If you’re reading this blog, you may have recently thought about buying a second home in Arizona. You may have already started your search. The excitement starts building. You hop on to a house listing site, or you reach out to an agent.

You might begin to wonder if you can make money off of a second home in this market. But the answer isn’t simple, and it’s always changing. There are a number of things you’ll want to start looking at in order to make the best decision. It will likely not be a simple yes or no answer. Before making an offer on a property, ask yourself the following:  

1. Why are you buying? 

The reason you are buying this second home can very well be the same reason you decide whether to sell one day or keep the home. 

Is it an investment property you’re looking to make some money off of? Or is this something you want you, your family, and your friends to enjoy as much as possible for many years to come? Many of the homeowners we work with bought their homes for the ability to use it themselves. They prioritized money second. They chose a place that felt like home, somewhere they knew they would visit often. 

The sole intention of owning short term rental can be a risky investment. The current market should be a deciding factor. Making the right investment decision can be more of a challenge in a seller’s market. Home prices are key. For example: you wouldn’t buy a $20 case of water to sell with the intention to only make $10 (a $10 loss overall) after selling all the water bottles in the case. 

2. Where are you looking? 

“Location, location, location!” It’s an often-heard mantra in the real estate world, and it’s an important one. If you’re buying this home to enjoy for yourself, you’ll want to find a house in the area that feels homey. You’ll need to make sure that not just yourself, but future guests enjoy the home as well.

Keep in mind that the more popular, enjoyable neighborhoods in the Phoenix Metro area already have a high supply of short term rentals. Popular Arizona cities, such as Scottsdale and Peoria, are becoming very saturated markets. These areas have are starting to have supply outweigh demand, with dozens of rentals sitting empty. Are you willing to wait it out? Can you afford to?

3. How much will it cost me? 

Buying a second home comes with expenses outside of just the home purchase itself that you will definitely want to consider before going all in. For example, you may need to hire someone that is able to check on the property while you’re away. If you’re hosting guests during the times you are not using the home you will also need to stock the home with basic supplies. 

You’ll also need to take maintenance and repair costs into consideration. Short term rentals see a lot of heavy use, and things will break. There’s also landscaping, decor, and furnishings to take into consideration. Those costs add up quickly. 

Will this be sustainable for you? And will you need to rely on others renting your property to maintain the ownership of the property?  

Do your research and crunch the numbers before you dive in!

Interested in starting your Arizona home search? Talk with one of our agents and let us know how we can help you! Short Term Rental Manager is a licensed broker and management company with over 15 years of experience. We know the Phoenix Metro area inside and out!