Thoughts on Surprise AZ market fro MTR/STR?

Question

We're a new investor, considering buying a second home in Surprise AZ. The area looks to be cash flow negative for long-term rentals, has a lot of STR options and some MTR. Our primary purpose would be to use the home when we travel there about 3-5 times/year and would make sense if we could rent it out when we aren't there.

Questions:

1. Looking at a property ~25 years old near Surprise Stadium/tennis courts, thinking it may be easier to rent out w/seasonal travelers. Other option is a new build in north Surprise. Thoughts on which area is better for the longer-term?

2. For those w/MTR/STR in the area, what is your vacancy rate and experience w/travelers in the area? I know there's a risk w/how they'll treat the home but wondering if this area has anything to be mindful of before renting out.

3. We purchased a rental property using DCSR loan 2 months ago. If we purchase another second home now, will that hurt our credit score?

4. It seems like we could put 10% down on a conventional loan if second home. How much of a difference, in general, would it be cash flow wise for MTR/STR w/10% down vs 20%?

5. We're W2 earners and was told that on the first rental, bonus depreciation probably wouldn't work due to our AGI (not super high but guess too much to claim a deduction). If we purchase a second home and STR/MTR out, would that help to bonus depreciate one or both homes? We aren't active RE professionals. Open to managing a MTR, possibly a STR if that would help for tax purposes.

Appreciate any feedback for this newbie!

Melissa Justice · Answer

@Janelle Hokama,

Hi there! I’m a licensed agent in the Valley and work with investors across Arizona, so happy to share some insights and connect.

Regarding Surprise - while it has a lot of STR options and some MTR, long-term rentals can be tight on cash flow, especially if your goal is mostly seasonal use. For a second home you'd visit a few times a year, renting it out when you're not there can make sense, but it's worth looking at other nearby markets that historically perform better for cash flow and longer-term rental demand.

A few thoughts:

Older homes near Surprise Stadium/tennis courts – These can attract seasonal travelers, but condition and ongoing maintenance could eat into your cash flow. If you plan on being hands-on, it could work, but managing wear and tear is important.

New builds in North Surprise – Often easier to manage, lower maintenance, and can appeal to both MTR and STR markets. Vacancy tends to be lower, and tenants are generally easier to screen.

Second property financing – Buying another property shortly after a DSCR loan will likely slightly impact your credit, but as W2 earners, conventional financing is usually achievable. Using 10% down vs 20% can help cash flow since your mortgage is smaller, but it also increases your monthly payment slightly.

Tax considerations – Since you’re not active RE professionals, bonus depreciation may be limited, but renting out a second home could open opportunities depending on your AGI and rental income allocation. Definitely a conversation to have with a CPA familiar with Arizona real estate.

If you want, I can show you some better-performing markets nearby that balance seasonal use with stronger cash flow, and we can review how a second home could work for MTR or STR. Happy to connect and run some numbers with you! Feel free to message me.

Janelle Hokama · Answer

@Arman Ahmed thanks for the advice! I haven’t yet. There’s a little on furnished finder, Airbnb and Zillow but I couldn’t find the breakdown of occupancy rate during the slow periods yet. We would be using the home for a few weeks for part of it so thinking that would maybe be a wash since we would have paid hotel or Airbnb anyway. That leaves about 3-4 months of the slower period that we’d potentially have to cover for.

There are so many markets out there and we’re just getting started in real estate. This was just an easier choice for location and we like the area, but want to figure out if we should proceed or save our money and invest elsewhere.

Mason Weiss · Answer

Hey Janelle, I represent many clients in the STR space but haven't had any acquire properties in Surprise because it usually doesn't rent out well for Airbnb. Are you sold on this area for a specific reason? Most recently Phoenix, Scottsdale, and Chandler have provide better NOI numbers for STR properties.

Noah Corwick · Answer

Hi Janelle!

I've successfully worked with quite a few clients on acquiring LTRs in Surprise/the west valley.

With their lower price points, the barrier to entry is easier + definitely possible to cash flow out there, but depends on how much you are aiming for.

The STR market is a bit odd in the greater PHX metro at the moment though. My advice is if you find a STR home prospect, to not put all your eggs in that basket and make sure it pens out as at least a MTR as well.

Hope this helps!

Janelle Hokama · Answer

Thank you @Melissa Justice for the feedback! Super helpful and I just scheduled some time with you to learn more about this market and nearby options.

Zack Beraznik · Answer

Hi Janelle, nice to meet you! I work with a wholesaler that gets properties in around the Surprise area. Shoot me a message and let's discuss!

Arman Ahmed · Answer

@Janelle Hokama

I don’t invest in AZ (I focus mostly in the Midwest), but your breakdown of Surprise makes sense—seasonal demand is always tricky, which is why I usually stress-test my numbers for the slow months and look at MTRs to balance things out. Curious—have you been able to find solid data on off-season occupancy rates there, or is most of it just anecdotal from STR operators?

Janelle Hokama · Answer

Thanks Mason! We will be visiting family in the Surprise area but open to Phoenix too.

It seems like people are saying to avoid the sunbelt areas in general, but since we're visiting anyway, considering a second home in the area.

Are there sections of Phoenix that are better than others?

Thoughts on Surprise AZ market fro MTR/STR?

Thoughts on Surprise AZ market fro MTR/STR?

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