Vacation rental or local rental investment?

Question

I’m 27, live in North Dakota, and already own local rentals. I’m currently flipping two homes and plan to reinvest the profits into my next purchase. I’m trying to decide between buying a vacation rental in Arizona (short-term rental, likely using a property manager) or purchasing another multifamily property locally.

The AZ property would give me geographic diversification and potentially higher upside, but it would be remote and more management-intensive. A local multifamily would be simpler, easier to control, and more predictable, but maybe slower growth.

Given my age and current position, would you prioritize diversification and higher potential returns, or simplicity and local control?

Kenneth Garrett · Answer

@Keaton Vols

I would invest locally. By the time you pay 20%-25% to a PM you would be better off investing locally. I run a couple STR’s and if I operated them out of state they would not be profitable.

Patrick O'Sullivan · Answer

Given your situation, sticking with a local multifamily property makes the most sense. It’s easier to manage, cash flow is more predictable, and you can reinvest profits faster. An Arizona vacation rental could offer higher upside and diversification, but remote management, seasonality, and learning a new market add risk and complexity. For steady growth and fewer headaches, local wins.

I'm also based in the Phoenix area and work closely with investors focused on long-term rentals and multifamily properties. I’d be happy to connect and share insights or help however I can as you get started.

Grant Schroeder · Answer

@Keaton Vols I would highly recommend you connect with @Jeremy Holden if you have not already! He is a local STR investor and real estate agent who would be an invaluable resource for you in and around Phoenix/greater Maricopa County, AZ.

Frank Pyle · Answer

I’d lean local multifamily with the flip profits unless the Arizona short term deal is a total home run on numbers even after a manager. Remote STRs look great on gross revenue but the real question is what’s left after management, cleaning, turns, supplies, higher utilities, repairs, taxes, and a vacancy buffer for slow months.

Quick checkpoint I would run is annual net after all STR expenses divided by all in cost, then compare it to a local multifamily where you underwrite rent minus PITI minus property management minus maintenance and capex and see which leaves more real cashflow per dollar invested. Action step you can do today is build two simple pro formas with conservative assumptions and stress test the STR at 60 to 70 percent of the occupancy the agent promises.

Are you buying the Arizona place for cashflow today or mostly appreciation and a future second home angle, and what are you assuming for property management percent plus cleaning cost per turn?

David Stephens · Answer

Hey @Keaton Vols, if you are considering a STR in AZ, I would highly recommend you speak with @Jeremy Holden. He's owns a handful of STR's in AZ and helped me really understand the numbers when I was looking to purchase my first.

Arman Ahmed · Answer

@Keaton VolsSounds like you’re in a great spot to scale! If your goal is steady cash flow and simpler management, I’d lean toward another multifamily in a Midwest market. You can snag duplexes or small quads well below replacement cost, get strong cash flow from day one, and manage remotely with a solid property manager. Vacation rentals in Arizona can be exciting, but the management and seasonality can eat into your time and returns. Midwest also lets you recycle capital faster for your next deal, so you grow your portfolio more predictably without getting bogged down in remote headaches.

Phillip Dwyer · Answer

@Keaton Vols If you have great multifamily deals available in your local market, you're probably better off going that route for the reasons already stated. Vegas is hard to cashflow at the moment with traditional 20% down financing. If you're ok with negative cash flow, because you really want to have exposure to the southwest, then make sure you do a lot of homework to find the best location for potential appreciation.

Keaton Vols · Answer

@Kenneth Garrett I appreciate it! Pm where I'm from is 5%😅 only thing appealing is it would be nice to visit it in the winter when it's cold up here

Vacation rental or local rental investment?

Vacation rental or local rental investment?

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