Short-Term Rental Basics for Phoenix Investors

Thinking about turning a Phoenix property into a short-term rental? You are not alone. With year-round tourism and seasonal demand across Maricopa County, STRs can look attractive. The challenge is getting the rules, HOA fit, and numbers right before you buy or list. In this guide, you will learn what to verify with the City of Phoenix, how HOA rules can make or break your plan, and how to underwrite conservatively so your investment stays resilient. Let’s dive in.

Phoenix STR rules: what to confirm

Short-term rental rules are set at the city level. Phoenix operates an STR program and uses city code to regulate registration, operations, and enforcement. Details change, so you should always verify current requirements with the City of Phoenix before you buy or go live.

Here is what to confirm for a specific property address:

• Registration or permit: Find out if a per-unit registration or business license is required, what documents you need, fee amounts, and renewal timing. Confirm whether owner-occupied and non-owner properties are treated differently.
• Neighbor notification and posting: Check if you must notify nearby addresses, post a city number on listings, display a sign on-site, or provide a 24/7 local contact.
• Occupancy and operations: Verify guest limits, any minimum-stay rules, parking and trash standards, and house rules you must keep on file.
• Taxes and licensing: Confirm your Arizona Transaction Privilege Tax registration and any Phoenix transient lodging taxes. Determine what, if anything, platforms collect and remit for you.
• Inspections and insurance: Ask whether a safety inspection or proof of liability insurance is required for STR use.
• Enforcement and penalties: Understand how Phoenix handles complaints, fines, suspensions, and listing delisting for noncompliance.

Tip: If the property sits in a special zoning district or historic overlay, confirm whether extra rules apply.

Step-by-step compliance checklist

Use this quick blueprint to reduce surprises and keep your operations smooth.

Before you buy

• Verify city rules for the address. Confirm current Phoenix STR registration, fees, and any neighborhood-specific standards.
• Check zoning and overlays. Ask about historic districts or special rules that might restrict STRs.
• Pull HOA documents. Review CC&Rs, bylaws, rules and regulations, and recent board minutes for rental restrictions or pending amendments.
• Request seller records. Ask for STR booking history, tax receipts, and proof of city registration if the home has been used as an STR.
• Screen for enforcement history. Check for prior code complaints or litigation tied to the property.
• Price management and cleaning. Get estimates from local STR managers for fees, occupancy, ADR, and cleaning costs.
• Confirm insurance. Ask your insurer about STR endorsements or commercial coverage and pricing for this property type.

After you buy

• Register with the city. Complete any required STR registration and post the number on your listings if required.
• Register for taxes. Set up Arizona TPT and any Phoenix lodging tax remittance. Put due dates on your calendar.
• Complete inspections and insurance. Schedule any required safety check and maintain proper liability coverage.
• Notify neighbors if required. Provide a 24/7 local contact, parking guidance, trash pickup days, and quiet hours. Keep a log of outreach.
• Maintain records. Keep booking logs, tax filings, complaint responses, and guest communications organized.

HOA rules: city approval is not enough

An HOA can be stricter than city law. If condo bylaws or CC&Rs prohibit STRs, the HOA can enforce that prohibition even if the city allows STRs. That can include fines and legal action according to governing documents.

Do this homework upfront:

• Read the documents in full. Focus on rental duration limits, caps on short-term rentals, registration requirements with the HOA, and enforcement language.
• Ask direct questions. Confirm whether STRs are allowed today and whether any amendments are pending.
• Request seller representations. If you are purchasing an active STR, consider written statements about rental history and HOA compliance.

Practical note: Some investors pivot to 30-plus day rentals to fit HOA rules. That can change demand patterns and revenue, so underwrite accordingly.

Occupancy, safety, and neighbor relations

Even if the city sets a maximum guest count, you can reduce risk by setting your own cap and house rules:

• Set a realistic guest limit. Align with local law and the home’s size to discourage parties.
• Post clear rules. Parking locations, trash days, pool safety, and quiet hours should be easy to find and enforced.
• Use noise monitoring (not recording). Real-time alerts help you resolve issues quickly while protecting privacy.
• Respond fast. Keep a local contact able to address issues within the city’s required timeframe.

These habits protect your relationship with neighbors and reduce complaint risk.

Taxes and registrations to set up

Arizona requires you to collect and remit Transaction Privilege Tax on STR income. Phoenix typically layers local lodging taxes on top of state requirements. Platforms may collect some taxes in certain jurisdictions, but they do not handle your registrations or all filings for you.

Best practices:

• Register with the state and city. Set up accounts and verify filing frequencies.
• Track platform remittance. Confirm what the platform collects versus what you must file yourself.
• Keep clean records. Save monthly statements, returns, and payments for audit readiness.

Underwrite your STR conservatively

Short-term rentals can look strong on gross revenue, but expenses and compliance reduce margins. Build a realistic pro forma before you make an offer.

How to build your model

1. Gather comps by micro-market. Pull ADR, occupancy, and seasonality for your property type and neighborhood.
2. Apply a conservative haircut. Reduce ADR by 10 to 30 percent and assume modest occupancy during your first year.
3. Build a full P&L. Include platform fees, management, cleaning, utilities, taxes and licenses, HOA dues, insurance, maintenance and supplies, and capital reserves.
4. Add a contingency. Budget for compliance costs, legal advice, or downtime.
5. Model debt service last. Use net operating income to test different mortgage scenarios.

Common conservative inputs

• Occupancy: 40 to 60 percent for underwriting unless strong comps support higher.
• ADR: Start with comparable ADRs, then discount to account for ramp-up and off-peak demand.
• Length of stay: 3 to 5 nights, which drives cleaning frequency.
• Management and platform fees: Budget for full-service management if you will not self-manage.
• Reserves: 5 to 10 percent for maintenance and 5 percent for furniture and refresh.

Worked example (hypothetical)

• ADR: 250 dollars after a conservative haircut
• Occupancy: 55 percent
• Average stay: 4 nights
• Management fee: 25 percent of gross
• Platform fees: 6 percent
• Cleaning: 120 dollars per stay
• Utilities and internet: 4,200 dollars per year
• Property tax, insurance, HOA combined: 8,000 dollars per year
• Maintenance reserve: 7 percent of gross
• Capital reserve: 5 percent of gross

Calculations:

• Gross revenue: 250 × 0.55 × 365 = 50,187 dollars
• Management: 12,547 dollars
• Platform: 3,011 dollars
• Estimated 50 stays per year. If guests pay cleaning, impact may be neutral to host; if you absorb cleaning, cost is about 6,000 dollars.
• Utilities: 4,200 dollars; Taxes/insurance/HOA: 8,000 dollars
• Maintenance reserve: 3,513 dollars; Capital reserve: 2,509 dollars

Result:

• Net before taxes and cleaning: about 16,407 dollars
• If you absorb cleaning: about 10,407 dollars

Key takeaway: Strong top-line numbers can still produce modest net income once fees and fixed costs are included.

Stress test your numbers

Run three scenarios to understand risk:

• Conservative: Lower ADR, lower occupancy, higher fees
• Base case: Your most likely assumptions
• Optimistic: Strong ADR and occupancy with stable expenses

Test shocks like a 10 percent ADR drop, a 10-point occupancy decline, higher fees, and an HOA rule change. You should know your break-even before making an offer.

Red flags to watch

• Unclear HOA language or pending amendments on rental durations
• Historic or special overlay districts with additional standards
• Prior code complaints tied to the address
• Unrealistic ADR assumptions not supported by comps
• High HOA dues or insurance costs that compress margins

Your next steps in Phoenix

If you are exploring an STR in Phoenix or greater Maricopa County, start with address-level rule checks, a deep HOA review, and a conservative model. From there, line up tax registrations, insurance, and a reliable local contact or manager.

Want a property shortlist aligned with STR potential, plus introductions to experienced local STR managers and compliance resources? Reach out to the team that pairs high-volume expertise with boutique, concierge service. Connect with Torie Ellens to get started.

FAQs

Do I need a city registration or permit for a short-term rental in Phoenix?

• Phoenix operates an STR program that governs registration and operations, so confirm current requirements for your specific address and follow them before listing.

Can my HOA prohibit short-term rentals even if the city allows them?

• Yes; private CC&Rs and condo bylaws can be stricter than city rules, and the HOA can enforce its standards if STRs are restricted or banned.

Are there occupancy limits for guests in Phoenix STRs?

• Many municipalities set guest caps or formulas, so verify Phoenix’s current limit and apply your own conservative house rules to prevent nuisance issues.

Will platforms collect and remit my taxes automatically?

• Platforms sometimes remit certain lodging taxes, but you are still responsible for registrations and any taxes the platform does not collect; verify exactly what is covered.

What insurance coverage should I have for an STR in Phoenix?

• Ask your insurer for a policy or endorsement that covers STR activity and confirm any minimum requirements tied to city registration or your HOA.

How should I estimate cleaning costs and frequency?

• Use average length of stay to estimate the number of turnovers, then multiply by a realistic per-clean rate; decide if the guest pays the fee or if you will absorb it.