the regulations that govern vacation rentals in your chosen city will help you identify the registration and licensing procedures and requirements. It’s also essential to be aware of the law so that you’ll remain in compliance at all times and avoid any legal issues.

You can visit your local city government office to inquire about the process and requirements of operating a short term rental business in the area. Check out Mashvisor’s short term rental regulations page to determine if your chosen location imposes positive or neutral Airbnb regulations. You can also see if there are restrictions that you need to be aware of.

Step 3: Find a Profitable Property for Short Term Rental

After checking out the short term rental regulations in your preferred city, look for the best investment property that meets your budget. It is a delicate step and should be taken with utmost caution. Remember that even if the city where you plan to invest is optimal for Airbnb, there are properties that will not be as profitable as others.

You need to conduct a thorough property analysis by gathering accurate short term rental data related to the property. You must find the property’s potential rental income, expected expenses, and other metrics that help you determine its ability to generate returns.

The good news is that you can use Mashvisor’s Property Finder to help you find the best Airbnb properties for sale. The tool is quite simple to use. You only need to input the city or neighborhood and set a few filters like budget, property type, rental strategy, distance, and number of bedrooms and bathrooms.

From the list of best property rentals in the search results, select a few that interest you. Then, you can easily conduct a rental property analysis right away since all the required real estate data are already provided for you. You can also use Mashvisor’s investment property calculator to determine if the property will make a good investment or not.

What’s best about the said rental property calculator is that it is interactive; you can input or change the figures for expenses and financing methods to get a more accurate computation. You can also experiment with changing the nightly rate and occupancy rate to see what would happen to your rental income in case of fluctuations.

Mashvisor’s Property Finder allows you search for the best Airbnb properties for sale, based on the filters you set.

Step 4: Perform the Necessary Renovations

One of the things that set short term rentals apart from long term rentals is that you need to ensure that you provide the right amenities to make your rental attractive. Guests are more likely to stay in your rental unit during their visit to your city if the property is appealing enough. So performing not just renovations but also home improvements is necessary.

You’ll also need to furnish the property to ensure that it stands out among the competition. Make sure to set aside a budget for this. Important improvements will increase the value of your vacation rental and you’ll be able to charge premium rates for essential amenities. However, make sure to stick to your budget and don’t spend more than what you can charge for.

It’s recommended to conduct a rental comps analysis in the area where your property is located. It will help you identify the amenities that are most popular among guests and what amenities your competitors provide. It will also let you know how your competitors are doing so you can strategize how to best position your property in the market.

Step 5: Process the Registration and Licensing

Once your property is ready to rent, you’ll need to process the registration and licensing requirements in your city. Remember that each city in Arizona might adhere to different rules and regulations regarding how to operate short term rentals legally. Make sure to know the relevant rules and comply with them to avoid any legal issues.

Keep in mind that there are taxes and fees that you may need to pay. You can typically register, file, and pay online through AZtaxes.gov. Before you start the registration process, check out with your local city to ensure that you know every step involved in registering a short term rental business and that you don’t miss a thing.

Step 6: List Your Short Term Rental on Online Platforms

Once everything is ready and you are duly registered to operate a short term rental business legally, the next step is to list your property on online home-sharing platforms. Platforms like Airbnb and Vrbo are the most popular among travelers worldwide, with millions of users available. Listing properties on the said platforms essentially provides you with free marketing.

Another important thing to note is that short term rentals are a seasonal business. It means that your pricing strategy should be dynamic and will adjust based on the market demand and seasonality. Several tools are available online to help you automatically set your vacation rental rates dynamically, and the best one is Mashvisor’s Dynamic Pricing tool.

Mashvisor uses several factors to automate your Airbnb nightly rates, including market conditions, rental demands, seasonality trends, local events, and booking history. Dynamic Pricing allows you to maximize your revenues during the high-peak season while ensuring that you get the most bookings during low-peak seasons.

Mashvisor provides the best rental estimate for your short term rental property because the suggested rates are based on actual figures and market insights. We also use AI-powered technology and machine-learning algorithms, ensuring that your Airbnb pricing can compete among the rest.

Top 5 Cities in Arizona for Airbnb

Now that you’ve learned how to start an Airbnb in Arizona, you can check the following top five cities in Arizona that are most optimal for Airbnb investing.

Keep in mind that the cities included in the list below meet certain criteria. The median property prices are below $1 million, the monthly rental income is at least $2,000, and the cash on cash return is 2% or higher. Further, we only considered cities with at least 100 Airbnb listings and an Airbnb occupancy rate of 50% or more.

Based on Mashvisor’s data as of April 2023, here are the top five cities in Arizona for short term rentals, ranked from the highest to the lowest cash on cash returns:

1. Glendale

Median Property Price: $490,891
Average Price per Square Foot: $261
Days on Market: 11
Number of Airbnb Listings: 407
Monthly Airbnb Rental Income: $3,012
Airbnb Cash on Cash Return: 3.76%
Airbnb Cap Rate: 3.80%
Airbnb Daily Rate: $209
Airbnb Occupancy Rate: 51%
Walk Score: 87

Glendale is conveniently located near many popular sites in the Phoenix metropolitan area, including the University of Phoenix Stadium and the Gila River Arena. The said venues host numerous events throughout the year, attracting a steady stream of visitors seeking short-term accommodations.

2. San Tan Valley

Median Property Price: $466,321
Average Price per Square Foot: $233
Days on Market: 315
Number of Airbnb Listings: 59
Monthly Airbnb Rental Income: $2,733
Airbnb Cash on Cash Return: 3.43%
Airbnb Cap Rate: 3.47%
Airbnb Daily Rate: $169
Airbnb Occupancy Rate: 56%
Walk Score: 3

San Tan Valley offers an easy drive to downtown Phoenix, Scottsdale, and Mesa, allowing travelers to explore them while enjoying a suburban setting for their accommodation. Also, it is near the San Tan Mountains Regional Park, which is a major draw for outdoor enthusiasts. The park offers hiking trails, mountain biking routes, and scenic picnic spots.

3. Waddell

Median Property Price: $693,812
Average Price per Square Foot: $281
Number of Airbnb Listings: 116
Monthly Airbnb Rental Income: $3,241
Airbnb Cash on Cash Return: 2.84%
Airbnb Cap Rate: 2.87%
Airbnb Daily Rate: $220
Airbnb Occupancy Rate: 50%
Walk Score: 4

Waddell is situated near several popular destinations, including the White Tank Mountain Regional Park. It is a vast desert park with beautiful landscapes, hiking trails, picnic areas, and wildlife viewing opportunities. It is also near the Westgate Entertainment District, which is a popular destination for shopping, dining, and entertainment.

4. Surprise

Median Property Price: $485,456
Average Price per Square Foot: $249
Days on Market: 22
Number of Airbnb Listings: 199
Monthly Airbnb Rental Income: $2,581
Airbnb Cash on Cash Return: 2.57%
Airbnb Cap Rate: 2.60%
Airbnb Daily Rate: $188
Airbnb Occupancy Rate: 54%
Walk Score: 19

Surprise, Arizona offers a variety of attractions and activities for visitors. It is home to the Surprise Community Park, which is an expansive park that features several amenities, such as a fishing lake, picnic areas, playgrounds, and walking trails. It is also known for the Aquatic Center, which offers a fun-filled water park experience with slides, splash pads, and pools.

5. Prescott

Median Property Price: $841,246
Average Price per Square Foot: $367
Days on Market: 134
Number of Airbnb Listings: 399
Monthly Airbnb Rental Income: $2,945
Airbnb Cash on Cash Return: 2.15%
Airbnb Cap Rate: 2.17%
Airbnb Daily Rate: $151
Airbnb Occupancy Rate: 51%
Walk Score: 50

Prescott is known for its charming downtown, historic sites, and scenic outdoor views. Surrounding the city, Prescott National Forest offers numerous recreational activities. Visitors can go hiking, mountain biking, camping, and picnicking in the national park. It is also famous for the Heritage Park Zoological Sanctuary, which is home to various wildlife.

Are you ready to find other profitable properties in Arizona? Use Mashvisor’s investment property search tool to get started.

Invest in Arizona Short Term Rentals Now

Arizona is an ideal place for investing in short term rentals because of its high tourist demand. If you’re planning to invest in Arizona vacation rentals, it’s crucial to do the process correctly to avoid getting yourself into trouble. With the guide above, you’ll most likely know how to start an Airbnb in Arizona and where to find the best markets to generate the most profits.

Proper research and analysis are essential to finding the best property rentals. To ensure you’re making an informed decision, use reliable tools tested and proven throughout the years. With Mashvisor, you can never go wrong with your investment decision.

Mashvisor offers a variety of real estate tools that can help you find the best investment property available in your chosen location based on your investing preferences.

Want to learn how Mashvisor works? Schedule a demo today.

Originally published at https://www.mashvisor.com on July 3, 2023.