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7 Best Places to Buy Rental Property in Arizona

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7 Best Places to Buy Rental Property in Arizona

Property Management | Publish Date: July 15, 2024 | SWSS Staff

Are you interested in purchasing a rental property in Arizona’s thriving real estate scene but unsure about the best cities to invest in?

No problem! In this article, we’ll dive into the hallmark features of the state’s real estate market, what factors to consider when choosing a property, and the best places to buy rental property in Arizona. Whether you’re a seasoned investor or just starting your real estate journey, this guide will help you determine which Arizona market to invest in next.

Why Invest in an Arizona Rental Property?

  • Strong Economic Drivers — Arizona has a strong economy with diverse industries that attract young professionals, creating an ongoing demand for housing.
  • Explosive Population Growth — Arizona’s population is growing more than ever because of the warm weather, affordable prices, and booming business.
  • Thriving Rental Market — The rental market currently boasts low vacancy rates, which increase rental yields and offer the potential for massive property value appreciation.

Factors to Consider When Choosing a Rental Property in Arizona

Investment Property Strategy

Not every real estate investment strategy will work in every city. It’s important to know your options and determine which strategies will work best in each market. Consider the following methods:

  • Cash Flow — Properties with higher rent and lower sale prices will generate more monthly cash flow for the investor.
  • Appreciation—Areas with a history of strong property value growth and potential for future development will appreciate steadily over time.
  • Long-Term Rentals — Established neighborhoods with renters looking for stable housing options are great for long-term rentals of six or more months.
  • Short-Term Rentals (Vacation Rentals) — Cities with high tourist traffic near popular attractions are great for short-term rentals, otherwise known as vacation rentals.
  • Student Housing —Properties near universities or colleges with a large student population are ideal for student housing.

Market Analysis

Calculate these numbers in each city to make a well-informed investment decision:

  • Analyze the median sale price in different areas to balance affordability and potential returns.
  • Research median rental prices in your target area. This will help you estimate your potential rental income and calculate your return on investment (ROI).
  • The price-to-rent ratio is the median sales price in your area divided by the median annual rent amount. A lower ratio means a better chance of greater cash flow.
  • Annual property value changes give you insight into an area’s potential for appreciation.
  • Prioritize areas with a history of population growth to better ensure consistent demand for rentals in the future.

Best Places to Buy Rental Property in Arizona

1. Scottsdale

Street view of a charming downtown area in Scottsdale during twilight, featuring a mix of old-style brick buildings and western-themed facades. String lights are strung overhead, creating a festive and inviting atmosphere. The street is lined with shops and businesses, with signs and decorations visible.

Scottsdale offers a vibrant, upscale lifestyle with world-class golf courses, renowned art galleries, and a high-end shopping scene. It’s also a hub for outdoor recreation, like hiking, mountain biking, rock climbing, horseback riding, and even hot air balloon rides!

Scottsdale attracts many residents and tourists, creating a strong demand for both luxury short-term rentals and high-end long-term rentals.

Market Analysis

2. Phoenix

As Arizona’s largest city, Phoenix boasts a booming job market with a diverse range of industries, attracting young professionals and families. The city has many desirable neighborhoods, from vibrant downtown areas to established family-friendly communities.

The Phoenix real estate market is one of the most diverse in the state, with opportunities for long-term rentals, short-term rentals, and properties that will generate cash flow and appreciate over time.

Market Analysis

3. Tucson

Evening view of downtown Tucson, featuring a skyline with a mix of modern and classic buildings.

Tucson is a more affordable alternative to Phoenix. Its strong job market is primarily rooted in the aerospace and bioscience industries, which creates an ongoing need for long-term rentals. The University of Arizona, located in Tucson, has a large student population, which presents a consistent demand for student housing. Tucson is also close to military bases like Davis-Monthan Air Force Base, which creates a need for military housing.

Market Analysis

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4. Tempe

Tempe is a vibrant college town full of energy due to its location near Arizona State University. The large student population in Tempe means there’s a high demand for long-term rentals, specifically apartments and single-family homes near campus.

Tempe is also home to a strong (and growing!) technology industry, which attracts many young professionals seeking long-term housing. Many Tempe properties are also ideal for generating cash flow and will appreciate over time.

Market Analysis

5. Mesa

Street view of downtown Mesa during a colorful sunset, featuring a vibrant sky with shades of pink and purple. The area is adorned with modern street lamps and well-maintained sidewalks. In the background, there is a notable building with a distinctive red roof and another contemporary structure.

Mesa has seen rapid population growth in recent years thanks to its strong job market and family-friendly environment. These factors have led to a high demand for long-term rentals. Mesa offers housing options for everyone, including families, young professionals, retirees, and snowbirds.

Market Analysis

6. Chandler

Chandler is an up-and-coming town with a booming technology industry. The city has a mix of established neighborhoods and growing areas with new condo developments.

Over the last couple of years, big companies like Intel, PayPal, and Doordash have set up campuses in Chandler, making corporate housing a popular investment strategy in this city. Chandler’s family-friendly lifestyle also attracts families searching for long-term rentals.

Market Analysis

7. Flagstaff

Street view in downtown Flagstaff featuring a historic brick clock tower with a peaked roof against a blue sky with some clouds. In the foreground, there is a street sign indicating the intersection of Birch Avenue and San Francisco Street, designed in a vintage style with red and white colors. The clock on the tower shows the time, and the overall scene captures the charming and historic essence of Flagstaff's downtown area.

Flagstaff — a popular mountain resort town in Northern Arizona — offers a unique niche market for investors. This city is one of the most popular day trips from Scottdale and Phoenix and attracts tourists year-round because of the nearby Grand Canyon National Park and Saguaro National Park. This creates a high demand for short-term vacation rentals and seasonal rentals.

Flagstaff is also home to Northern Arizona University, making this town ideal for long-term student housing.

Market Analysis

Pro Tips for Arizona Rental Property Investors

  • Partner with a Local Real Estate Agent — Rely on the guidance of a knowledgeable, local real estate agent who can give insight into specific neighborhoods and market trends.
  • Be Prepared for Upfront Costs — Before purchasing a rental property, factor in upfront costs like the down payment, closing costs, and potential repairs.
  • Consider Ongoing Expenses — When calculating your potential return on investment, consider ongoing expenses like property taxes, insurance, and property management fees.

Take the Hassle Out of Managing Your Scottsdale Vacation Rental with Stay With Style Scottsdale

As you can see, Arizona has several appealing rental markets for investors with thriving economies, steady population growth, and a rising demand for rental properties.

While it’s important to choose the right property and rental market based on your goals, budget, and risk tolerance, we would love to steer you toward owning a short-term vacation rental property in Scottsdale, Arizona, managed by our team at Stay with Style Scottsdale.

Learn more about our vacation rental management services to get started, and please reach out to us with any questions. We’re just a phone call away!

Discover Excellence in Property Management

Your property, our priority. Explore a new level of management excellence with our services designed to take the hassle out of renting your property.

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