Airbnb Tucson, Arizona: Market Data, Laws & Investor Guide

Tucson, Arizona is an increasingly attractive destination for Airbnb hosts looking to start a short-term rental business in 2024. With its warm climate, stunning desert landscapes, and vibrant cultural scene, Tucson draws a diverse range of travelers year-round.

The annual revenue for Airbnb rentals in Tucson is a healthy $28,600, demonstrating the strong demand for short-term rentals in the area. Additionally, the year-over-year growth of new Airbnb listings in the 85716 zip code is an impressive 86%, indicating a thriving market with room for new hosts.

Tucson's home values are also favorable for Airbnb investors. As of July 2024, the average home value in the 85716 zip code was $322,724, which is relatively affordable compared to other popular Airbnb markets. This allows hosts to enter the market with a lower upfront investment while still having the potential for strong returns.

Tucson Short-Term Rental Market Analysis

Tucson's short-term rental market has shown steady growth and strong performance in recent years. According to AirDNA the average occupancy rate for short-term rentals in Tucson was 38%. The average daily rate for Tucson Airbnb rentals was $186.

Comparing Airbnb market data from the last two years reveals the following trends in 2024:

• Active listings increased by 8% year-over-year
• Average monthly occupancy grew by 3% compared to the previous year
• Average daily rates rose by 5% year-over-year
• Average monthly revenue increased by 3% compared to the previous year

Tucson's tourism industry has experienced significant growth in recent years. In 2023, total visitors to Tucson and Southern Arizona rose 18% from 2021 to 5.8 million, demonstrating the city's increasing popularity as a travel destination.

Some of the key events and festivals that boost tourism in Tucson include:

1. Tucson Gem, Mineral & Fossil Showcase (January-February)
2. Tucson Rodeo and Parade (February)
3. Tucson Festival of Books (March)
4. Cologuard Classic PGA Tour Championship (March)
5. Agave Heritage Festival (April)
6. 4th Avenue Street Fair (April and December)
7. All Souls Procession (November)
8. Parade of Lights & Festival (December)

According to discussions on the BiggerPockets forum, mid-term rentals (monthly rentals) are gaining traction in Tucson. Investors are increasingly exploring this strategy as a viable option alongside traditional short-term rentals. The strong performance of Tucson's short-term rental market, combined with the city's growing tourism industry and diverse calendar of events, makes it an attractive destination for Airbnb hosts and investors in 2024.

Best Neighborhoods in Tucson for an Airbnb Business

When searching for the ideal location to start an Airbnb business in Tucson, hosts should consider factors such as proximity to popular attractions, up-and-coming areas, and tourist hotspots. By analyzing data from reputable sources like AirDNA and Mashvisor, along with local knowledge, we have identified the top 5 neighborhoods for Airbnb investments in Tucson.

1. Downtown Tucson

Downtown Tucson is a vibrant, walkable area with a mix of historic buildings, modern restaurants, and cultural attractions. Its central location makes it an attractive option for Airbnb hosts.

1. Average Occupancy Rate: 71%
2. Average Daily Rate: $135
3. Airbnb Seasonality: High season from January to April
4. Estimated Annual Revenue: $35,000

According to Zillow, the median home value in Downtown Tucson is $325,000 as of July 2024. For optimal return on investment, consider investing in a 2-bedroom property, which can generate an estimated $3,400 per month in rental income.

2. Sam Hughes

Sam Hughes is a historic neighborhood near the University of Arizona, known for its tree-lined streets and charming bungalows. Its proximity to the university makes it popular among visiting parents and academics.

1. Average Occupancy Rate: 68%
2. Average Daily Rate: $119
3. Airbnb Seasonality: High season from September to November
4. Estimated Annual Revenue: $29,500

The median home price in Sam Hughes is $450,000 (Zillow, July 2024). Investing in a 3-bedroom property can yield an estimated monthly rental income of $3,800.

3. Armory Park

Armory Park is a historic district located just south of Downtown Tucson, featuring a mix of Victorian homes and modern condos. Its proximity to the Convention Center makes it a popular choice for business travelers.

1. Average Occupancy Rate: 67%
2. Average Daily Rate: $130
3. Airbnb Seasonality: High season from February to May
4. Estimated Annual Revenue: $31,800

The median home value in Armory Park is $375,000 (Zillow, July 2024). A 2-bedroom property can generate an estimated monthly rental income of $3,200.

4. Catalina Foothills

The Catalina Foothills is an upscale neighborhood known for its luxury homes and stunning mountain views. Its proximity to hiking trails and resorts makes it popular among outdoor enthusiasts and luxury travelers.

1. Average Occupancy Rate: 65%
2. Average Daily Rate: $250
3. Airbnb Seasonality: High season from December to March
4. Estimated Annual Revenue: $59,300

The median home price in the Catalina Foothills is $800,000 (Zillow, July 2024). Investing in a 4-bedroom luxury property can yield an estimated monthly rental income of $6,500.

5. Barrio Viejo

Barrio Viejo is a historic neighborhood known for its colorful adobe homes and vibrant art scene. Its proximity to Downtown Tucson and unique charm make it an increasingly popular choice among travelers.

1. Average Occupancy Rate: 66%
2. Average Daily Rate: $110
3. Airbnb Seasonality: High season from November to April
4. Estimated Annual Revenue: $26,500

The median home value in Barrio Viejo is $250,000 (Zillow, July 2024). A 1-bedroom property can generate an estimated monthly rental income of $2,800.

By considering these top neighborhoods and their respective data points, Airbnb hosts can make informed decisions when investing in Tucson's short-term rental market. It's essential to balance factors like location, property type, and potential revenue to maximize returns on your Airbnb business.

Maximizing Your Revenue Through In-Demand Amenities and Properties in Tucson

To set competitive prices for your Airbnb listing in Tucson, consider factors such as seasonality, local events, and the prices of similar listings in your area. Use Airbnb's Smart Pricing tool or third-party pricing software to optimize your rates based on market demand.

According to AirDNA data, the most in-demand and best-performing Airbnb listings in Tucson share the following amenities:

1. Air conditioning (99% of listings)
2. Pool (45% of listings)
3. Hot tub (25% of listings)
4. Self check-in (70% of listings)
5. Patio or balcony (80% of listings)

To maximize your revenue, consider adding these amenities to your listing if possible. A pool or hot tub can be a significant draw for guests, especially during Tucson's hot summer months. Self check-in is also increasingly popular, as it allows for flexible arrival times and minimizes host-guest interaction.

In terms of property types, entire homes and apartments are the most popular in Tucson, accounting for 90% of all listings. The remaining 10% are private rooms, with shared rooms making up a negligible portion of the market.

Here's a breakdown of average property prices and potential revenue by bedroom count, based on Zillow and AirDNA data from July 2024:

1-Bedroom Properties:

1. Median Property Price: $150,000
2. Average Daily Rate: $119
3. Occupancy Rate: 68%
4. Annual Revenue: $29,500

2-Bedroom Properties:

• Median Property Price: $250,000
• Average Daily Rate: $186
• Occupancy Rate: 71%
• Annual Revenue: $48,200

3-Bedroom Properties:

• Median Property Price: $350,000
• Average Daily Rate: $250
• Occupancy Rate: 68%
• Annual Revenue: $62,000

4-Bedroom Properties:

• Median Property Price: $450,000
• Average Daily Rate: $350
• Occupancy Rate: 65%
• Annual Revenue: $83,000

As the data shows, larger properties command higher daily rates and annual revenue, but they also require a more significant upfront investment. 2-bedroom properties offer a balance of affordability and revenue potential, making them a popular choice for Airbnb investors in Tucson.

To maximize your earnings, focus on providing a high-quality guest experience with in-demand amenities, competitive pricing, and excellent communication. By staying attuned to market trends and guest preferences, you can optimize your Airbnb business for success in Tucson's growing short-term rental market.

Understanding Tucson Short-Term Rental Regulations

Tucson, Arizona's short-term rental regulations are primarily governed by state laws, as the city has not enacted its own specific vacation rental ordinances. This means that hosts in Tucson must comply with Arizona's general short-term rental laws, which allow for the legal operation of non-owner-occupied properties without additional restrictions within the city limits.

To operate a short-term rental in Tucson, hosts are required to obtain a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue. Once the TPT license is acquired, operators must also ensure they have any necessary municipal permits. Tucson defines a short-term rental as a dwelling unit rented out for less than 30 consecutive days, as per the Tucson City Code Chapter 18.

Short-term rental hosts in Tucson are subject to lodging taxes, which include a combined rate of 12.05% and an additional fee of $2 per bed per night. The lack of specific regulations in Tucson has made the city an attractive place to invest in Airbnb properties, with hosts appreciating the ease of conducting business in the vacation rental market.

Tucson's reputation as an Airbnb-friendly city stems from its lack of stringent short-term rental regulations compared to other cities with more restrictive policies. The absence of complex rules and bureaucratic hurdles has made it simpler for hosts to establish and operate their short-term rental properties in Tucson.

Read our full STR regulations guide for more detailed information on Tucson short-term rental regulations, including insights from local hosts and a closer look at other policies.

Keys to Success as a Tucson Airbnb Host

Popular Amenities and Design Themes in Tucson

To attract guests and stand out in Tucson's Airbnb market, consider incorporating these popular amenities and design themes:

• Outdoor living spaces: Tucson's warm climate makes outdoor amenities like patios, balconies, and pools highly desirable. Create inviting outdoor spaces with comfortable seating, shade, and desert-inspired landscaping.
• Southwestern decor: Embrace Tucson's unique Southwestern style by incorporating elements like colorful textiles, rustic wood furnishings, and desert-inspired artwork.
• Modern conveniences: Guests appreciate modern amenities like high-speed Wi-Fi, smart TVs, and well-equipped kitchens. Ensure your rental is up-to-date with these essential features.
• Eco-friendly features: Tucson's environmentally-conscious visitors value sustainable amenities like solar power, water-saving fixtures, and organic bedding.

How to Attract Tucson Customers

To appeal to Tucson's diverse visitor base, consider these strategies:

• Highlight local attractions: Showcase Tucson's top attractions in your listing, such as the Arizona-Sonora Desert Museum, Saguaro National Park, and the University of Arizona. Provide recommendations for local restaurants, shops, and events.
• Offer flexible booking options: Accommodate a range of travelers by offering both short-term and longer-term stays. This can help attract a mix of tourists, business travelers, and snowbirds.
• Provide exceptional customer service: Respond promptly to guest inquiries, offer helpful local tips, and go above and beyond to ensure a positive experience. Excellent reviews are crucial for attracting new bookings.

Potential Challenges and Guidelines for Success

Running an Airbnb in Tucson comes with its own set of challenges. Here are some potential risks and guidelines for success, based on insights from experienced hosts:

• Seasonality: Tucson's hot summers can lead to slower bookings. Consider adjusting your rates and offering special promotions during the off-season to maintain occupancy.
• Competition: With a growing number of Airbnb listings in Tucson, it's essential to differentiate your property. Focus on creating a unique, high-quality experience that stands out from the competition.
• Regulations: Stay up-to-date with Tucson's evolving short-term rental regulations, including obtaining necessary licenses and paying applicable taxes. Failure to comply can result in fines and legal issues.
• Maintenance and cleaning: Tucson's desert environment can take a toll on your rental. Invest in regular maintenance, including HVAC servicing, pool upkeep, and thorough cleaning between guests.
• Guest screening: Carefully screen potential guests to minimize the risk of damage or disruptive behavior. Set clear house rules and communicate expectations upfront.

By incorporating these insights and guidelines, Airbnb hosts in Tucson can create successful and profitable short-term rental businesses while providing memorable experiences for their guests.

Using BNBCalc to Find Profitable Properties in Tucson, Arizona

1. Analyze Properties Using BNBCalc

BNBCalc is a powerful tool for analyzing the profitability of potential short-term rental properties. To get started, simply enter the address of the property you're interested in. BNBCalc will automatically populate key details like the purchase price, number of bedrooms and bathrooms, and maximum occupancy.

Next, adjust the financial assumptions to match your specific situation, such as your down payment, interest rate, and loan term. BNBCalc will then generate a detailed financial report, including projected revenue, expenses, cash flow, and return on investment.

2. Benchmark Comparable Rentals

One of the most valuable features of BNBCalc is its ability to show you comparable short-term rentals in the area. This allows you to see how your property stacks up against the competition and identify opportunities to optimize your pricing and amenities.

To fetch top dollar for your rental, pay close attention to the nightly rates, occupancy rates, and revenue of top-performing properties in your area. Use this information to guide your own pricing strategy and make strategic improvements to your property.

3. Determine the Right Price and Property Size

BNBCalc can help you determine the optimal number of bedrooms, bathrooms, and purchase price to maximize your revenue potential. By analyzing the performance of comparable properties with different configurations, you can identify the sweet spot that balances investment cost with rental income.

Keep in mind that larger properties may command higher nightly rates, but they also come with higher upfront costs and ongoing expenses. Use BNBCalc to run scenarios with different property sizes and purchase prices to find the combination that offers the best return on investment.

4. Make an Offer

Once you've identified a property that meets your investment criteria, it's time to make an offer. Use the financial projections from BNBCalc to determine a purchase price that aligns with your target returns.

To streamline the financing process, consider working with BNBCalc's partnered STR lender, Brian Bockholdt at Alliant Credit Union. Brian specializes in short-term rental loans and can help you secure the most competitive rates and terms.

5. Use Our Tax Calculator

Don't forget to factor in the potential tax benefits of owning a short-term rental property. BNBCalc's built-in tax calculator can help you estimate your potential deductions from bonus depreciation, which allows you to accelerate the depreciation of certain assets like furniture and fixtures.

By taking advantage of these tax benefits, you can significantly reduce your taxable income and boost your overall returns. Be sure to consult with a qualified tax professional to ensure you're maximizing your deductions and staying compliant with all applicable laws and regulations.

6. Come Up With a Buy Box

To streamline your property search and investment decisions, it's important to develop a clear set of criteria for what constitutes a worthwhile investment. This "buy box" should include specific parameters like:

Location: Focus on areas with strong demand for short-term rentals, such as popular tourist destinations, business districts, or event venues.

Property type: Determine which types of properties (e.g., single-family homes, condos, townhouses) are most popular and profitable in your target market.

Price range: Set a budget based on your available capital and target returns, and stick to properties within that range.

Amenities: Identify the amenities that are most important to guests in your market, such as high-speed Wi-Fi, fully equipped kitchens, or outdoor spaces.

Return metrics: Establish minimum thresholds for key metrics like cash-on-cash return, cap rate, and internal rate of return (IRR).

By having a clear buy box in place, you can quickly filter out properties that don't meet your criteria and focus your time and energy on the most promising opportunities. This will help you make more informed, data-driven investment decisions and increase your chances of success in the competitive world of short-term rentals.

Ready to start your Airbnb journey in Tucson? Use BNBCalc to analyze potential properties and make informed investment decisions. Our powerful tool provides comprehensive data to help you maximize your profits. Check out this pre-analyzed Tucson Airbnb opportunity and see how BNBCalc can help you succeed in the short-term rental market. Visit BNBCalc.com today and take the first step towards building your Airbnb business.