Top Locations Hidden Opportunities in Arizona: The Tempe Real Estate Market by Hamza Abdul-Samad June 15, 2019June 13, 2019 by Hamza Abdul-Samad June 15, 2019June 13, 2019 The US housing market is home to many locations that are great for short-term and long-term rentals. Many of the nation’s markets are well-known, but there are plenty of hidden investment opportunities as well. One such place is the Tempe real estate market. To uncover the investment potential of this city in the Arizona housing market, we will answer the following questions today: How is the Tempe market performing? What are the reasons why real estate investors should invest in this market? What about Airbnb Tempe? Is it legal? Where are the best neighborhoods for buying Tempe AZ real estate? Related: 10 Best Places to Invest in Real Estate in 2019 Tempe Real Estate Market: 2019 City-Level Data Let’s tackle the first question: How is the Tempe real estate market performing? The best way to assess any rental market is to look at the average return on investment metrics. You need this kind of data for both long-term rentals and Airbnb rental properties to be able to determine what rental strategy to implement in this market. Don’t know where to obtain reliable rental data? Look no further! Click here to learn all about Mashvisor’s tools that bring you the data you need! In the meantime, take a look at the data for the Tempe housing market: Pricing Median Property Price: $358,319 Price per Square Foot: $207 Price-to-Rent Ratio: 18 Traditional Investing Rental Income: $1,688 Cap Rate / Cash on Cash Return: 1.7% Airbnb Investing Rental Income: $2,862 Cap Rate / Cash on Cash Return: 4.4% Occupancy Rate: 55% As seen from the data, the Tempe AZ real estate market is highly impressive. We’ll discuss this data (and more) in depth as we go over the reasons to invest in the Tempe real estate market. Why You Should Invest in the Tempe Real Estate Market There are four main reasons why investors should purchase a Tempe real estate investment. The Tempe real estate market is relatively affordable, highly profitable, and superb for traditional and Airbnb investing. Affordability When deciding where to invest in real estate, property prices are often a significant factor to consider. In the case of the Tempe housing market, property prices are not a primary concern. The median property price in Tempe is $358,319, as seen from Mashvisor’s data. While this is slightly more than the national median, which was most recently at $342,200, the median Tempe investment property price is much lower than the state median of $423,000, according to Mashvisor. Relative to the Arizona real estate market and its major cities, the Tempe real estate market is an affordable alternative. Profitability Tempe investment properties are affordable and very profitable. As seen from Mashvisor’s data, the average traditional and Airbnb rental income in Tempe are $1,688 and $2,832, respectively. Return on investment for both strategies is also high, with an ROI for traditional long-term rentals at 1.7%, and an ROI for Airbnb Tempe short-term rentals at 4.4%. Keep in mind that these figures are merely averages. Typical Tempe investment properties will more than likely have higher metrics. The Tempe real estate market also benefits from appreciation. The market ranks in the top 20 percent in appreciation, according to Neighborhood Scout. During the last 12 months, the Tempe housing market had an appreciation rate of 10.33%. This rate is higher than a whopping 93.9% of other cities and towns in the US. The appreciation rate of the latest quarter was 3.52%, which equates to an annual rate of 14.84%. Tempe’s extraordinarily high appreciation rate is the perfect added bonus when buying Tempe houses for sale. Related: How to Increase Rental Income for Your Long-Term Rental Property Traditional Investing The Tempe real estate market is excellent for traditional investing. Tempe is ranked as the 5th best suburb in the state of Arizona. With a price-to-rent ratio of 18, it is preferable for the average resident to rent out Tempe investment properties, instead of purchasing a home. This gives real estate investors an edge, as 60 percent of the city’s residents reside in Tempe rental properties. Tempe’s growing economy is another reason why traditional investing is thriving in the city. The city’s recent job growth was 3.3%, which is more than double the national average. Its future job growth is 49.9%. This is well above the expected national rate of 33.5%. Airbnb Investing Tempe short-term rentals are another type of lucrative investment in the market. This is due to the city’s rapid growth in tourism. Over 3.7 million people visited Tempe last year, generating $730 million for the city’s economy. People from all over the country visit Tempe for its shopping venues, bars and restaurants, and music events. Is Airbnb Legal in Tempe? But before you can decide on investing in Tempe Airbnb properties, you need to know, is Airbnb legal in Tempe? The answer is…yes! There are a number of Airbnb regulations real estate investors need to be aware of, many of which you can learn about from the city’s website. Some of its notable Airbnb regulations include its different taxes. Airbnb properties in the Tempe real estate market are subject to a State Privilege Tax (5.5%), a City Privilege Tax (1.8%), and a City Transient Lodging Tax (5%). Find a Profitable Airbnb Investment Property Best Neighborhoods in Tempe for Traditional Investing So, what is the best place to invest in real estate in the city? For traditional investing, the best neighborhoods in Tempe are University Estates, Shalimar, and Kyrene-Superstition. University Estates Pricing Median Property Price: $330,000 Price per Square Foot: $178 Price-to-Rent Ratio: 4 Traditional Investing Rental Income: $6,966 Cap Rate / Cash on Cash Return: 16.3% Shalimar Pricing Median Property Price: $295,000 Price per Square Foot: $161 Price-to-Rent Ratio: 5 Traditional Investing Rental Income: $5,021 Cap Rate / Cash on Cash Return: 10.1% Kyrene-Superstition Pricing Median Property Price: $201,450 Price per Square Foot: $164 Price-to-Rent Ratio: 7 Traditional Investing Rental Income: $2,314 Cap Rate / Cash on Cash Return: 6.9% Best Neighborhoods in Tempe for Airbnb Investing What about for Tempe short-term rentals? According to Mashvisor, the best neighborhoods in Tempe are Kyrene-Superstition, Tempe Gardens, and Tempe Royal Estates. Kyrene-Superstition Pricing Median Property Price: $201,450 Price per Square Foot: $164 Price-to-Rent Ratio: 7 Airbnb Investing Rental Income: $4,066 Cap Rate / Cash on Cash Return: 12.9% Occupancy Rate: 60% Tempe Gardens Pricing Median Property Price: $255,250 Price per Square Foot: $165 Price-to-Rent Ratio: 14 Airbnb Investing Rental Income: $4,686 Cap Rate / Cash on Cash Return: 12.6% Occupancy Rate: 58% Tempe Royal Estates Pricing Median Property Price: $266,500 Price per Square Foot: $200 Price-to-Rent Ratio: 14 Airbnb Investing Rental Income: $4,417 Cap Rate / Cash on Cash Return: 9.9% Occupancy Rate: 53% All in all, the Tempe real estate market is the perfect hidden opportunity in the US housing market 2019. To start searching for investment opportunities in the city, click here to start your 14-day FREE trial with Mashvisor! Related: The Best Investment Property Calculator in 2019 Start Your Investment Property Search! START FREE TRIAL AirbnbAirbnb RegulationsArizonaTraditional 0 FacebookTwitterGoogle +PinterestLinkedin Hamza Abdul-Samad Hamza is a long-time writer at Mashvisor. With a focus on real estate investing tips, concepts, and top investing locations, he aims to help all aspiring investors who come across his blogs to hit the bank with their investment property. Previous Post Here’s How to Calculate Depreciation on Rental Property Next Post The Secret Guide to Pocket Real Estate Listings Related Posts The 10 Most Profitable Locations for Traditional Rentals in the US Housing Market at the End of 2017: Cash on... 4 Reasons to Buy Airbnb Investment Property in Austin 10 Best College Towns for Student Housing Investment in 2022 Should You Invest in Airbnb Atlanta in 2020 and Where? Utah Housing Market: Should You Invest Here? 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