Rookie Buying a STR in the Phoenix Area

Lauren Kormylo

Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes

4y

PV has very restrictive STR laws, and Scottsdale has some laws too, so check those out.

2 Reply

Scott E.

Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes

4y

There is a reason there are so many STR's in Old Town Scottsdale. It's very centrally located, close to all of the big attractions like Barrett Jackson, the Waste Management Open, Spring Training fields, etc. Many of the homes around Old Town are also walking distance to unlimited shopping, bars, and restaurants. All of these factors are fueling hotel growth, and will continue to fuel STR ownership as long as Scottsdale allows it.

If you're going to look in Chandler or Gilbert, I'd look for homes that are close to their downtown areas(Their version of Old Town Scottsdale). I wouldn't buy a STR Mesa.

Brett Tvenge

Flipper/Rehabber · Phoenix, AZ · Member since 2018 · 268 posts · 152 votes

4y

Quote from @Chad Cherry:

Hi BP Phoenix! #Rookie here. My wife and I live in the North Phoenix area and are looking to buy our first rental property. We are about to close on a fixed-rate Home Equity loan on our primary house, which we plan to put as the down payment on a property.

I’ve been analyzing properties in the North Scottsdale, North Phoenix, Old Town Scottsdale, and PV areas that could be good STRs. I know these areas well and so I’ve been comfortable with analyzing these areas. However, while the numbers are working well according to AirDNA, I am wondering if I should be looking at Mesa/Chandler/Gilbert areas for STR instead? Especially since our down payment will need to be $130k - $140k at 20%, and those types of properties are rather rare in the areas I’ve been looking. Are the Mesa/Chandler/Gilbert good areas for Airbnb in the Phoenix area? Any recommendations on neighborhoods?

One other option we’ve thought of is looking at Mund’s Park/Flagstaff area for a 2nd home/vacation property (only 10% down), but I worry that those markets feel more unstable in comparison to Phoenix with the uncertain future market.

Would love to hear some thoughts. Thanks so much for the help!

Hey Chad, Agent/Investor here! I think your on the right track here. To maximize cash on cash returns and with your budget, I'd go straight to Scottsdale. While you can still do very well in North Phoenix, Gilbert and other pockets. I'd also strongly consider still going North with your investment, Flagstaff is much more stable than you'd think and you will get steady year round traffic.

Ryan Swan

Real Estate Agent · Phoenix, AZ · Member since 2012 · 640 posts · 457 votes

4y

Central Phoenix actually has a really strong Airbnb market that actually gets overlooked compared to Scottsdale. Some N.Phoenix zip codes also have the benefit of Phoenix municipality (police, water, trash, tax, laws, etc), but with a Scottsdale mailing address. This is the best of both worlds!

My STR clients and I have typically avoided Chandler and Gilbert because there are so many HOAs. Mesa doesn't seem like a strong enough market, and may also have a negative stigma from out of state travelers. A house on the edge of Mesa/Tempe next to the Cubs spring training facility could work well.

Patrick Kaiser

Real Estate Agent · Mesa, AZ · Member since 2020 · 46 posts · 76 votes

4y

I had a friend that had a small an Airbnb management company and they ran analysis on the best ROI for airbnb and at that time, which in fairness was about 18 months ago (and they sold their business for 7 figures to some company out of California) but the two highest zip codes were 85032 which is actually Phoenix and then just Val Vista lakes but only if the house was on the water. Now, houses on water in VVL have skyrocketed, but IMO houses on lakes still represent a good value, but also 85032 but the house has to be unique and preferably on a hill or something. But property taxes lower in phoenix, close to airport, close to Kierland commons and many resorts and event center, close to Barrett Jackson, etc.

But I'd also like to point out that many many people I know who bought airbnb's in the last few years several who had 6 figure profits last year are selling today because bookings are down 50% this year and the future is bleak. If you're running AirDNA, just be aware that the numbers based upon past might be very very different from future revenues.

edit: maybe this one? https://www.flexmls.com/share/...

4 Reply

Michael PorchePro Member

Rental Property Investor · Boise, ID · Member since 2017 · 220 posts · 101 votes

4y

Hey Chad! You'll probably have a lot of advice or comments on this. However, you definitely got a good start! Utilizing that Heloc can give you a solid leverage to buy well. The markets you have mentioned work really great as they are, you just have to find the specific property that will perform the way you want it to and make sure to include the amenities that will help the property perform optimally. I got a few recommendations of other markets that perform quite better if you are willing to invest out of state. You can verify on airdna as well. Let me know if that'll help?

Ezgi Janicek

Real Estate Agent · Phoenix, AZ · Member since 2021 · 9 posts · 7 votes

4y

Hi Chad,

I am an agent in Phoenix area. I would recommend you to find one without HOA as a start. STRs are very tricky especially in Scottsdale.

George MevawalaBusiness Member

Real Estate Agent · Scottsdale, AZ · Member since 2017 · 115 posts · 102 votes

4y

I like the Flagstaff/ Mund's Park play. My 3/2 single family home in Flagstaff is on track to gross just under 100k my first full year of operating it.

Chad Cherry

OP

Phoenix, AZ · Member since 2022 · 3 posts · 3 votes

4y

Quote from @Patrick Kaiser:

I had a friend that had a small an Airbnb management company and they ran analysis on the best ROI for airbnb and at that time, which in fairness was about 18 months ago (and they sold their business for 7 figures to some company out of California) but the two highest zip codes were 85032 which is actually Phoenix and then just Val Vista lakes but only if the house was on the water. Now, houses on water in VVL have skyrocketed, but IMO houses on lakes still represent a good value, but also 85032 but the house has to be unique and preferably on a hill or something. But property taxes lower in phoenix, close to airport, close to Kierland commons and many resorts and event center, close to Barrett Jackson, etc.

But I'd also like to point out that many many people I know who bought airbnb's in the last few years several who had 6 figure profits last year are selling today because bookings are down 50% this year and the future is bleak. If you're running AirDNA, just be aware that the numbers based upon past might be very very different from future revenues.

edit: maybe this one? https://www.flexmls.com/share/...

Thanks Patrick! That's the exact area that I've been leaning towards, as I've seen solid STR projections with reasonable home prices. Plus the rebuild of PV Mall just adds potential appreciation in the future (but not banking on that alone).

That's a great note about AirDNA and what you've seen with recent bookings! I haven't heard about it being down ~50%, so definitely something I need to dig more into. In a best case scenario, part of my strategy is to find one where the numbers also work as a LTR in a worst case scenario. This area seems to be perfect for lowering risk.

Chad Cherry

OP

Phoenix, AZ · Member since 2022 · 3 posts · 3 votes

4y

Quote from @George Mevawala:

I like the Flagstaff/ Mund's Park play. My 3/2 single family home in Flagstaff is on track to gross just under 100k my first full year of operating it.

Thanks George! What area of Flagstaff is your 3/2 located? What's your approach when looking at different neighborhoods in Flag? Thanks!

Patrick Kaiser

Real Estate Agent · Mesa, AZ · Member since 2020 · 46 posts · 76 votes

4y

Quote from @Chad Cherry:

Quote from @Patrick Kaiser:

I had a friend that had a small an Airbnb management company and they ran analysis on the best ROI for airbnb and at that time, which in fairness was about 18 months ago (and they sold their business for 7 figures to some company out of California) but the two highest zip codes were 85032 which is actually Phoenix and then just Val Vista lakes but only if the house was on the water. Now, houses on water in VVL have skyrocketed, but IMO houses on lakes still represent a good value, but also 85032 but the house has to be unique and preferably on a hill or something. But property taxes lower in phoenix, close to airport, close to Kierland commons and many resorts and event center, close to Barrett Jackson, etc.

But I'd also like to point out that many many people I know who bought airbnb's in the last few years several who had 6 figure profits last year are selling today because bookings are down 50% this year and the future is bleak. If you're running AirDNA, just be aware that the numbers based upon past might be very very different from future revenues.

edit: maybe this one? https://www.flexmls.com/share/...

Thanks Patrick! That's the exact area that I've been leaning towards, as I've seen solid STR projections with reasonable home prices. Plus the rebuild of PV Mall just adds potential appreciation in the future (but not banking on that alone).

That's a great note about AirDNA and what you've seen with recent bookings! I haven't heard about it being down ~50%, so definitely something I need to dig more into. In a best case scenario, part of my strategy is to find one where the numbers also work as a LTR in a worst case scenario. This area seems to be perfect for lowering risk.

please feel free to reach out to me if you have more questions about the area.

John Bradley

Lender · Phoenix, AZ · Member since 2017 · 55 posts · 11 votes

4y

Now days I've heard a lot of investors are seeing low occupancy rates with the state of the economy, my strategy is traveling nurses since they're mid term renters usually 2-3 months at a time that pay a premium for the furnishings and their work is paying them a stipend for their housing so they're more flexible on price.

That strategy is working great for me in phoenix and prescott markets. Check out furnishedfinder.com to run comps. You can rent per room or house. Anywhere next to hospitals would be a great market for this strategy. My partner has a 400 sq ft casita in downtown phoenix off of 7th st and is grossing $1750 a month.

I like this strategy since it's not airbnb/high turn over, it does have slightly less profits but it's held steady occupancy and cash flow for us as well as good tenants since they're there for work, not to party.

Let me know your thoughts!

Member since 2022 · 22 posts · 5 votes

4y

Quote from @Chad Cherry:

Hi BP Phoenix! #Rookie here. My wife and I live in the North Phoenix area and are looking to buy our first rental property. We are about to close on a fixed-rate Home Equity loan on our primary house, which we plan to put as the down payment on a property.

I’ve been analyzing properties in the North Scottsdale, North Phoenix, Old Town Scottsdale, and PV areas that could be good STRs. I know these areas well and so I’ve been comfortable with analyzing these areas. However, while the numbers are working well according to AirDNA, I am wondering if I should be looking at Mesa/Chandler/Gilbert areas for STR instead? Especially since our down payment will need to be $130k - $140k at 20%, and those types of properties are rather rare in the areas I’ve been looking. Are the Mesa/Chandler/Gilbert good areas for Airbnb in the Phoenix area? Any recommendations on neighborhoods?

One other option we’ve thought of is looking at Mund’s Park/Flagstaff area for a 2nd home/vacation property (only 10% down), but I worry that those markets feel more unstable in comparison to Phoenix with the uncertain future market.

Would love to hear some thoughts. Thanks so much for the help!

thats awesome. taking the adventure with the wife! love those stories hope u post your story and how u went about it.
i am learning as well. i love learn different technique and strategy. flag gonna be breaking ground soon for a project. word is a data factor
you gonna master it sound like u gonna be a broker soon ill look to lending from you

Member since 2022 · 22 posts · 5 votes

4y

Quote from @Scott E.:

There is a reason there are so many STR's in Old Town Scottsdale. It's very centrally located, close to all of the big attractions like Barrett Jackson, the Waste Management Open, Spring Training fields, etc. Many of the homes around Old Town are also walking distance to unlimited shopping, bars, and restaurants. All of these factors are fueling hotel growth, and will continue to fuel STR ownership as long as Scottsdale allows it.

If you're going to look in Chandler or Gilbert, I'd look for homes that are close to their downtown areas(Their version of Old Town Scottsdale). I wouldn't buy a STR Mesa.

training feilds??? thats awesome.. parking lots be good passive money to. people love their baseball but run out of places to park. rent your parking space. new technology you can rent ur drive way

Member since 2022 · 22 posts · 5 votes

4y

Quote from @David Avery:

Mesa and Chandler would be my thoughts.

Get a great Real Estate agent working for you unless you know a wholesaler personally.

Good luck Chad

when u whole sale and your a flipper when do you sale or flip?

the cost or time? too much time u will wholesale? little cost u will flip?

Member since 2022 · 22 posts · 5 votes

4y

Quote from @George Mevawala:

I like the Flagstaff/ Mund's Park play. My 3/2 single family home in Flagstaff is on track to gross just under 100k my first full year of operating it.

that is sickkkk! what you gonna do with that money?

reinvest? renovate? start a business to help the community to keep the money moving? the power you got is crazyyyy huh thats awesome congrats

Member since 2022 · 22 posts · 5 votes

4y

Quote from @Ryan Swan:

Central Phoenix actually has a really strong Airbnb market that actually gets overlooked compared to Scottsdale. Some N.Phoenix zip codes also have the benefit of Phoenix municipality (police, water, trash, tax, laws, etc), but with a Scottsdale mailing address. This is the best of both worlds!

My STR clients and I have typically avoided Chandler and Gilbert because there are so many HOAs. Mesa doesn't seem like a strong enough market, and may also have a negative stigma from out of state travelers. A house on the edge of Mesa/Tempe next to the Cubs spring training facility could work well.

good advice. soo with a hoa and u want to invest is it smart to rent n let hoa keep an eye on them?

Member since 2022 · 22 posts · 5 votes

4y

Quote from @Michael Porche:

Hey Chad! You'll probably have a lot of advice or comments on this. However, you definitely got a good start! Utilizing that Heloc can give you a solid leverage to buy well. The markets you have mentioned work really great as they are, you just have to find the specific property that will perform the way you want it to and make sure to include the amenities that will help the property perform optimally. I got a few recommendations of other markets that perform quite better if you are willing to invest out of state. You can verify on airdna as well. Let me know if that'll help?

ur reaching out from boise ??? i have to wipe my screen every time i see their collage football feild ..
is there alot of rentals that way? how are others going about it renting out of state . you working with them?

Member since 2022 · 22 posts · 5 votes

4y

Quote from @Ezgi Janicek:

Hi Chad,

I am an agent in Phoenix area. I would recommend you to find one without HOA as a start. STRs are very tricky especially in Scottsdale.

thats good advice u an independent agent? what other advice u got for new home/investor buyers

Member since 2022 · 22 posts · 5 votes

4y

Quote from @Chad Cherry:

Quote from @Patrick Kaiser:

I had a friend that had a small an Airbnb management company and they ran analysis on the best ROI for airbnb and at that time, which in fairness was about 18 months ago (and they sold their business for 7 figures to some company out of California) but the two highest zip codes were 85032 which is actually Phoenix and then just Val Vista lakes but only if the house was on the water. Now, houses on water in VVL have skyrocketed, but IMO houses on lakes still represent a good value, but also 85032 but the house has to be unique and preferably on a hill or something. But property taxes lower in phoenix, close to airport, close to Kierland commons and many resorts and event center, close to Barrett Jackson, etc.

But I'd also like to point out that many many people I know who bought airbnb's in the last few years several who had 6 figure profits last year are selling today because bookings are down 50% this year and the future is bleak. If you're running AirDNA, just be aware that the numbers based upon past might be very very different from future revenues.

edit: maybe this one? https://www.flexmls.com/share/...

Thanks Patrick! That's the exact area that I've been leaning towards, as I've seen solid STR projections with reasonable home prices. Plus the rebuild of PV Mall just adds potential appreciation in the future (but not banking on that alone).

That's a great note about AirDNA and what you've seen with recent bookings! I haven't heard about it being down ~50%, so definitely something I need to dig more into. In a best case scenario, part of my strategy is to find one where the numbers also work as a LTR in a worst case scenario. This area seems to be perfect for lowering risk.

doing ur own home work that some drive. u gonna be one bad investor

Member since 2022 · 22 posts · 5 votes

4y

Quote from @John Bradley:

Now days I've heard a lot of investors are seeing low occupancy rates with the state of the economy, my strategy is traveling nurses since they're mid term renters usually 2-3 months at a time that pay a premium for the furnishings and their work is paying them a stipend for their housing so they're more flexible on price.

That strategy is working great for me in phoenix and prescott markets. Check out furnishedfinder.com to run comps. You can rent per room or house. Anywhere next to hospitals would be a great market for this strategy. My partner has a 400 sq ft casita in downtown phoenix off of 7th st and is grossing $1750 a month.

I like this strategy since it's not airbnb/high turn over, it does have slightly less profits but it's held steady occupancy and cash flow for us as well as good tenants since they're there for work, not to party.

Let me know your thoughts!

that is sick! bigger pocket did a show like that. the lady. all she did was rent to traveling nurse. she save alot in re models and cleaning

Bob Willis

Investor · Curtis, NE · Member since 2019 · 231 posts · 140 votes

4y

@Chad Cherry - did you pull the trigger? If so, anything you can share?

Cole Maurer

Real Estate Agent · Scottsdale, AZ · Member since 2022 · 25 posts · 10 votes

4y

Hello Chad!

I'm an agent in AZ with Russ Lyon Sotheby's. I personally would focus on N Phoenix, Scottsdale, Paradise Valley, Cave Creek, Carefree or mountain towns like Flagstaff, Williams, and Sedona for your short-term rental search! If I were to venture out from these areas I would consider Tempe as well. All of these areas have the attractions, shopping, food, etc that bring your guests to visit. You can also use a site called ilovescottsdale.com, ilovesedona.com for some STR estimates in these different areas.(They also do STR property management) Like some of the other comments have mentioned, I would certainly avoid HOAs when looking for your STR, which is a downside to real suburbia areas like Chandler/Gilbert with large HOA subdivisions. These areas are also too far from your main attractions of AZ. Finally, something to keep an eye out for, even if a property has no HOA, it can still have a deed restriction in the CC7Rs that prevent STRs. So keep an eye out for that! Best of luck!

Scott E.

Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes

4y

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