The Best Scottsdale Properties for Investment: Airbnb or Long Term Rentals?

The first thing you should ask before investing in Scottsdale real estate is which rental strategy should I follow. This blog will tell you what to go for: Airbnb rentals or long term rentals.

Scottsdale is one of the best cities to live in, visit, and do business in. Speaking of business, let’s talk Scottsdale real estate investment. The Scottsdale real estate market is currently a buyer’s market, according to Zillow. Even though buyers have the upper-hand, Scottsdale real estate investors still need to work hard if they want to make the best real estate investments.

What classifies an investment property as one of the best? Well, if you’re consistently making a profit from this rental property, it’s one of the best. That’s what it’s all about. The return on investment you make is what drives your real estate investing career. Generating good returns could depend on the type of rental strategy you decide to follow. But how do you decide on which strategy is better for you when it comes to Scottsdale properties? One way is to follow the data.

Scottsdale Properties: Airbnb Rentals vs Long Term Rentals

A great way to figure out which strategy is best for Scottsdale investment properties is to check out the real estate data. What do we mean by data? We mean the city-level and neighborhood-level key real estate metrics. So numbers like cap rate, cash on cash return, rental income, and more. Knowing how your city ranks based on these measurements is invaluable when investing in real estate. The great news is, with Mashvisor, you can find this kind of data for both Airbnb rentals and long term rentals, for any city and neighborhood of your choosing.

To learn more about how we will help you make faster and smarter real estate investment decisions, click here.

What Does the Data Say?

Mashvisor’s investment property calculator has provided the most recent data analysis of how Scottsdale properties are performing on the city-level. Let’s take a look:

Scottsdale Real Estate Market 2018: City-Level Data

Median Property Price: $869,920
Price per Square Foot: $293
Monthly Traditional Rental Income: $3,509
Monthly Airbnb Rental Income: $1,802
Traditional Cash on Cash Return: 2.52%
Airbnb Cash on Cash Return: 0.13%
Traditional Cap Rate: 2.52%
Airbnb Cap Rate: 0.13%
Airbnb Occupancy Rate: 41.55%

Based on our Scottsdale real estate market summary above, it’s clear that traditional Scottsdale investment properties are dominant in the market. The range between the average cash on cash return (CoC) of traditional Scottsdale property and Airbnb Scottsdale property shows just how differently each rental strategy performs. The low Airbnb occupancy rate is another indicator that Airbnb Scottsdale properties aren’t performing as well as traditional properties. So based on the data, we’d say the best investments are long term rentals in Scottsdale.

Note: Just because the average metrics for Airbnb Scottsdale aren’t as high as traditional, that doesn’t mean you can’t make a profitable Airbnb investment here. Click here to search for Airbnb properties in Scottsdale.

Scottsdale real estate prices seem to continue rising, but high property prices can reflect high market value. The median property price of $869,920 doesn’t mean all Scottsdale houses for sale are listed at that price. You can definitely find profitable Scottsdale properties at lower prices. Let’s see what data for traditional rentals our tools have provided for a couple of neighborhoods in Scottsdale.

Scottsdale Properties: Neighborhood Analysis for Traditional Rentals

Here are three neighborhoods with top-performing traditional rentals in the Scottsdale real estate market 2018.

Pinnacle Peak

Median Property Price: $1,423,067
Price per Square Foot: $329
Monthly Traditional Rental Income: $6,358
Traditional Cash on Cash Return: 3.47%
Traditional Cap Rate: 3.47%

Pinnacle Peak seems to be holding quite profitable rental properties. As you can see, there is a higher traditional cash on cash return, which makes sense when you look at the monthly traditional rental income. Yes, the median property price is higher than the city level, but it’s met with a higher monthly rental income as well. Rental income in Pinnacle Peak is almost double the amount on the city-level.

South Scottsdale

Median Property Price: $559,903
Price per Square Foot: $296
Monthly Traditional Rental Income: $2,460
Traditional Cash on Cash Return: 2.50%
Traditional Cap Rate: 2.50%

North Scottsdale

Median Property Price: $826,674
Price per Square Foot: $276
Monthly Traditional Rental Income: $2,969
Traditional Cash on Cash Return: 2.14%
Traditional Cap Rate: 2.14%

These three neighborhoods hold profitable real estate investments under the traditional rental strategy. We know this because of the data. But the question remains. What’s the problem with Airbnb Scottsdale? Why aren’t they as profitable as long term rentals in the Scottsdale real estate market?

Could Airbnb Laws & Regulations Be the Problem in Scottsdale?

With the new law passed in 2017, Arizona now allows Airbnb to collect taxes and fees directly from guests. This law actually removed any Airbnb restrictions citywide. The state’s new laws stipulate that cities, towns, and counties cannot put any restrictions on short-term rentals. This means that Airbnb rentals should have become more popular in the state of Arizona, and in some cities, such as Phoenix, they have. But for the Scottsdale real estate market, it’s a different story. If you’re interested in Airbnb real estate investing, check out this related blog to find out which cities are best.

Scottsdale Real Estate Properties for Sale

To show you how profitable traditional rentals are in the Scottsdale real estate market, we’ve used our Property Finder tool to locate some top-performing properties. Do you have a free Mashvisor account? Click here to use our Property Finder and find properties in a matter of minutes! Here are the details of the Scottsdale properties.

Scottsdale Property #1

Property Neighborhood: Pinnacle Peak
Property Type: Single Family Residential
Listed Property Price: $439,000
2,493 Square Feet
$176 per Square Foot
4 Beds and 2 Baths
Comparable Traditional Rental Income: $7,496
Traditional Cash on Cash Return: 13.15%
Traditional Occupancy Rate: 94%

Scottsdale Property #2

Property Neighborhood: Pinnacle Peak
Property Type: Townhouse
Listed Property Price: $232,500
3,014 Square Feet
$77 per Square Foot
3 Beds and 3 Baths
Comparable Traditional Rental Income: $5,154
Traditional Cash on Cash Return: 11.23%
Traditional Occupancy Rate: 94%

Scottsdale Property #3

Property Neighborhood: South Scottsdale
Property Type: Townhouse
Listed Property Price: $259,000
1,464 Square Feet
$177 per Square Foot
4 Beds and 3 Baths
Comparable Traditional Rental Income: $4,680
Traditional Cash on Cash Return: 12.95%
Traditional Occupancy Rate: 94%

Scottsdale Property #4

Property Neighborhood: South Scottsdale
Property Type: Townhouse
Listed Property Price: $294,900
2,000 Square Feet
$147 per Square Foot
4 Beds and 3 Baths
Comparable Traditional Rental Income: $4,680
Traditional Cash on Cash Return: 11.37%
Traditional Occupancy Rate: 94%

Interested in these Scottsdale real estate properties? Click here for more details on these investment properties and others in the Scottsdale real estate market.

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