Sedona, Arizona Vacation Rentals

[Chad McMahan]

Within the last 6 months, the real estate market in Sedona, AZ has changed from an average time on the market of 3 months, to a month or less on the market. We are now seeing multiple offers at or above asking price for homes priced at fair market value that have a desirable floor plan and are turn-key. As a result, we are seeing the start of a strong appreciation trend.

In 2016, a law was passed, removing city and county control over rental time frame restrictions. Now these restrictions are in the hands of local HOA's. Suddenly, there are great vacation rental candidates in Sedona, in a market where there are not enough short term rentals, to meet the demand. There are still many HOA's that limit rentals ( 1+ month, 6+ months, 12+ months) at this time, but quite a few completely flexible great choices on the menu. As an example, owners at one Sedona condominium PUD recently voted to reduce the rental restriction from 6 months to 1 night. This subdivision has become a hot potato in our local paradise. And it is in the lowest price range.

Typical vacation rental returns (Assuming financed purchases, not cash):

Sedona vacation rental property management companies concur occupancy should be 55-85% through the year. These companies charge 20% of gross monthly income. I expect by the end of 2017 the estimation will be revised at 65% - 90%.

[Chad McMahan]

Hi Jimmie. Here are a few of the rules, followed by a few notes.

The length/term at which properties can be rented is determined by the HOA, NOT the city/county/state (Looks like you know this part). Specifically, in the VOC, *most* (There are certainly exceptions) homes are within what is called VOCA- Village of Oak Creek Association (a $180 per YEAR HOA). Homes governed by VOCA have a 1 month minimum requirement for rentals. In many cases, 1 month minimum still works successfully for furnished short term rentals. Although, I do find that ROI takes a small hit, as monthly rates are lower than the accumulative shorter stays. The upside of monthly rentals, is less turnover and wear and tear, etc.

There are other HOA's in VOC that allow short term (nightly) rentals, some HOA's that do not allow anything other than 1+ year rentals, and some with 1 month or even 6 month minimums. Also, there are some homes with no HOA, which means nightly is perfectly fine.

The VOC market is performing well for vacation rentals. Depending on your budget, you should be able to tick some or all of the following boxes: VIEWS, convenience of location (Close to restaurants and coffee), quiet, nearby trails, amenities (golf, gym, pool, etc), and of course the normally desired quality and size of home/furniture/etc.

There are condos that can be rented nightly, priced under $300k. Most of the best vacation rental properties and single family and price out around $500k - $700k, with exceptions on both sides of the spread.

1 additional note: if you are thinking of adding an extra kitchen/min-kitchen to your property, for renters, etc- good luck getting a permit as it's not allowed.

I hope this helps. Feel free to reach out to me, privately, if you would like to ask more questions, or if I can otherwise help.