Top 5 short-term rental markets in Arizona

If you’ve ever considered buying a property to rent on Airbnb or VRBO, there’s a good chance Arizona has caught your eye. Between year-round sunshine, a thriving tourism economy, and some of the most landlord-friendly laws in the country, it’s one of the most promising places in the U.S. for short-term rental investors.

Whether you’re a seasoned real estate investor expanding your portfolio or a first-timer looking to enter the market, it’s essential to understand how location, regulation, and insurance intersect before you buy. That’s why it’s worth taking a few minutes to explore short-term rental insurance in Arizona before diving in—coverage designed specifically for STRs can make the difference between a profitable season and a costly setback.

In this guide, we’ll break down the top 5 short-term rental markets in Arizona for 2025—places where occupancy rates, tourism demand, and property values align for strong investment potential. Along the way, we’ll link to insights on Arizona’s landlord-friendliness, rental costs, HOA laws, and other factors that influence your bottom line.

Why Arizona is an attractive state for STR investors

Arizona continues to draw investors for several reasons. The state’s tourism industry remains robust, bolstered by year-round events, golf tourism, national parks, and growing metro areas. The laws also tend to favor landlords, and compared with states that restrict Airbnb activity, Arizona cities still allow investors a relatively open field.

The combination of sunshine, economic growth, and flexible regulation has created a sweet spot for short-term rentals. However, success still requires careful planning—understanding local Airbnb rules, HOA limitations, and property management laws is key. You can dive deeper in our dedicated guides to Airbnb and short-term rental laws in Arizona and Arizona HOA regulations.

And because every STR comes with unique risks—from guest damage to liability exposure—it’s smart to protect your investment early with specialized short-term rental insurance.

What makes a top STR market

To identify Arizona’s top-performing short-term rental markets, we looked at several key factors that determine profitability:

• Occupancy rates and seasonal demand, especially through platforms like Airbnb and VRBO
• Average daily rates (ADR) and annual revenue potential
• Regulatory environment and how easy it is to obtain a rental license
• Local amenities and tourism drivers, including airports, universities, and event venues
• Affordability and growth, such as property acquisition costs and long-term appreciation
  

The five markets below consistently rise to the top for their balance of returns, sustainability, and investor-friendly conditions.

1. Scottsdale

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Scottsdale is the crown jewel of Arizona’s short-term rental scene. Known for its luxury resorts, golf courses, and desert scenery, it consistently ranks among the most profitable Airbnb markets in the Southwest.

Occupancy rates hover around the mid-50s to 60% range, but high nightly rates push annual earnings near $40,000 per property on average. Investors targeting upscale experiences—poolside villas, modern condos, or mid-century desert retreats—find especially strong demand.

While lucrative, Scottsdale requires close attention to regulation. The city enforces Ordinance 4566, which mandates safety standards, contact registration, and local licensing. It’s worth reviewing city guidance before listing your property.

Explore our short-term rental insurance options in Scottsdale.

2. Phoenix metro

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Phoenix and its surrounding suburbs—Tempe, Arcadia, and Chandler among them—form Arizona’s largest and most dynamic short-term rental ecosystem.

Phoenix alone draws over 40 million visitors a year, creating steady demand for furnished apartments and single-family homes. Occupancy rates for full-home listings typically fall in the upper 60s, with especially strong performance near downtown, ASU, and event-heavy neighborhoods.

However, regulation varies widely by city. Some suburbs require business licenses or impose occupancy limits, while others are more flexible. Doing your homework on zoning and licensing can save major headaches later.

Best for: Investors looking for scale or diversification—Phoenix supports both single-property operators and portfolio builders.

3. Mesa

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Mesa has quietly become one of Arizona’s most stable mid-tier STR markets. With lower property prices and solid occupancy—around 66% to 67%—it offers reliable returns without the Scottsdale price tag.

A short-term rental license is required for properties rented 29 days or less, but the process is straightforward. Mesa’s proximity to Phoenix Sky Harbor Airport and family-oriented amenities also broaden its guest base.

Mesa’s relative affordability makes it a smart entry point for first-time investors who want exposure to the Arizona STR market without overleveraging.

4. Tucson

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Tucson delivers steady, value-oriented performance for investors seeking consistent bookings and lower acquisition costs.

With roughly 4,800 active Airbnb listings, Tucson’s market thrives on its mix of university tourism, snowbird demand, and regional events. ADRs are lower than Phoenix or Scottsdale, but so are property prices—making cash-on-cash returns competitive.

Neighborhoods near the University of Arizona or downtown arts district tend to see the most reliable traffic, particularly during academic and festival seasons.

Best for: Investors who prioritize affordable entry and stable year-round occupancy over luxury pricing.

5. Yuma or Sedona

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The fifth slot depends on your investment strategy.

Yuma has quietly emerged as a strong value market for short-term rentals. Its tourism base includes snowbirds, border travelers, and desert recreation visitors. Homes are far more affordable here than in metro Phoenix, giving investors higher yield potential per dollar invested.

Sedona, on the other hand, caters to a high-end audience. Scenic red rocks, luxury retreats, and wellness tourism make it one of Arizona’s most popular—but also most tightly regulated—vacation markets. ADRs are among the highest in the state, but zoning rules can be strict.

Best for: Investors seeking either low-cost cash flow (Yuma) or luxury vacation experiences (Sedona).

Regulations, licensing, and the short-term rental loophole

Local rules can make or break your investment. Always confirm current Airbnb and short-term rental regulations in Arizona before listing a property, as requirements vary by city.

Homeowners associations can also limit or ban STR activity, so check Arizona HOA laws and regulations before closing on a property.

Some investors use what’s known as the short-term rental loophole to operate legally under different zoning or tax conditions—but this approach requires caution and should never replace due diligence.

Insurance and risk

Short-term rentals come with unique risks—from guest injuries to accidental property damage. Protect yourself with tailored short-term rental insurance or a policy designed for Airbnb hosts.

Unlike standard homeowners policies, landlord coverage accounts for commercial use, multiple guests, and liability exposure—essential for investors aiming to scale safely.

Property management

Running multiple STRs means juggling bookings, cleaning, repairs, and guest communication—tasks that quickly add up. Professional managers can streamline all of this. Learn more in our guide to property management laws and regulations in Arizona.

Strong management not only keeps reviews high but also ensures compliance with local rental license requirements.

Costs, financing, and returns

Understanding the financials is as important as picking the right location. Review our breakdown of average rental property ownership costs in Arizona to plan for taxes, utilities, maintenance, and insurance.

Combine those figures with insights from real estate trends in Arizona and our overview of why Arizona is landlord-friendly to calculate long-term returns more accurately.

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Read more: Top 5 short-term rental markets in Texas

Final thoughts

Arizona’s leading short-term rental markets—Scottsdale, Phoenix metro, Mesa, Tucson, and Yuma or Sedona—offer diverse paths to profit. From high-end resort towns to affordable desert escapes, there’s an option for nearly every investment style.

Before you buy, confirm local regulations, HOA restrictions, and insurance coverage. Then protect your portfolio with a policy built for the realities of short-term rentals.

At Steadily, we help landlords safeguard their investments with flexible, landlord-focused coverage. Get a quote today and see how the right policy can keep your Arizona rentals running smoothly.