Arizona AirBnB Investing Guide 2026

Arizona has earned its reputation as one of the most investor-friendly states for short-term rentals, and 2026 is shaping up to reward those who understand the data. The state's regulatory framework prevents cities from banning vacation rentals outright, while tourism-driven markets like Sedona, Scottsdale, and Flagstaff continue generating strong yields. What makes this moment compelling: statewide revenue growth roughly matched supply growth in 2025, though performance varies sharply by market, with select emerging destinations meaningfully outperforming established ones. For investors who want hands-off real estate exposure, mogul offers fractional ownership in professionally managed residential properties, including short-term rental strategies. This guide breaks down the 2026 Arizona Airbnb landscape, market by market, regulation by regulation, so you can invest with precision.

Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.

Key Takeaways

• Arizona's statewide short-term rental market shows healthy fundamentals heading into 2026. Average annual revenue reached $44,538 with 16.23% year-over-year growth, while supply grew at 16.76%, indicating statewide revenue growth roughly matched supply, though performance varied sharply by market.

• State law prevents cities from banning short-term rentals. A.R.S. § 9-500.39 establishes one of the nation's most host-friendly regulatory environments, though individual cities can still impose permit requirements and operational rules.

• Market performance varies dramatically by location. Sedona leads Arizona markets with an ADR of $294 per Airbtics (Jan. 2025-Dec. 2025; other providers may report higher figures depending on methodology and property mix), while emerging markets like Lake Havasu City posted 33.1% revenue growth, the strongest in the state.

• DSCR financing can make Arizona STR acquisitions accessible without traditional income verification. Some STR-focused lenders may consider AirDNA projections for new properties, though underwriting treatment varies by lender, with down payments typically starting at 20-25%.

• Fractional ownership removes six-figure capital requirements. Investors can access institutionally underwritten residential properties through fractional platforms like mogul, which provides professional property management and day-to-day operations so investors receive income distributions without hands-on involvement.

Why Arizona Stands Out for Short-Term Rental Investing in 2026

Arizona's appeal to STR investors comes down to three factors: regulatory stability, diverse tourism demand, and favorable market dynamics.

The state's preemption law, established through Senate Bill 1350 (2016) and Senate Bill 1168 (2022) and codified at A.R.S. § 9-500.39, prevents municipalities from outright banning vacation rentals. This legal framework gives investors confidence that their properties won't be legislated out of existence, a real concern in markets like New York City or Los Angeles.

Statewide performance metrics (2025 full-year data):

• Average occupancy rate: 59.47%

• Average annual revenue: $44,538

• Average daily rate: $198

• Year-over-year revenue growth: +16.23%

Tourism drives consistent demand across different property types. Northern Arizona attracts year-round visitors to Sedona's red rocks and Flagstaff's ski resorts. The Phoenix metro pulls business travelers, spring training crowds, and winter snowbirds. Lake communities along the Colorado River serve water recreation enthusiasts.

Understanding Arizona's Tourism Economy

Flagstaff alone welcomes 5 million annual visitors, supporting nearly 8,000 jobs and approximately $565 million in annual economic impact based on FY2025 reporting. This visitor volume creates a consistent baseline of rental demand independent of any single property type or season.

The Phoenix metro benefits from corporate relocations, Arizona State University (one of the largest universities in the country by enrollment), and major sporting events. Scottsdale's luxury positioning attracts high-net-worth travelers willing to pay $242 per night or more per Airbtics (Jan. 2025-Dec. 2025; other providers may report higher ADR figures depending on property mix and methodology) for premium accommodations.

Top Arizona Markets by Investment Potential

Premium markets (highest revenue):

• Sedona: ~$74,786 annual revenue per Airbtics (Jan. 2025-Dec. 2025; other providers may report different estimates depending on methodology and property mix), 68% occupancy, dual-peak seasons (spring and fall)

• Scottsdale: ~$59,898 annual revenue per Airbtics, 66% occupancy, luxury golf and resort positioning

• Flagstaff: ~$51,459 annual revenue per Airbtics, year-round tourism from skiing to hiking

Under-the-radar opportunities:

• Lake Havasu City: +33.1% revenue growth with only +11.4% supply growth

• Bullhead City: +29.5% revenue growth, with Airbtics listing a $225,000 property price estimate

• Payson: +22.3% revenue growth, best arbitrage opportunity in state with $3,358 rent gap

Affordable entry points:

• Sierra Vista-Douglas: Airbtics lists a $180,000 property price estimate with a 16.7% STR yield, the highest in Arizona

• Tucson: Confirm current city business-license and TPT obligations before listing; proximity to the University of Arizona supports student and visitor lodging demand

Arizona Airbnb Regulations and Local Ordinances

Arizona's state-level protections don't mean regulations are absent, they simply shift to the local level. Understanding city-specific requirements is essential before acquiring any property.

State-Level Framework

A.R.S. § 9-500.39 establishes what cities generally cannot do:

• Outright ban short-term rentals

• Cap the total number of rental units (with limited pending exceptions)

• Impose restrictions that effectively prohibit STR operations

What state law allows:

• Non-owner occupied vacation rentals and investment properties

• Single-family homes, condos, casitas, and guest houses (note: ADUs and casitas may trigger additional state or local restrictions; for Phoenix, STR permit applications involving certain newer ADUs require an owner-residency attestation, see city-specific requirements below)

• Properties rented for less than 30 consecutive days

2026 Legislative Watch

H.B. 2429 passed the Arizona House third reading on March 10, 2026, by a 36-19-4-0 vote and was read a second time in the Senate on March 18, 2026. As of that date, the engrossed bill text would allow cities and towns to adopt STR permit caps and minimum-distance requirements, subject to statutory limits and grandfathering for existing permitted STRs in good standing. Investors should monitor the current bill status as the legislation develops.

City-Specific Requirements

Phoenix (among Arizona's most formalized STR permit regimes):

• Formal permit required via SHAPE PHX portal

• $250 permit fee

• Minimum $500,000 liability insurance

• Mandatory sex offender background checks

• Emergency contact information required; the contact must be available to respond as required by public-safety or enforcement personnel (verify current Phoenix code for response-time requirements)

• ADUs are subject to additional restrictions: effective April 4, 2026, if an STR permit application involves a property with an ADU certificate of occupancy issued on or after September 14, 2024, the owner must submit a notarized attestation confirming they reside on the same property

• Violations: $500-$3,500 per offense

Scottsdale:

• Comprehensive licensing under Ordinance 4566

• Local permit number required on all listings

• $500,000 liability insurance explicitly mandated

• Pool safety compliance (barrier fencing, self-latching gates)

• Active enforcement; violations may result in civil penalties, verify current fine schedule in Scottsdale code

Tucson (less STR-specific than Phoenix or Scottsdale):

• No Phoenix/Scottsdale-style STR permit regime identified in official Tucson materials reviewed; operators must still confirm current city business-license requirements before listing

• Verify Arizona/Tucson TPT obligations with the Arizona Department of Revenue's Tucson city profile before listing; Tucson reduced its per-night bed surtax from $4.00 to $0.00 effective March 1, 2026

• Operators should not assume zero local obligations, business-license and tax registration/remittance requirements apply

Critical compliance warning: Arizona HOA CC&Rs can and do prohibit short-term rentals. State preemption law cannot override these private restrictions. Always pull the full CC&R document before submitting an offer on any Arizona property.

Estimating Your Arizona Airbnb Profits

Accurate financial modeling separates profitable investments from money pits. Arizona's market data provides a solid foundation for projections, but property-specific analysis is essential.

mogul's Airbnb calculator uses data from millions of Airbnb listings across the U.S. to estimate potential short-term rental income, ROI, profit, and projected returns for any U.S. address. The investment property calculator provides detailed analysis across three scenarios (base, bear, bull) and compares short-term versus long-term rental strategies.

Operating Expense Breakdown

From industry analysis (illustrative estimates; actual costs vary by property size, municipality, vendor pricing, amenity set, and occupancy):

• Platform fees: Airbnb split-fee pricing typically charges hosts 3%, while guests usually pay a 14.1%-16.5% service fee; for affected PMS/channel-manager hosts, Airbnb's single-fee model is 15.5% as of April 13, 2026. Vrbo charges a 5% commission plus payment-processing fees

• Utilities: model above owner-occupied residential usage due to guest turnover, HVAC load, laundry, and amenity use (no independently published benchmark verified; obtain property-specific utility estimates before underwriting)

• Maintenance and restocking: 8-12% of gross revenue (illustrative underwriting assumption; obtain property-specific estimates before finalizing)

• STR management fees: vary by provider and scope; some platforms advertise starting rates around 10%, while full-service operators can charge materially more

• Cleaning: $150-$600 per turnover depending on property size (illustrative range; obtain local cleaning bids to confirm)

Initial setup costs (illustrative estimates):

• Furnishing and design: $15,000-$40,000+ depending on size and quality (illustrative underwriting assumption; obtain room-by-room quotes before finalizing)

• Professional photography: $400-$800 (one-time; obtain current local bids to confirm)

• Permits and licensing: Phoenix $250; Scottsdale $250; Tucson business-license fees differ and tax registration may also apply, verify city by city

• STR-specific insurance upgrade required

Sample Investment Analysis: Tempe 3BR

Property details:

• Location: Tempe, AZ (near ASU)

• Purchase price: $465,000

• Down payment (20%): $93,000

Financing (DSCR loan):

• Loan amount: $372,000

• Estimated PITIA: $3,290/month (illustrative estimate based on author assumptions; actual PITIA depends on loan terms, insurance, taxes, and HOA at the time of financing)

• No personal income verification required

Revenue projections:

• Gross STR income: $4,900/month ($58,800 annual) (illustrative projection; actual revenue depends on occupancy, ADR, and platform fees at time of operation)

• DSCR calculation: ~1.49 (gross monthly income ÷ PITIA); if a lender uses 80% of projected STR income, the DSCR would be approximately 1.19. Lenders may apply an expense haircut or net income method, and the qualifying DSCR should be confirmed with your specific lender

Net cash flow analysis:

• Gross revenue: $58,800

• Operating expenses (30%): -$17,640

• Debt service: -$39,480

• Net cash flow: ~$1,680/year

This conservative example demonstrates the importance of property selection. Top-performing properties in premium locations with pools and mountain views can generate significantly higher returns.

Investing in Arizona Airbnb Properties Without Direct Ownership

Traditional Arizona Airbnb investing requires substantial capital. A 20% down payment on a Scottsdale property at $600,000 means $120,000 before closing costs, furnishing, and reserves. That barrier excludes most investors from prime markets.

Fractional real estate investing changes the equation. Instead of purchasing an entire property, investors buy shares in professionally selected and managed assets through platforms like mogul.

How fractional ownership works:

• Properties are acquired and underwritten using institutional-grade processes

• Each property is placed into a state-registered LLC and fractionalized into purchasable shares

• Investors receive monthly dividends proportional to their ownership stake

• Professional management handles tenant placement, ongoing property management, maintenance, rent collection, income distribution, and reporting

• Investors participate in appreciation when properties sell after 3-10 year hold periods

This structure provides the benefits of real estate, potential appreciation, potential monthly income, and potential tax advantages, without requiring hands-on involvement or six-figure capital commitments. mogul's research team analyzes thousands of potential acquisitions, with less than 1% of properties reviewed passing their diligence process.

For investors interested in Arizona's STR market but unwilling to manage properties directly, investing in Airbnb without owning property provides a viable alternative.

DSCR Financing for Arizona Short-Term Rentals

Debt Service Coverage Ratio loans qualify based on property rental income rather than personal income, no tax returns, W-2s, or DTI calculations required. Declining-market overlays are lender- and appraisal-specific rather than a single statewide designation; investors should confirm current lender overlays for their specific Arizona property and appraisal before assuming full standard LTVs apply.

Typical DSCR requirements (ranges are lender-specific and vary by loan size, borrower profile, property type, STR history, and reserves; confirm terms with each lender directly):

• Minimum DSCR: 0.75-1.0 (most lenders require 1.0+)

• Down payment: 20-25%

• Credit score: 620-700 range

• Cash reserves: requirements vary by lender and deal profile; some programs require 2 months PITIA, while larger or riskier loans may require more, confirm with your lender

• Loan amounts: some DSCR lenders advertise loan sizes from the mid-five figures to several million dollars; confirm program minimums and maximums directly with each lender

• Close time: 14-21 business days where advertised; timing varies by appraisal, title, borrower documentation, and underwriting

Arizona-focused DSCR lenders:

• Roadrunner AZ Lending: Phoenix/Scottsdale specialization, may accept AirDNA projections for new STR purchases, confirm current underwriting guidelines directly with the lender

• Truss Financial Group: Arizona statewide coverage

• Pinnacle Funding Network: loan range varies by program, confirm directly with the lender; 14-21 business day closes where advertised; timing varies by appraisal, title, borrower documentation, and underwriting

National lenders with Arizona programs:

• 1st NWM: 12-month history or AirDNA projections may be considered, minimum DSCR 1.0, confirm current STR projection policy directly with the lender

• HomeAbroad Inc.: No-ratio options with DSCR 0-1.0 accepted, foreign nationals eligible

• Griffin Funding: Minimum credit score varies by program, confirm directly with Griffin Funding; accessible for first-time STR buyers

Arizona Property Management Options

Managing a short-term rental requires significant time investment: guest communication, cleaning coordination, maintenance, dynamic pricing adjustments, and regulatory compliance. STR management fees vary by provider and scope; some platforms advertise starting rates around 10%, while full-service operators can charge materially more.

Boutique specialists:

• CT Brothers: Phoenix/Maricopa County focus, 2,300+ five-star reviews

• Air Concierge Scottsdale: 15,000+ five-star reviews, boutique Scottsdale/Phoenix focus

• One Fine BnB: Mesa/Chandler coverage

Regional/national players:

• Awning: Fees starting at 10%, data-driven strategies, transparent reporting; actual pricing may vary by service scope and market

• RedAwning: Plans starting at 10% of rental revenue, multi-platform distribution across 50+ booking channels; plan pricing varies by service tier

• Vacasa: Management fees are customized by home and market, contact Vacasa for a property-specific quote. Full-service with Phoenix local offices

For investors using fractional ownership through mogul, property management and day-to-day operations are handled by professionals, including tenant placement, ongoing property management, maintenance, rent collection, income distribution, and reporting, no guest calls or operational decisions required.

Maximizing Returns and Managing Risk

Arizona's STR market offers strong fundamentals, but not all markets perform equally. Understanding which opportunities are growing versus saturating helps investors allocate capital effectively.

Markets where revenue is outpacing supply (opportunity):

• Lake Havasu City: Supply +11.4% vs Revenue +33.1%

• Bullhead City: Supply +12.0% vs Revenue +29.5%

• Flagstaff: Supply +16.2% vs Revenue +25.2%

• Payson: Supply +9.0% vs Revenue +22.3%

Markets showing early saturation (caution):

• Glendale: Supply +37.6% vs Revenue +9.6%

• Mesa: Supply +27.8% vs Revenue +14.4%

• Yuma: Supply +20.7% vs Revenue +11.5%

Tax optimization opportunity: Arizona's flat 2.5% state income tax, one of the lowest in the nation, combined with federal tax treatment of STR activities may allow certain operators to use depreciation-driven losses against non-passive income if the activity is not treated as a rental activity and the taxpayer materially participates. The amount of any tax offset is taxpayer-specific and depends on average rental period, material participation, basis, passive activity rules, and excess business loss limitations; investors should model this with a qualified CPA before making investment decisions based on anticipated tax benefits.

mogul covers up to $10,000 in losses for new members in their first year of investments, a risk mitigation feature not commonly found on competing platforms.

Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.

Frequently Asked Questions

How does Arizona's Airbnb market compare to other Sun Belt states?

Arizona offers a more stable regulatory environment than many Sun Belt markets where some cities have enacted or attempted restrictive STR rules, including ban-like zoning approaches, though enforceability of such measures has been contested in litigation in some jurisdictions. A.R.S. § 9-500.39 provides host-side legal protection that is not present in all competing markets; verify the current regulatory status of any jurisdiction you are comparing before drawing investment conclusions. Airbtics reports Arizona's average annual STR revenue at $44,538 for 2025; any meaningful comparison to specific markets should rely on the same data provider and time period.

What insurance requirements apply specifically to Arizona Airbnb properties?

Beyond the $500,000 liability minimums required by Phoenix and Scottsdale, Arizona STR operators should secure: short-term rental-specific coverage (standard landlord policies often exclude Airbnb-style operations), umbrella liability policies, and potentially flood insurance for properties near waterways. Monsoon season creates unique weather exposure, and Arizona homeowners have faced rising insurance premiums, with insurers and analysts citing weather, wildfire, reinsurance, and claims-cost pressures; STR investors should obtain property-specific quotes.

Can I use a self-directed IRA to invest in Arizona Airbnb properties?

Yes, self-directed IRAs can hold real estate investments including Arizona STR properties. The property must be held by the IRA (typically through an LLC), and all income and expenses must flow through the retirement account, you cannot personally use the property or perform maintenance yourself. Investors interested in using a self-directed IRA with mogul should contact the platform directly to explore current eligibility and requirements.

What seasonal patterns should Arizona STR investors expect?

Arizona's seasonal dynamics vary significantly by region. Phoenix metro sees peak demand from November through April (winter snowbirds and spring training), with summer occupancy dropping due to extreme heat. Sedona experiences dual peaks in spring (March-April) and fall (October), with milder summers than Phoenix. Flagstaff generally reverses the typical pattern, winter skiing and summer hiking both drive meaningful demand, though investors should consult a month-by-month Airbtics or AirDNA report for the specific property location before relying on precise seasonal occupancy estimates.

How do Arizona Airbnb returns compare to long-term rentals?

In some Arizona submarkets, STR gross revenue may exceed comparable long-term rent, but net yield depends heavily on occupancy, management fees, furnishing, utilities, cleaning, financing, and local regulation. Avoid relying on broad multipliers without a property-level analysis that accounts for all operating costs and local market conditions. The key advantage of STRs is pricing flexibility, operators can capture premium rates during peak seasons and events that long-term leases cannot access. mogul's rental property calculator can model both strategies for any U.S. address to determine which approach maximizes returns for specific properties.