Airbnb Investing in Scottsdale – Is It Still Worthwhile?

Airbnb Investing in Scottsdale – Is It Still Worthwhile

Airbnb is one of the most lucrative ventures you can use to earn on the side. This business was made popular in 2008 when homeowners discovered they could rent their bedroom space at a reasonable price. However, the industry suffered a major hit due to the recent pandemic that limited travel.

Government regulations and health concerns saw Airbnb proprietors lay off their staff, a trend supported by a significant reduction in bookings. Despite the recent challenges faced in the sector, Airbnb remains a good investment with a substantial return on investment.

The success of your Airbnb business is largely dependent on the location you buy the investment property. One of the best locations to buy an investment property in the United States is Scottsdale, Arizona.

This region provides a template you can use to identify the best location to set up your Airbnb business. Scottsdale has a thriving real estate market, especially for investors looking to invest in short-term rentals. Below are a few factors that make Scottsdale the best location to invest in Airbnb properties.

Reasons to Invest in Scottsdale, Arizona

As stated before, there are several factors you should consider before investing in the real estate industry. Here are a few reasons Scottsdale stands out.

Real Estate Laws

Popular cities such as New York, San Francisco, and LA have banned Airbnb practice; however, Scottsdale and Arizona as a whole are still open for business despite the backlash it received recently.

Laws about Airbnb are managed at the HOA level, but there are several areas, such as Old Town Scottsdale, that don’t have HOAs. Old Town Scottsdale is considered one of the popular Airbnb spots in Arizona, generating more than $50,000,000in revenue for the year ending 2019.

These figures form a huge chunk of Arizona’s total tax revenue. Despite various litigations against the practice in Scottsdale, it’s unlikely for any action to materialize in the near future. This means you can invest and earn your returns without worry.

Tourism

Arizona is one of the top tourist destinations in the country, famous for its picturesque sceneries. It’s also frequented for its perfect weather, with residents enjoying six months of warm climate. Areas such as Old Town Scottsdale are famous for eclectic and diverse venues that offer something for everyone, young and old.

Your Airbnb can thrive in such a location due to the high number of tourists visiting the region and travelers taking a break on their way to the west or east coast.

Location of Amenities

Availability of amenities forms the foundation for any Airbnb business. Before investing in an Airbnb property, you need to consider proximity to amenities. Tourists engage in various activities on their visit to new places, including exploring nightclubs to dance the night away.

However, you should locate yourself close to other fun things the city offers. Scottsdale prides itself on various fun activities and destinations, including casinos, hiking, art galleries, spring training, fine dining, top golf, and exquisite breakfast options, all within a five-mile radius of Old Town Scottsdale.

When choosing a property for your business, you need to take this into account. The more amenities guests can access from your location, the higher your occupancy level. The availability of several amenities within a close range is one factor that maintains Scottsdale’s occupancy rate at 63% against the national average of 48%.

Impressive Profitability

One of the main factors drawing people to Airbnb is the profit margin since rent is collected on a nightly basis as opposed to monthly payments. The impressive profitability is another reason hosts in Scottsdale choose to invest in the practice. On average, the rental income from Airbnb is $2,788.

This means that investing in an Airbnb in Scottsdale will likely generate more revenue than monthly collection. The price margin varies from one location to another, worth the best neighborhoods fetching higher rates.

The high Airbnb occupancy rate in Scottsdale is supported by a year-round supply of tourists. Below is a breakdown of Scottsdale Airbnb short-term rentals

  • Airbnb investing
  • Rental income: $2,788
  • Occupancy rate: 52%
  • Cap rate/ Cash on cash return: 1.8%

Arizona Economy

The real estate industry in Arizona has been on an upward trajectory since the mortgage crisis of 2008 that affected the price of homes. In the last decade, Arizona has witnessed a 78% increase in the average home value, averaging 8.6% yearly returns.

The recent economic crisis that hit the world did little to discourage investors and major companies from relocating to Arizona. This is mainly because the crisis was tied directly to the 2019 coronavirus.

This migration is influenced by the business-friendly environment witnessed in Scottsdale and Arizona in general. A stable economy has also attracted a huge population of people looking to relocate and settle.

The high population has caused demand for housing to skyrocket, making it difficult for builders to keep up with the available housing inventory unable to satisfy demand.

Rental and median home prices are expected to rise in the future, making it a perfect location to invest in an Airbnb.

Airbnb Investment: Pros and Cons

As mentioned before, the real estate market, especially for short-term rentals, is booming in Scottsdale, AZ. One particular area that has attracted investors is Airbnb practice, which is growing to be more competitive and lucrative.

Despite guaranteed ROI, new trends are marking this venture more difficult to enter. For example, visitors now expect hotel-like amenities and services with a personal touch, something most homeowners cannot provide. The rising standards give rise to the following pros and cons.

Pros

  • Less reliance on long-term clients
  • Higher profits
  • Less effort to find renters

Cons

  • High upfront cost due to furnishing
  • Time-consuming in terms of management
  • Less security for long-term tenants

Factors to Consider when Buying Airbnb Property in Scottsdale

Type of Property

The most important factor you need to consider when investing in Scottsdale Real Estate is the type of property you are buying, a house or condo. Condos give you access to locations such as Mill Ave, Old Town Kierland, Tempe Town Lake, and Downtown at a lesser price compared to a single-family home.

A condo comes with several units and amenities your guests can enjoy, unlike sing-family homes where you are restricted to a few guests per night. Nevertheless, the type of property you choose should align with your investment goals.

Competition

It’s no secret that there are several hosts in Scottsdale, all looking to benefit from the practice. You need to set yourself apart from your completion by developing unique ideas in terms of marketing and presentation.

The success of an Airbnb is pegged on the reviews guests leave. You need to impress your guest during their visit for them to recommend your home to people in their circles. Some areas that need work include the quality of beddings you provide, bath accessories, and customer service.

You should also improve the staging of the property and use professional photos for advertisement. During their stay, provide guests with a list of local vendors, attractions, and popular destinations they can explore during their stay.

Legal Status of Airbnb in Scottsdale

Airbnb practice has come under heavy fire, with several cities across the country banning it. However, it is still legal in Arizona under state law. Authorities legalized short-term rental across the state, providing an opportunity for Airbnb to thrive.

However, before staging your property, you need to observe Scottsdale regulations concerning Airbnb. The law allows for a maximum family size of 6 adults and their dependent children for a single unit. You should also be ready to pay short-term rental taxes, which include:

  • Transaction privileges Sales Tax- 5.6%
  • City Transaction Privilege Sales Tax- 1.75%
  • City Transient Tax- 5%

Conclusion

Nowadays, Airbnb is very popular, and investing in Scottsdale is a fantastic choice. It’s a wise investment with a high rate of return. They have a wide range of operations in the area. This may entice visitors. Even with the competition in the area having a sound approach is all that is required.

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