Phoenix and Scottsdale Short-Term Rental Markets for DSCR Investors

Arizona's short-term rental framework in plain terms

Arizona took an unusual path on vacation rentals. In 2016 the legislature limited how cities and towns could regulate them, and later amendments gave cities more tools without restoring the power to ban them. The current statute, A.R.S. § 9-500.39, says a city or town may not prohibit vacation rentals or short-term rentals, and may not restrict them based on their classification, use or occupancy except in the ways the statute lists.

Those permitted tools matter to any investor financing a Valley STR. Cities can:

• Apply health and safety rules: fire and building codes, sanitation, traffic control and solid waste.
• Enforce zoning and nuisance ordinances, including noise, the same way they apply to other residential property.
• Require an emergency contact who can respond in person, by phone or by email at any hour.
• Require a local regulatory permit or license, with an application limited to items the statute lists and a fee capped at the actual cost of issuing it or $250, whichever is less.
• Require neighbor notification before the first rental, generally to adjacent and across-the-street homes (or same-floor units in a multifamily building).
• Suspend a permit or license after repeated verified violations, under the procedures the statute sets out.

The statute also links STRs to the state transaction privilege tax (TPT) system run by the Arizona Department of Revenue. Each rental needs a TPT license, and Phoenix, Scottsdale and Tempe ask for that license number in their own applications.

What state preemption means for your loan

Preemption is a big reason lenders are comfortable with Valley STRs. A city cannot simply zone short-term rentals out of existence after you close, so the income stream does not depend on a future city council vote to ban them. That predictability helps wholesale lenders treat Phoenix, Scottsdale and Tempe STRs as a financeable property type.

But preemption has a hard edge: it applies to cities and towns, not private agreements. An HOA's CC&Rs, a condo declaration or a deed restriction can still prohibit rentals under 30 days, set minimum lease terms, cap the number of rentals or require registration. Many master-planned communities and condo projects across the Valley use those tools. If the community documents forbid short-term rentals, no city permit will fix it, and a loan sized on short-term income will not work there.

Always read the CC&Rs and rental rules before you make an offer. Our HOA and condo guide lists the clauses to look for.

How Phoenix, Scottsdale and Tempe compare

All three cities use the tools the statute allows, but the details differ. This summary is based on each city's published rules; check the current versions before you buy.

Phoenix's accessory dwelling unit rule deserves special attention. For ADUs with a certificate of occupancy issued on or after September 14, 2024, the owner must attest that they will live on the property to use the ADU as a short-term rental, effective April 4, 2026 under the city's published rules. A property where you live does not fit an investment-only DSCR loan. Read our Phoenix ADU guide before buying a property whose numbers depend on a newer ADU.

How DSCR lenders treat Valley STR income

Lenders review two things on a Valley STR: whether the home is allowed to earn short-term income, and how much of that income they will count. The first comes from the documents above. The second depends on the wholesale program, which usually uses one of three methods:

1. Actual payout history, typically 12 months of platform or management statements, averaged.
2. A market-data estimate for a new listing, from a third-party STR data provider or an appraiser's STR rent analysis, if the program accepts one.
3. Long-term market rent only, from the appraisal, ignoring nightly income.

Valley seasonality makes this choice important. Cooler months are typically strongest across Phoenix, Scottsdale and Tempe; the hottest weeks are slower. A full year of statements captures both. A partial year can overstate or understate the average. Our guide to how lenders count Airbnb income goes deeper, and the STR DSCR calculator lets you test the difference on your own numbers.

Common reasons a Valley STR file gets harder

• HOA or condo restrictions on rentals under 30 days.
• Hotel-like condo projects with rental desks, mandatory pools or high short-term concentration.
• Missing or lapsed city credentials, or a TPT license that was never set up.
• Insurance that does not cover short-term rental use or meet a city liability minimum.
• Partial-year history that covers only the slow or only the strong season.
• Owner use. Any plan to live in the home, even part of the year, takes it out of business-purpose DSCR lending.

Each of these is easier to handle before you are under contract than during underwriting.

What a complete Valley STR scenario looks like

Whether the home is in Phoenix, Scottsdale or Tempe, the strongest scenarios arrive with the same handful of facts. Having them ready lets us compare programs on the first pass instead of the third:

• The address or neighborhood, property type and number of bedrooms.
• HOA status, with the rental clause from the CC&Rs or condo declaration.
• Whether the home already holds a TPT license and a city permit or license, and in whose name.
• How the home earns today: months of payout history, a market-data estimate, or nothing yet.
• Purchase price or estimated value, current loan balance if any, and the loan amount you want.
• How title will be held, personally or in an LLC.
• Confirmation that no owner or family member will live in the home.

With those answers, the conversation moves quickly to the questions that actually differ between programs: the income method, reserves and structure.

Neighborhood guides

Each page below covers local rental demand in qualitative terms, the city rules that apply, typical property types and HOA patterns, and a worked DSCR example with user-style inputs. We do not publish invented market statistics; the examples are math illustrations, not loan offers.

Looking beyond short-term rentals?

This site covers one thing: financing whole-home short-term rentals in the core of the Valley. For all Arizona DSCR options, including long-term rentals and small multifamily statewide, see dscrloanarizona.com.