Warm temperatures year-round, stunning desert sunsets, frequent sporting events, ample shopping, and lively nightlife. With all of this to offer, the Phoenix area has become a huge draw for people looking to escape cold winter weather from across North America.
Every year, 22 million people flock south to Arizona’s capital city to enjoy the sunny climate – many of which have made Phoenix and its surrounding cities a second home.
As a result, we’ve seen the Phoenix area become one of the foremost markets in the vacation rental industry.
To gain a better understanding of why short-term rentals perform so well there, we analyzed data from thousands of listings and compiled our Vacation Rental Performance Report for Phoenix, Scottsdale, Tempe, and Mesa. This report will give you insight into the average rental income, occupancy rates, booking windows, and vacation rental inventory in the area.
Some of the key factors we’ve identified that are contributing to the area’s immense success are:
Not only is real estate is relatively affordable in the Phoenix area, with the median home value at $249,300, but vacation homes are incredibly popular with travelers.
Many visitors heading to Arizona every year are retirees from the Northern United States and Canada who stay for weeks at a time. They like to travel to the same area and often book the same property year after year. Short-term rentals are the ideal option for them because they provide the comforts of home and are more affordable than hotels for long-term stays.
The demand is so great that vacation rental owners in Phoenix and surrounding cities, such as Mesa, Tempe, and Scottsdale, have no trouble getting bookings throughout the peak season, which spans January through March.
And with long-term guests who stay for an average of 8.4 days per trip, there are fewer turnovers as well as less wear and tear on the property. That lowers maintenance costs and ensures the property remains in tip-top shape for future guests and the owners themselves.
Two-bedroom properties, which make up the majority of the vacation rental inventory, generate $12,200 per year when they perform at the 50th percentile of the market. At the 75th percentile, they generate $17,400.
Comparatively, a five-bedroom property that performs at the median generates $58,000 per year, while a five-bedroom at the 75th percentile brings in $86,600.
The discrepancy between a property performing at the median and one performing in the 75th percentile isn’t just a matter of amenities (although pools are a must for success in the Phoenix market). It often comes down to how the property is managed.
Download our free report to see rental income by property size and performance.
As the demand for vacation rentals has risen, inventory has grown to meet it. And unfortunately for longstanding homeowners in the area, so has the competition.
Owners who once found it easy to fill their calendars now are seeing their performance drop off. They’re not at the top of the search results on sites like VRBO anymore because they’re getting outperformed by the competition
Through our research, we found that vacation rental owners who perform at the top of the market are the ones taking a professional approach to managing their homes.
Owners seeing the most success in the Phoenix area are:
These owners are making strategic upgrades to the way they do business, such as using dynamic pricing tools. Dynamic pricing allows you to raise rates to reflect demand for special events and drop them during the dead of summer to attract travelers at times outside of their normal peak season.
This extra effort is what really sets owners head and shoulders above the competition in the Phoenix area.
With consistent demand and strong returns, the Phoenix area is proving to be one of the hottest markets for vacation rental owners.
Are you thinking about buying a vacation rental in this area? Already own a second home in Phoenix and want to outperform the competition?
Download our free 2018 Vacation Rental Performance Report for Phoenix, Scottsdale, Tempe, and Mesa to find out about: