Phoenix runs on a calendar most of the country does not share. From January through April, spring training, golf, the Phoenix Open in Scottsdale and snowbird visitors fill the Valley. By July, with afternoons well over 100 degrees, nightly rates can drop sharply. A Phoenix STR loan is underwritten on the whole year, not on February.
In short: LendingStreet finances Phoenix-area short-term rentals with DSCR loans that, on some programs, qualify on projected short-term rental revenue instead of a long-term lease. Loans start at $150,000, the standard minimum DSCR is 1.0x, the minimum credit score is 620 and LLC borrowers are standard. Arizona law limits how far cities can go in banning short-term rentals, but Phoenix and other Valley cities require STR licenses or permits, Arizona requires a transaction privilege tax license, and HOAs can still prohibit short stays.
Arizona is one of the more STR-friendly states. State law prevents cities and towns from banning short-term rentals outright, though it was amended to let local governments require permits or licenses, emergency contacts, neighbor notification and penalties for repeated nuisance violations. The City of Phoenix adopted an STR licensing requirement under that framework, and Scottsdale, Tempe, Mesa, Glendale and other Valley cities have their own permit or registration rules.
Separately, operators need an Arizona transaction privilege tax (TPT) license, and city and county lodging taxes apply. Platforms collect and remit some of these taxes, but not necessarily every local tax, so confirm what you still need to file.
Much of the Valley's newer housing sits in master-planned communities with HOAs, and Arizona HOAs can restrict rentals through their recorded covenants. Some prohibit stays under 30 days, some require registration with the association and some cap the number of rentals. Older central Phoenix neighborhoods such as Arcadia Lite, Coronado, Encanto and North Central are less likely to have HOAs.
Get the CC&Rs and any rental rules before you make an offer, not after. A property that cannot legally take nightly guests will be underwritten on long-term rent instead.
Peak demand runs roughly January through April. Cactus League spring training brings fans to stadiums in Scottsdale, Mesa, Tempe, Glendale, Peoria, Surprise and Goodyear. Golf, the Phoenix Open, Barrett-Jackson and spring break add more. October through December is a solid shoulder season.
June through September is hot and slow for leisure travel, though some properties hold up with medical, business and local staycation bookings. A credible projection shows this curve month by month, and a lender will compare it with similar listings nearby.
This example is illustrative and not a quote. An investor buys a three-bedroom home with a pool in north central Phoenix for $560,000. A third-party projection estimates average revenue of $5,100 a month across the year, with winter months well above that and summer months well below. At 75% LTV the loan is $420,000.
Estimated principal and interest on a 30-year loan is about $2,922. Arizona property taxes are relatively low, budgeted here at $230 a month, and a short-term rental insurance policy with pool liability coverage is $210. The total payment is about $3,362, so DSCR on average projected revenue is about 1.52x.
In a slow summer month earning $3,000, revenue would not cover the payment on its own, which is why reserves and a year-round view matter more here than in a steadier market.
| Item | Annual average month | Slow summer month |
|---|---|---|
| Loan amount (75% LTV) | $420,000 | $420,000 |
| Estimated principal and interest | $2,922 | $2,922 |
| Property taxes | $230 | $230 |
| STR insurance | $210 | $210 |
| Total monthly payment | $3,362 | $3,362 |
| Revenue | $5,100 | $3,000 |
| Coverage | About 1.52x | About 0.89x |
Pools are close to standard for Valley STRs, and guests expect them. They also add liability insurance, pool service, fencing or barrier requirements where children may be present and, if you offer heated pools in winter, a significant utility bill. Summer electric bills for air conditioning are another major cost.
These costs do not sit in the DSCR payment, but they affect whether the property actually makes money. Budget them alongside cleaning, supplies and platform fees. Many Valley hosts also plan a summer refresh while bookings are slow, repainting, replacing worn furniture and servicing AC units before the winter rush, which is easier to fund from reserves set aside during peak months.
Old Town Scottsdale and south Scottsdale are the most established STR areas in the region, close to nightlife, golf and spring training. Tempe near Arizona State University draws event and graduation traffic. Central Phoenix neighborhoods near the Biltmore, Arcadia and downtown attract business and leisure guests, and Glendale near State Farm Stadium sees big-event spikes.
Beyond the Valley, Flagstaff, Sedona, Prescott and Lake Havasu City have very different seasons and their own rules. Sedona and Flagstaff in particular have active local debates about STRs, so check each city.
| Area | Main demand driver | Notes |
|---|---|---|
| Old Town and south Scottsdale | Golf, nightlife, spring training | City STR rules; HOAs in some areas |
| Central Phoenix and Arcadia | Business travel, resorts, events | Phoenix STR license required |
| Tempe near ASU | University events, sports | City rules; parking and occupancy |
| Glendale and West Valley | Stadium events, spring training | Spiky demand around big events |
Arizona does not charge a real estate transfer tax, which keeps closing costs lower than in many states. Property taxes are assessed by the Maricopa County Assessor, and rental properties are classified differently from owner-occupied homes, so do not rely on a seller's bill if they lived there. Arizona also requires owners of residential rental property to register it with the county assessor.
Furnishings and setup are generally paid from your own funds rather than the loan.
Send the address, price, a revenue projection or booking history, the city license status and HOA rules. The financing team will run the ratio on the full-year figure and show leverage options.
Our investor loans are business-purpose loans on non-owner-occupied property. Call (877) 298-1001 or use the form below to get a quote.
Yes, subject to licensing. Arizona law limits outright bans, and Phoenix requires an STR license. HOAs can still restrict them through recorded covenants.
Yes. Arizona requires short-term rental operators to hold a transaction privilege tax license, and local lodging taxes apply.
On some programs, yes, using a third-party projection or booking history checked against comparable listings.
Lenders look at annual revenue, so a strong winter can carry a slow summer. Plan reserves for months when revenue falls short of the payment.
In many cases, yes. Read the CC&Rs and rental rules before you buy.
Yes. Scottsdale has its own STR permit and rules, as do Tempe, Mesa and other Valley cities.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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