Phoenix Short-Term Rentals Yield 8.7%, Nearly Double Long-Term

Estimates for a typical 3-bedroom house. Figures are modelled from market data; not guaranteed outcomes.

Both revenue figures match the Dashboard's calculation for this market.

Short-term rentals out-gross long-term rentals by roughly 98% in Phoenix, though higher operating costs (platform fees, utilities, furnishing wear, lodging tax) narrow the gap on a net basis.

Short-Term Rental Break-Even

Short-term rental gross revenue equals long-term annual rent at roughly 25% occupancy. Above that, the short-term strategy out-earns long-term gross. Phoenix's market average of 50% sits comfortably above break-even, which is why the gross yield gap is so wide.

Occupancy Sensitivity

Occupancy is the single biggest variable in short-term rental returns. At a softer 35% occupancy, gross revenue falls to roughly $29,000. At a stronger 60%, it climbs to about $50,000. Long-term rent, by contrast, is essentially fixed once tenanted at about $21,000 per year. The verdict above is conditional on hitting at least the market-average occupancy.

Phoenix Suburb-Level Yields Range From 7.1% to 8.2%

City medians hide a wide spread. Across 133 ZIP codes in Maricopa County, gross long-term yields range from sub-4% in pricier inner-Phoenix and Scottsdale postcodes to as high as 8.2% in outlying suburbs where sale prices are well below the metro median.

These are averages per suburb. Returns vary further by bedroom count and property type, the dashboard shows that breakdown so you can model your specific property.

View Phoenix in the dashboard →Free preview · every bedroom count and property type

Operating Costs Eat Roughly Half of Phoenix Short-Term Rental Gross

Phoenix short-term rental gross of about $41,000 carries roughly $24,000 in annual operating costs, leaving net operating income around $17,000 and a net yield of 3.7%. The cost stack is heavier than long-term rental because short-term rental properties bear platform fees, utilities, furnishing wear, and the local transient tax.

For a Phoenix 3-bedroom house, the default cost breakdown looks like this:

• Airbnb host fees: roughly $6,400 per year (the 15.5% host-only fee on gross revenue)
• Insurance: about $2,900 for short-term rental coverage (versus about $1,400 for a standard landlord policy)
• Maintenance and furnishing replacement: about $7,300 per year, reflecting higher guest turnover wear
• Utilities: $3,000 per year (the host pays, unlike a long-term rental where the tenant typically does)
• Property tax: roughly $2,000 per year at Maricopa's 0.4% effective rate
• Transient lodging tax: Phoenix's combined city/county/state rate is roughly 14%, paid on bookings on top of the host fee

Long-term rental costs are lighter at about $8,100 per year, leaving about $13,000 net and a 2.7% net yield. The dashboard defaults short-term rental management to 0% (self-managed). If you hire a professional manager instead, add roughly $9,100 per year, which noticeably compresses the net yield advantage.

Tax Implications for Phoenix Investors

Depreciation is the largest non-cash deduction available to Phoenix rental investors. The IRS lets you depreciate the building (not the land) over 27.5 years on a straight-line schedule. With a building value of approximately $379,000 (80% of the about $615,000 median sale price), that produces an annual paper deduction of around $14,000.

For a long-term rental in Phoenix, that depreciation alone roughly equals the net operating income of about $13,000, often producing a paper loss for tax purposes even when the property is cash-flow positive. Mortgage interest is fully deductible on Schedule E, with no SALT cap on rental properties. Arizona has a flat state income tax of 2.5% (one of the lowest flat rates in the country), so most of your tax shield comes from federal deductions rather than state-level relief.

Short-term rental operators who participate (typically defined as 100+ hours of active management per year, more than any other person) can sometimes deduct rental losses against ordinary W-2 income, a notable difference from the passive-loss limits that apply to long-term rentals. The combined Phoenix transient tax of roughly 14% is collected from guests and remitted to the city, county, and state; it is not an income tax on the operator. A 1031 exchange remains available if you eventually sell and roll proceeds into another investment property.

Phoenix Sale Prices Run 80.8% above the Arizona Median

Phoenix's median 3-bed house sale price of about $615,000 is 80.8% above the Arizona median of $340,000, and 153.5% above the US median of about $243,000. Rent of about $1,800/month sits 24.5% above the state median of about $1,500/month and 71.8% above the national median.

The headline result: long-term gross yield of 4.4% comes in 0.8pp below the Arizona average and 0.9pp below the national average. Prices have appreciated faster than rents in Phoenix over the last decade, which is why long-term yield looks compressed compared to lower-cost metros. Short-term rental gross yield of 8.7% flips that picture, sitting 3.5pp above the state's long-term benchmark.

Comparison of key investment metrics.

Phoenix Regulations Are Among the Most Permissive in the Country

Arizona state law preempts cities from banning short-term rentals outright, which puts Phoenix in a different regulatory bucket from places like New York, Honolulu, or coastal Florida cities with strict caps. Operators still need an annual business license (around $250 in Tempe, with similar fees across Maricopa County jurisdictions), a state sales tax license, and Maricopa County registration. Hosts must notify adjacent neighbors of the rental and respond to complaints within 30 minutes for public-safety issues or 24 hours for other complaints. Accessory dwelling units built after December 20, 2024 require an owner on-site, narrowing one common short-term stays playbook for new ADU builds.

The combined transient tax in Phoenix runs roughly 14% (city 6.8%, plus county and Arizona's 5.5% state share). Investors should plan for that as a pass-through cost charged to guests, not a margin hit, but it does affect headline pricing competitiveness against hotels.

Investment Bottom Line

Phoenix is a yield-tilted short-term rental market with a permissive regulatory environment, where 50% average occupancy and a $250 nightly rate produce gross revenue roughly 98% above what long-term lease can match. Net yields of 3.7% for short-term and 2.7% for long-term reflect that gap, though the short-term advantage depends entirely on hitting market-average occupancy. Investors who can absorb seasonality (winter is peak; summer occupancy drops) and operate efficiently will capture the spread.

For a deeper look at the underlying inputs, see the market score methodology and the data sources page. Peer markets worth comparing: Arizona Rental Investment Insights, After All Costs, Phoenix's Short-Term Rental Premium Shrinks Sharply, Phoenix Apartments Beat Houses on Yield, but HOA Fees Bite, Gila Bend (85337) Tops Phoenix at 8.2%, Inner Suburbs Trail. The Arizona rental market insights page covers state-wide investment dynamics.

Data reflects market conditions as of August 2026.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.