You asked- we answered! Here is the ultimate guide to investing in short-term rentals in Flagstaff, Arizona. A charming, nature-rich city nestled in the beautiful Grand Canyon State, Flagstaff is very attractive to real estate investors, particularly in the short-term rental market. Flagstaff possesses diverse demand drivers, including outdoor recreation, cultural attractions, and a thriving economy. This charming city is a sought-after spot for short-term rentals. So don’t miss out on the perfect spot for your next investment- dive into this guide as we give you all the tools that you need to get started.
Our Short-Term Rental guide will walk you through everything that you need to know- recommended investment locations, inside information about the market, how to finance STRs with Easy Street Capital’s industry-leading STR Loans, and the latest updates on rules and regulations for short-term rentals in Flagstaff, Arizona. We’ve got you covered with a comprehensive guide as well as up-to-date information on the latest developments in Arizona STR rules and requirements.
Table Of Contents
Why is Flagstaff So Popular for Short-Term Rentals?
Top Things To Do in Flagstaff, Arizona (STR Demand Drivers)
STR Rules and Regulations in Flagstaff, Arizona
Investing in Short Term Rentals in Flagstaff, Arizona
Invest in Flagstaff Today!
Why is Flagstaff so Popular for Short-Term Rentals?
As experienced investors know, choosing the correct market is crucial whenever deciding where to invest. One of the most important factors in that decision is the market’s “demand drivers”. These demand drivers are the attractions and events that draw people to visit the city year-round. Visitors are driven to your market and subsequently book your short-term rental, thus providing you with your vital returns. Therefore, it’s essential to choose a vacation destination with dependable and diverse demand drivers.
Now, with that established, we are delighted to tell you that Flagstaff, Arizona, is a fantastic market for short-term rentals with many different demand drivers that cater to people of all ages and needs.
For outdoor enthusiasts, it offers close proximity to iconic destinations such as the Grand Canyon, Powell Observatory, and numerous national forests and parks, making it a year-round hub for hiking, skiing, and other recreational activities. Additionally, Flagstaff is home to Northern Arizona University, which attracts students, families, and academics who need temporary accommodations. The city also boasts a rich cultural scene, with museums, festivals, and a vibrant arts community that regularly draw visitors to the area. Downtown Flagstaff couldn’t possibly be more charming! Regarding the seasonality of this market, Flagstaff’s appealing climate, with mild summers and snowy winters, ensures a steady stream of tourists throughout the year. This diverse range of demand drivers helps mitigate the risk of having “busy seasons,” providing a reliable flow of visitors year-round.
Flagstaff is also a great “drivable market” for visitors from neighboring states like California, Nevada, and New Mexico, as well as a quick flight from many major cities across the country.
Top Things To Do in Flagstaff, Arizona (STR Demand Drivers)
The Grand Canyon
The most popular attraction, the magnum opus, the crown jewel that drives visitors to Flagstaff, is Grand Canyon National Park. Located just an hour and a half drive from Flagstaff, which is the closest mid-sized city to the canyon, the park is home to a variety of activities throughout the year. These include hiking the Bright Angel Trail, exploring the depths of the canyon on mule rides, and experiencing the Colorado River through rafting adventures. The park also offers educational programs, ranger-led tours, and stunning viewpoints along the scenic Desert View Drive. The Grand Canyon continues to be a top destination for adventurers and a significant economic driver for the region.
Two must-see destinations for any Grand Canyon visitor are the South Rim and the Grand Canyon Village. The South Rim offers incomparable views and numerous hiking trails, providing an immersive experience of the canyon’s unmatched grandeur. Meanwhile, the Grand Canyon Village features historic buildings, visitor centers, and guided tours that provide fascinating insights into the canyon’s history and geology.
Other National Parks
Don’t forget about the lesser known, but still undeniably striking, nature attractions near Flagstaff! In addition to the Grand Canyon, Flagstaff is home to several other stunning national parks and monuments, including Walnut Canyon National Monument, Sunset Crater Volcano National Monument, and Wupatki National Monument. These parks offer unique landscapes and experiences that attract nature enthusiasts from all over.
Walnut Canyon National Monument features cliff dwellings and ancient ruins of the Sinagua people, providing visitors with a glimpse into the region’s rich history. Sunset Crater Volcano National Monument, with its unique volcanic landscape, offers hiking trails and intriguing views of lava fields. Meanwhile, Wupatki National Monument showcases ancient pueblo ruins and provides educational insights into the lives of the early inhabitants of the area.
These national parks draw a significant number of visitors to Flagstaff, many of whom seek comfortable and convenient accommodations during their stay. By offering short-term rentals in prime locations near these attractions, investors can capitalize on demand and generate impressive rental income.
Festivals and Events
In addition to these national parks, Flagstaff hosts numerous outdoor events and festivals that attract large crowds. The Flagstaff Festival of Science, for example, is a ten-day event that celebrates science and nature, drawing thousands of attendees each year. In 2019, the festival saw an attendance of over 25,000 people, generating significant economic impact for the city.
Science, Arts, and Museums
Space lovers, rejoice! Flagstaff, Arizona is home to several attractions that highlight its unique contributions to science, particularly in the realm of astro-tourism (celestial tourism centered around astronomical pursuits), attracting visitors from across the country.
The Lowell Observatory, in particular, is a must-visit for astronomy enthusiasts. Known for the discovery of Pluto (we’ll let you decide whether you think Pluto is a planet or not!), Lowell Observatory offers an extensive array of telescopes and exhibits. Visitors can partake in stargazing events and educational programs, making it an ideal destination for anyone fascinated by the night sky. Additionally, Flagstaff’s strict light pollution regulations ensure that the night sky remains brilliantly visible, enhancing the stargazing experience.
For history buffs, the Museum of Northern Arizona provides a deep dive into the region’s cultural and natural history. The museum’s exhibits cover Native American heritage, geology, and the area’s rich biodiversity, offering a comprehensive understanding of Northern Arizona’s past and present.
For those interested in science and technology, the Coconino Center for the Arts is an engaging destination. With a variety of exhibits that include visual arts and cultural events, the center provides an immersive and educational experience for visitors of all ages.
Flagstaff’s commitment to preserving its dark skies, coupled with its rich cultural, scientific, and educational institutions, makes it a unique and enriching destination, driving demand for short-term rental stays even higher! This is especially true for families booking Airbnbs and wanting to including learning opportunities in their vacations.
STR Rules and Regulations in Flagstaff, Arizona
With the real estate industry continuing to trend upward in Arizona, particularly in Flagstaff and nearby Sedona, it’s no surprise that the state has been proactive in developing rules and regulations for short-term rentals. The most important question, though: is Flagstaff, Arizona short-term rental friendly? Overall, the answer is yes.
Do you need a license to obtain and operate an Airbnb (Short-Term Rental) in Flagstaff, Arizona?
Flagstaff has established clear and reasonable rules and regulations for short-term rentals, which include:
Effective November 2023, a city ordinance requires owners of short-term rentals to obtain a Short-Term Rental License. Licenses are valid for one year and have several requirements, including:
- Providing an emergency point of contact: Owners must inform adjacent properties of the short-term rental operation and provide neighbors with an emergency point of contact. Notifications must be in writing and include the STR License Number, physical address of the STR, and contact information for the emergency point of contact.
- Proof of Transaction Privilege Tax (TPT) license: Owners must provide proof of a TPT license and pay a license fee of $175. Applications will be returned if any requirements are incomplete.
- Safety and Compliance: Owners must ensure that their properties are approved structures. For example, converting a garage or workshop into a short-term rental requires the necessary building permits. Basic safety measures, such as fire extinguishers, smoke and carbon monoxide detectors, and deadbolt locks, are strongly encouraged.
- HOA rules: If an HOA allows rentals of less than 30 days, short-term rentals are likely permitted.
Investing in Short Term Rentals in Flagstaff, Arizona
For a market that we have proven to be as dynamic and popular as Flagstaff, understanding the numbers before you dive in is crucial. Every successful short-term rental investor knows that underwriting and running the numbers on an investment is the key to success.
Revenue Projections
Two of the most critical aspects of evaluating a vacation rental investment are understanding and projecting revenue (income) and expenses. A significant portion of expenses often comes from the cost of a short-term rental (STR) loan. Below, we’ll provide recommendations on how to tackle each to become a short-term rental investing pro!
An exciting development in the short-term rental investing space has been the explosive growth of accessible data for investors. Companies such as AirDNA and Rabbu continue to provide high-level, actionable data for investors evaluating short-term rental markets.
As of July 2024, AirDNA gives the following metrics for Flagstaff Short-Term Rentals:
Occupancy Rate: The percentage of days per year the STR will have guests (generally assuming market rates are charged). Flagstaff’s occupancy rate is 57%. While this may sound low, this is simply the average and does necessarily reflect the occupancy rate that you will experience.
Average Daily Rate (ADR): The average price of a day’s stay at the property. Flagstaff’s average Daily Rate is $269. This rate reflects Flagstaff’s appeal to a wide range of visitors, including outdoor enthusiasts and students’ families. It suggests that offering affordable options could be a strong strategy for investing in short-term rentals in Flagstaff.
RevPAR (Revenue per Available Room): A common metric for hotels, this multiplies the occupancy rate and the ADR to get total expected earnings over a year. Flagstaff’s RevPAR is $155.
Market Score: Flagstaff’s Market Score is 99. This is considered a “great” rating, balancing overall market factors.
Seasonality Score: Flagstaff’s Seasonality Score is 85. Flagstaff has a high seasonality score due to its year-round attractions, which reduces the risk of uneven, seasonally dependent returns and low-volume months.
Utilizing these metrics is key to evaluating the revenue potential of short-term rentals. For short-term rental projections in Flagstaff, Arizona, AirDNA provides excellent information, directly connecting to actual performance data and offering estimates and real-time tracking of changes.
Expense Projections
A common area of stress for STR investors is the financing cost, typically the monthly payment of principal and interest to the lender financing the property. Many investors in short-term rentals cover the majority of the investment with a loan, often utilizing only 20%-30% for a down payment. Thus, it’s crucial to get the best rates and terms on financing the STR to ensure the returns are worthwhile.
When financing your short-term rental in Flagstaff, you have several options. You can obtain a loan from traditional lenders such as banks, credit unions, and “conventional” (i.e., Fannie Mae / Freddie Mac) lenders.
However, relying solely on traditional loans can be a big mistake for STR investors. Short-term rentals are still a new and rapidly changing asset class, so lenders that are flexible around STRs are vital. Utilizing a lender that understands and embraces short-term rentals is the key to success.
Unlike most lenders offering loans on short-term rentals, Easy Street Capital embraces the unique aspects of short-term rentals. Qualification based on projected STR returns from cutting-edge data sources such as AirDNA is crucial for investors seeking flexibility and ease in short-term rental investing. Additionally, using advanced strategies to get the best rates and terms is essential for achieving the best returns! For more information, FAQs, and free projected numbers for any potential STR address in Flagstaff, Arizona, check out our short-term rental lending program resource page here!
Invest in Flagstaff Today!
Have your eye on purchasing a short-term rental investment property in Flagstaff, Arizona? Easy Street Capital is America’s best lender for short term rentals – see options below to explore financing options!
Disclaimer: The information provided in this article is not intended as financial or legal advice of any kind. Regulations regarding short-term rentals are subject to change and all investments are subject to risk. Information included in this article may contain information that has not been verified by licensed attorneys and should be subject to independent verification. Readers are advised to consult with qualified legal or financial professionals prior to investing in real estate investment properties.
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