Is investing in Airbnb Phoenix Arizona in 2022 worth it? If you think this is a lucrative business to try, read this article to the end.
Investing in real estate is one great way of building your wealth and creating a consistent stream of income. There are many ways of investing in real estate. If you want to buy a property that generates rental income, you can choose to either follow the traditional rental strategy or the short-term rental strategy. The short-term rental strategy has become increasingly popular with investors due to its high-income potential.
Many investors have been considering Airbnb Phoenix Arizona as their next investment. In this article, we look at whether Phoenix is a great housing market for the Airbnb business and provide some tips to help you nail down your investment process.
Why Invest in Phoenix Real Estate Market in 2022?
The Phoenix real estate market should be on any savvy investor’s radar. Once considered a sleepy town in the West, it’s now one of the fastest-rising cities. With a population of well over 1.6 million residents, Phoenix is the fifth most populous city in the US.
The population has grown by about 20% in the past decade alone. The COVID-19 pandemic also contributed to the population boom as many people moved in search of affordable but larger spaces. This has turned this affordable city into one of the most expensive real estate markets.
If this isn’t proof enough that you should invest in the Phoenix real estate market, here are some other reasons:
State of the Housing Market
While the larger Phoenix metro area has in the recent past experienced some challenges, such as rising living costs, there are still plenty of reasons to remain hopeful. Many of the major economic indicators in the city demonstrate that business conditions are improving.
Here are the latest Phoenix statistics from Mashvisor:
- Median Property Price: $718,982
- Average Price per Square Foot: $357
- Traditional Rental Income: $2,294
- Traditional Cash on Cash Return: 2.13%
- Traditional Cap Rate: 2.16%
- Airbnb Rental Income: $3,763
- Airbnb Cash on Cash Return: 4.01%
- Airbnb Cap Rate: 4.09%
- Airbnb Daily Rate: $255
- Airbnb Occupancy Rate: 62%
This data is a great indicator that there’s a lot of potential in Airbnb Phoenix Arizona. The return on investment metrics, namely cash on cash return and cap rate, for Airbnbs are higher than those for traditional rentals. This demonstrates that you’ll earn more if you implement the short-term rental strategy in Phoenix Arizona than if you follow the traditional rental strategy.
The Airbnb occupancy rate is also higher than average, meaning that you’ll experience a constant flow of guests for a larger part of the year.
Related: 2022 Real Estate Market Forecast—Top 10 Predictions
Phoenix Is Airbnb-Friendly
One of the most vital factors to consider before investing in Airbnbs in any real estate market is the laws and regulations surrounding the business. You don’t want to invest your hard-earned cash only to run into legal problems in the future.
Fortunately, the Phoenix local government supports Airbnb in Phoenix Arizona. In January 2021, the city passed laws and regulations that will guide the licensing and operation of short-term rentals within the city.
Here’s a round-up of Airbnb Phoenix Arizona ordinances:
- Short-term and vacation rental owners must register their business with the city.
- Airbnb Arizona Phoenix hosts must display emergency and complaint contact information within their rental property. If any situations arise on their property, hosts must respond to police inquiries within one hour.
- There are penalties for specific violations. The fines are $500 for the first violation, $1,000 for the second, and $1,500 for the third offense.
- Phoenix levies a sales tax on all rental properties. In addition, Airbnb Phoenix hosts will have to pay transient lodging tax.
- The state of Arizona also collects transient lodging tax from all guests who stay for less than 30 days. Meanwhile, guests staying for more than 30 days qualify as permanent residents and are not liable to pay the transient lodging tax.
As always, this list may not be exhaustive. Always consult your local authorities and real estate attorney to help you understand the Airbnb Phoenix Arizona regulations better. This list is just to help you get started on the right foot.
The Arizona government is committed to creating a friendly environment for businesses in the state. This has been evident as more companies continue to choose Arizona as their company headquarters, even in the past two years amidst the pandemic.
What does this mean for Airbnb Arizona hosts?
A business-friendly environment means that more professionals will be flying in and staying for longer periods as they explore the market and look for more opportunities. Due to this trend, Airbnb hosts can prepare for Airbnb monthly stays. These are a type of booking where Airbnb guests stay for longer periods, say more than 30 days.
Airbnb monthly stays are great for hosts since they give you a consistent income. You’re assured of a robust occupancy rate. They are also great for property managers since they take many responsibilities off their shoulders. For example, a property manager won’t have to schedule cleaning for the property since the long-term guest can clean the house themselves.
Related: The Best States for Landlords in 2022
Tourism in Phoenix Arizona
Investing in a tourist city is one way to ensure that you receive a consistent flow of Airbnb guests and maintain a strong occupancy rate. Luckily, Phoenix Arizona is a major tourist hub with many attractions and activities for visitors.
For starters, the city boasts of a year-long supply of sunshine and a warm climate that’s a major attraction for people looking to escape the winter and snow during cold months. As such, many people flock to this city to enjoy the outdoors.
Here’s a breakdown of major attractions that will help your Airbnb Phoenix Arizona generate a great income:
History and Art
The Heard Museum is a top museum in the American Indian Art category. Visiting it is one of the best ways to learn about the indigenous native tribes in Arizona. The museum is known for its award-winning exhibits that display more than 2,000 works, such as jewelry, textiles, basketry, pottery, and ritual items.
There is also the Phoenix Art Museum, which is a community art collection whose roots can be traced back to when Arizona became America’s 48th state in 1912. It was launched in 1959 and is famous for its modern art from art giants, such as Picasso, Henry Moore, and Alexander Calder.
For musical instrument lovers, the Musical Instruments Museum in Phoenix is a great spot to visit. It’s one of the largest of its kind globally with a collection of over 6,000 instruments from about 200 countries.
Parks and Outdoors
The Desert Botanical Garden has over 50,000 desert plants from South America, Australia, and California. Visitors can stroll through themed trails that have beautiful desert wildflowers. They can also engage in the topic of conservation.
For visitors who want to enjoy their mornings or the entire day hiking and walking through the desert, there are enough hiking trails in Phoenix that accommodate all levels of hikers. Camelback Mountain has extreme trails for adventurous hikers as well as easy ones for bird watchers. There are also trails in Papago Park, Pinnacle Peak, Mormon Trail, and Lost Dog Wash Trailhead.
For visitors carrying their kids and looking for child-friendly activities, the Phoenix Zoo is a great outdoor location. There are desert animals, such as turkey vultures, coyotes, and cougars, as well as beasts from Africa, such as lions, cheetahs, and giraffes. On top of these, the zoo has a 4D theater that uses wind, scents, and other ambient effects.
A visit to a new city never feels complete without tasting the local cuisine. Taste It Tours is a food adventure that gives guests a memorable experience by sampling some of the best food joints within the city. Visitors are taken to about 5 different culinary gems that are hidden in the city to see what the local food scene is like.
The MacAlpine’s Diner and Soda Fountain is among the oldest and most-loved eateries in the city. Visitors can enjoy old-fashioned foods that are still loved today, including classic meals such as egg creams and phosphates. Beverages include malts and a mind-blowing menu of 99 different flavors of sodas.
These tourism attractions and activities are meant to show you that you’ll enjoy a high Airbnb occupancy rate since the city receives a consistent flow of travelers and vacationers.
Related: How to Determine Rental Demand Before Buying an Investment Property
How to Find Lucrative Airbnb Phoenix Arizona Properties
By this point, you might have already made up your mind to invest in a Phoenix investment property. How can you find a property with the potential to create a strong income stream?
Traditionally, investors looking for properties would drive through desired neighborhoods looking for “for sale” signs and look for print listings in newspapers and magazines. However, that process is tiring and now outdated.
You can choose to look for local listings on online platforms, such as the Multiple Listing Services (MLS), or by working with a local real estate agent who understands the Arizona real estate market. Though these can simplify the process, it may take a few hours. The best solution, therefore, is Mashvisor.
Schedule a demo with us and learn how Mashvisor tools can help your business.
Mashvisor’s Property Finder is an online tool that will help you find houses for sale in Phoenix. It’s easy to use and combines all available listings in your desired area, so that you can filter through the results to find the ideal listing. You can filter the results based on the following metrics:
- Property price
- Optimal rental strategy
- Property type
- Property size
- Number of bedrooms
- Number of bathrooms
These metrics help you find Phoenix Arizona Airbnb that matches your criteria fast.
Investment Property Calculator
You need to carry out an Airbnb analysis to further understand whether the property matches what you’re looking for. Mashvisor’s Investment Property Calculator is the best tool to help you evaluate how profitable an Airbnb Phoenix Arizona property can be.
Our calculator is accurate since we pull the data from reliable sources, such as Airbnb and other short-term rental platforms. We also update our data regularly, so you’re assured of up-to-date estimates.
If you feel that the estimates provided are different from your situation, you can change certain variables, such as the rental income, occupancy rate, and monthly costs.
Our Airbnb calculator stands out since it also provides you with estimates for both rental strategies, so you can pick the best one for you. Investors using Mashvisor’s Property Calculator get estimates for the following metrics:
- Rental income
- Cash on cash return
- Cash flow
- Cap rate
- Airbnb occupancy rate
As we’ve mentioned, the tool provides the metrics above for both rental strategies. You’ll see the best strategy to generate the best return on investment for your Arizona investment property.
Real Estate Heatmap
While carrying out your market and property analysis, you may want to find out how other neighborhoods in Phoenix Arizona perform just in case you discover areas that perform better. The best tool for this job is Mashvisor’s Real Estate Heatmap.
This tool helps you conduct neighborhood analysis of any location in the US, which is an essential aspect of market analysis. It was created to help real estate investors zone in on areas with the most potential to make money.
The Real Estate Heatmap analyzes the following data to determine how much cash flow a neighborhood will generate:
- Rental income
- Listing price
- Occupancy rate
- Cash on cash return
The tool is color-coded to help you understand the results. Green represents areas that perform well, while red shows neighborhoods that are dormant. Yellow and orange show neighborhoods that are neutral.
If you’ve decided that investing in real estate in 2022 is the way to go, then Airbnb Phoenix Arizona isn’t a bad idea after all. However, if you want to create a great source of income, you must do it right. You must choose the right location and the right property and use the right tools to help you in your market and property analysis.
This is where Mashvisor comes in. Our platform was created with savvy real estate investors in mind. You’ll find accurate and valuable data to help you in your Airbnb business. On top of that, the tools use predictive analytics to help you catch up with real estate market trends.
Sign up today and access a 7-day free trial.