Tucson's short-term rental year runs backward compared with most of the country. The best weeks come in late January and February, when the gem and mineral shows fill every hotel room in town and winter visitors arrive from the north. July and August, with triple-digit heat, are the slow season.
In short: LendingStreet finances Tucson short-term rentals with DSCR loans that can qualify on projected short-term rental revenue on some programs, instead of a long-term lease. Loans start at $150,000 with no stated maximum, purchases go up to 80% LTV and cash-out up to 75% LTV, with a 620 minimum credit score and LLC borrowers allowed. Our investor loans are business-purpose loans on non-owner-occupied property.
Arizona law limits the ability of cities and counties to ban short-term rentals outright, which is why investors can operate in Tucson neighborhoods where other states' cities would prohibit them. A later state law gave local governments more tools: they can require a permit or license, an emergency contact, neighbor notification and proof of the state tax license, and they can penalize repeated violations. Check the current requirements with the City of Tucson, or with Pima County, Oro Valley or Marana depending on the address.
HOAs are the bigger limit in many newer areas. Subdivisions in Oro Valley, Marana, Rita Ranch and Vail often have covenants on rental terms, and Arizona courts have generally allowed associations to enforce them. Read the CC&Rs before you make an offer.
Condo and townhome communities near the university and in the Foothills deserve the same check. Some allow nightly rentals, some require minimum stays of 30 days or longer, and some cap the number of units that can be leased at all.
A Tucson-area host typically needs to handle:
Near the University of Arizona, Sam Hughes, West University, Jefferson Park and Blenman-Elm book for football and basketball weekends, graduation and parents' events. Downtown, the Mercado District, Barrio Viejo and Armory Park attract guests who want to walk to restaurants and the streetcar. The Catalina Foothills and Tanque Verde areas offer larger homes with mountain views and are close to Sabino Canyon.
Outside the core, Oro Valley and Marana draw golfers and families, and homes near Davis-Monthan Air Force Base serve visiting military families. In summer, cabins in Summerhaven on Mount Lemmon are one of the few local markets that peak when the city is hottest.
This example is illustrative and not a quote. An investor buys a three-bedroom midtown home for $465,000 with 25% down. A third-party projection estimates $50,000 of annual short-term revenue.
Estimated principal and interest on a 30-year loan of $348,750 is about $2,379 a month. With estimated taxes of $275 and insurance of $150, the total payment is about $2,804. On an annual basis, projected revenue of $4,167 a month gives a DSCR of about 1.49x.
The quarterly view tells the real story. The first quarter covers the payment several times over, while summer revenue falls short of it. Some programs adjust projected revenue for seasonality, and how much varies by program. Set aside part of the winter income to carry the summer.
| Quarter | Projected revenue | Monthly average | Coverage of payment |
|---|---|---|---|
| Jan-Mar (gem show, winter visitors) | $19,000 | $6,333 | 2.26x |
| Apr-Jun (spring, graduation) | $12,000 | $4,000 | 1.43x |
| Jul-Sep (summer heat, monsoon) | $6,500 | $2,167 | 0.77x |
| Oct-Dec (fall events, early snowbirds) | $12,500 | $4,167 | 1.49x |
| Full year | $50,000 | $4,167 | 1.49x |
January and February bring the Tucson Gem, Mineral and Fossil Showcase, which fills lodging across the city for weeks. Winter visitors stay from fall through spring, and March adds the Tucson Festival of Books and spring break. Graduation in May is a strong weekend near campus. June through September is hot, and the monsoon arrives in July, so occupancy and nightly rates drop. Fall picks up with university events and the first snowbirds.
Arizona caps annual growth in a property's limited value at 5%, which tends to keep tax increases gradual, and Arizona does not levy a real estate transfer tax. Insurance in Tucson is generally lower than in hurricane or hail states, but check whether the property sits near a wash or in a flood zone, and confirm coverage for short-term rental use. Pools, which many Tucson rentals have, can affect both insurance and guest demand.
Guests expect working air conditioning, shade and often a pool or outdoor living space. Older midtown homes may have evaporative coolers instead of refrigerated air, which can hurt reviews in summer. Budget for cooling upgrades in your plan, and keep in mind that the appraiser and projection will reflect what the property offers today.
Desert landscaping, shaded patios and a well-maintained pool are what Tucson listings compete on. Guests visiting for the gem shows often want parking for a vehicle loaded with inventory and good security, while winter visitors staying a month want a full kitchen and laundry. Furnish for the guest you expect.
If you already run a Tucson rental with a booking history, a refinance may be able to use actual revenue. Cash-out goes up to 75% LTV once seasoning is met, and seasoning varies by program. Our STR refinance guide explains what to pull from your platform account.
Send the address, price, revenue projection or booking history and any HOA documents through the form below, or call (877) 298-1001. If the property is in an HOA, include the CC&Rs and any rental rules. Our Arizona short-term rental page covers Scottsdale, Sedona and Flagstaff.
Generally yes. Arizona law limits outright bans, but cities and counties can require permits and other rules, and HOAs can restrict rentals. Check the current local requirements.
Yes. Arizona requires a transaction privilege tax license, and city or county taxes apply.
Arizona requires residential rental property to be registered with the county assessor.
Late January through March, driven by the gem shows and winter visitors. Summer is the slowest period.
On some programs, yes. The lender may adjust the projection for seasonality.
Some do and some do not. Read the CC&Rs before you buy.
The minimum is 620.
Yes. LLC borrowers are standard, and you sign for the loan personally.
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