Phoenix, AZ, is one of the fastest-growing cities in the country—and that explosive growth has transformed the city’s rental market. In-migration from high-cost states, rising home prices, and limited affordable housing have made Phoenix a challenging but rewarding place to invest in rental property.
Whether you’re exploring long-term rentals, short-term stays, or coliving rental models like PadSplit, landlords in Phoenix have the opportunity to serve a high-demand market—while also providing solutions for renters navigating affordability pressures and extreme climate conditions.
Why Phoenix is a strong rental market
Phoenix has become a go-to destination for people relocating from states like California, Nevada, and Washington. This population influx has accelerated rental demand across the metro, pushing nearly 48% of Phoenix households into the rental market. At the same time, average rents have climbed to between $1,650 and $1,850 per month in 2025.
Affordability remains a serious concern. Phoenix now has one of the highest percentages of cost-burdened renters in the U.S., with many households spending more than 30% of their income on rent. This is especially challenging for essential workers, new arrivals, and those with lower or fixed incomes.
Extreme summer heat and rising utility costs add another layer to the equation. For landlords, this means prioritizing energy-efficient upgrades, proactive HVAC maintenance, and climate-conscious property improvements that reduce long-term operating costs.
Despite these challenges, Phoenix remains a landlord-friendly city with no rent control, strong demand, and multiple investment pathways—particularly in underserved and emerging neighborhoods.
Phoenix’s job market and growth drivers
Phoenix’s economy is powered by a growing mix of healthcare, technology, construction, and logistics. These sectors drive sustained demand for rental housing across a wide range of income levels and lease types.
Key industries include:
- Healthcare: Major employers like Banner Health, Dignity Health, and Mayo Clinic drive rental demand near hospitals and medical campuses.
- Technology and semiconductors: Expansions from Intel, TSMC, and tech startups are attracting a growing base of engineers, researchers, and contractors.
- Education: Arizona State University (ASU) in Tempe fuels housing demand from students, faculty, and support staff.
- Logistics and warehousing: The city’s location and infrastructure make it a hub for regional distribution and last-mile delivery.
- Construction and skilled trades: Ongoing commercial and residential development keeps the demand strong for housing among tradespeople and contractors.
As sustainability becomes a higher priority for renters and local policymakers, landlords investing in solar panels, xeriscaping, and energy-efficient HVAC systems can reduce operating costs while appealing to environmentally conscious tenants.
Understanding zoning and rental regulations in Phoenix
Arizona is widely considered landlord-friendly, but city-specific rules still apply—especially for short-term and shared housing.
- Short-term rentals (STRs): STRs are legal statewide, but cities like Phoenix and Scottsdale require registration with the Arizona Department of Revenue (ADOR), a transaction privilege tax license, and compliance with local nuisance, noise, and occupancy ordinances.
- Long-term rentals: No rent control applies, but all rentals must meet habitability standards and include valid lease agreements.
- Coliving rentals: Coliving rental models like PadSplit are permitted but subject to zoning, occupancy limits, and building safety codes. Properties in R-3 or R-5 zones are generally more flexible for multi-tenant housing setups.
Landlords should also check for HOA restrictions and community-specific overlay rules before investing in any shared housing arrangement.
Best neighborhoods for long-term rentals
Maryvale
- Why invest? Maryvale offers affordability and proximity to job centers. It’s home to a large renter population and continues to draw working-class families.
- Rental market insight: Consistent demand and lower home prices make it attractive for long-term rental strategies.
- Best property types: Ranch-style homes, single-family homes, and duplexes.
- Ideal tenants: Families, tradespeople, and essential workers seeking stable housing near transit and schools.
Deer Valley
- Why invest? This north Phoenix neighborhood offers good schools, access to I-17, and a growing job base in healthcare and logistics.
- Rental market insight: Low vacancy and strong appreciation make it a reliable investment for landlords focused on stability.
- Best property types: Suburban single-family homes, townhomes, and newer multifamily units.
- Ideal tenants: Healthcare professionals, families, and middle-income earners.
Best neighborhoods for short-term rentals
Downtown Phoenix
- Why invest? The city’s business and cultural hub attracts tourists, event attendees, and traveling professionals.
- Rental market insight: STRs perform well in STR-approved buildings, especially those close to the convention center and sporting venues.
- Best property types: Lofts, condos, and mixed-use apartments in properly zoned areas.
- Ideal guests: Business travelers, medical visitors, and short-term contractors.
Old Town Scottsdale
- Why invest? This walkable, upscale district sees high tourist activity and commands premium nightly rates.
- Rental market insight: Regulations are strict, but approved properties can deliver excellent returns.
- Best property types: Luxury condos, townhomes, and vacation rentals in STR-permitted zones.
- Ideal guests: Leisure travelers, golf tourists, and weekend groups.
Best neighborhoods for coliving rentals
South Phoenix / Laveen
- Why invest? These neighborhoods are close to job centers, highways, and light industrial zones. Home prices are lower than the metro average.
- Rental market insight: Larger homes with multiple bedrooms work well for room-based leasing models.
- Best property types: 4–5 bedroom single-family homes, homes with two or more bathrooms.
- Ideal tenants: Construction workers, service industry employees, and new arrivals seeking affordability and flexibility.
Tempe (near ASU)
- Why invest? Strong demand from students, interns, and early-career professionals makes this area ideal for coliving setups.
- Rental market insight: Properties that offer furnished rooms and shared kitchens are particularly competitive.
- Best property types: Older homes near campus, duplexes, and multi-bedroom houses.
- Ideal tenants: ASU students, grad assistants, and tech interns working in the East Valley.
Emerging neighborhoods to watch
Alhambra
- Why invest? Alhambra is gaining attention for its mid-century charm, revitalization efforts, and central location.
- Rental market insight: Investors are finding value in older properties near commercial redevelopment zones.
- Best property types: Bungalows, duplexes, and homes with room conversion potential.
- Ideal tenants: Young professionals, small families, and renters seeking walkable neighborhoods.
Estrella Village
- Why invest? This area is strategically located near logistics corridors and benefits from infrastructure investment.
- Rental market insight: Workforce housing demand is high, and room-based models are gaining traction.
- Best property types: Large single-family homes, homes with shared bathrooms and kitchens.
- Ideal tenants: Distribution workers, plant employees, and multi-tenant households.
Financing and tax considerations for Phoenix landlords
- Taxes: Arizona’s property tax rates are moderate compared to other Sun Belt states, and there’s no rent control.
- Insurance: Premiums for HVAC systems, roof maintenance, and extreme heat coverage are rising.
- Financing options: DSCR loans, seller financing, and value-add renovation loans are common among Phoenix investors.
- Sustainability incentives: Landlords can access rebates and utility credits for solar panels, low-water landscaping (xeriscaping), and high-efficiency HVAC systems.
Make the most of Phoenix’s rental market
Phoenix offers multiple investment strategies for landlords ready to serve a fast-growing population with evolving housing needs. Whether you’re managing long-term rentals in Maryvale, converting homes in Tempe for coliving, or operating STRs in downtown Scottsdale, success depends on compliance, community alignment, and smart upgrades that reduce long-term costs.
Coliving rental models like PadSplit offer a unique opportunity to increase rental income, reduce vacancies, and provide affordable housing in a city where many residents are feeling the squeeze. It’s a win-win for landlords and the communities they serve.
Join PadSplit today to increase your rental revenue while expanding access to affordable housing in Phoenix’s growing neighborhoods.
The information provided in this blog post is for general informational purposes only. It should not be construed as legal, financial, or professional advice. The content is intended to provide general guidance and should not be relied upon for making specific decisions.
PadSplit strongly recommends consulting with qualified legal counsel, licensed financial advisors, tax professionals, or other relevant experts for advice concerning your specific situation and investment needs. PadSplit makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, or suitability of the information contained in this post.
