Are Short-Term Rentals Still a Good Investment in the East Valley?
By Susan Seiber, East Valley Real Estate Expert
"Should I buy an investment property for short-term rentals?" I'm getting this question a lot from East Valley buyers, and honestly, the answer in 2025 is more complicated than it was a few years ago. The short-term rental landscape has changed dramatically, and what worked in 2020-2022 might not work today.
Here's what I've learned after helping dozens of investors navigate the East Valley short-term rental market: success is still possible, but it requires much more strategic thinking about location, regulations, and realistic financial projections. The days of "buy anywhere and profit" are over, but smart investors can still build wealth with the right approach.
Quick Answer Summary
Are short-term rentals still profitable in Gilbert, Chandler, and Mesa in 2025? Profitability varies significantly by location and property type. Prime locations near attractions, golf courses, or spring training facilities can still generate 15-25% annual returns, while average neighborhoods may struggle to break even after expenses, taxes, and increased competition.
What regulations affect short-term rentals in the East Valley? Each city has different rules: Gilbert requires business licenses and limits rentals to 30+ days in some areas, Chandler allows short-term rentals with permits and neighbor notification, and Mesa has varying restrictions by zoning. HOA rules often add additional limitations regardless of city regulations.
What are realistic revenue expectations for East Valley short-term rentals in 2025? Well-located properties might generate $3,000-6,000+ monthly during peak season (January-April) but drop to $1,500-3,000 during summer months. Annual gross revenue typically ranges $30,000-60,000 for average properties, with expenses consuming 40-60% of gross income.
The 2025 Short-Term Rental Reality Check
Before we dive into specific strategies, let me share what's actually happening in the East Valley short-term rental market right now. The landscape has shifted dramatically from the pandemic boom years.
The Saturation Factor: The number of short-term rentals in the East Valley has exploded. Areas that had 10-20 listings in 2020 now have 100+ properties competing for the same guests. This increased supply has driven down nightly rates and occupancy rates in many neighborhoods.
The Regulation Tightening: Cities are implementing stricter rules, HOAs are banning short-term rentals in new developments, and the "wild west" days of unregulated rentals are ending. Investors need to navigate an increasingly complex regulatory environment.
The Professionalization: Successful short-term rental operators are now running sophisticated businesses with professional management, dynamic pricing, and significant marketing budgets. The casual "list it and forget it" approach rarely works anymore.
Gilbert: The Challenging but Potentially Rewarding Market
Gilbert presents unique opportunities and challenges for short-term rental investors.
The Opportunity: Gilbert's reputation for excellent schools and family-friendly amenities attracts visitors for youth sports tournaments, family reunions, and extended stays. Properties near golf courses, parks, or sports complexes can command premium rates.
The Challenge: Gilbert has implemented some of the strictest short-term rental regulations in the East Valley. Many areas now require minimum 30-day stays, effectively eliminating traditional short-term rentals. Additionally, most newer HOAs prohibit short-term rentals entirely.
What Works: Investors finding success in Gilbert focus on:
•Older neighborhoods without restrictive HOAs
•Properties that can accommodate large groups (6+ bedrooms)
•Homes near Santan Village or major golf courses
•Extended-stay properties targeting corporate relocations
Real Numbers: Successful Gilbert short-term rentals might generate $4,000-7,000 monthly during peak season, but many properties struggle to maintain year-round profitability due to regulatory constraints and high competition.
Chandler: The Balanced Approach
Chandler offers perhaps the most balanced environment for short-term rental investment in the East Valley.
The Regulatory Environment: Chandler allows short-term rentals with proper permits and neighbor notification requirements. While there are rules to follow, they're generally more investor-friendly than Gilbert's restrictions.
The Market Dynamics: Chandler's central location, business district, and proximity to Phoenix Sky Harbor make it attractive for business travelers and tourists. The city also hosts numerous corporate events and conferences.
What's Working: Successful Chandler properties typically:
•Target business travelers with professional amenities
•Focus on areas near major employers or the airport
•Offer mid-range accommodations rather than luxury or budget
•Maintain consistent year-round occupancy
Investment Reality: Well-managed Chandler properties might generate $35,000-50,000 annually in gross revenue, with net returns of 12-20% for properties purchased at the right price.
Mesa: The Value Play with Complications
Mesa offers some of the most affordable entry points for short-term rental investment, but success requires careful location selection.
The Opportunity: Lower property prices mean better cash-on-cash returns if you can achieve decent occupancy. Mesa's proximity to spring training facilities, golf courses, and outdoor recreation creates seasonal demand.
The Challenge: Mesa is a large city with dramatically different neighborhoods. Some areas attract quality short-term rental guests, while others struggle with demand or attract problematic renters.
Location Strategy: Successful Mesa investors focus on:
•Areas near Sloan Park (Cubs spring training)
•Golf course communities in East Mesa
•Neighborhoods near outdoor recreation (Usery Mountain, Salt River)
•Properties that can accommodate groups visiting nearby attractions
The Numbers Game: Mesa properties might generate $25,000-45,000 annually, but the key is buying at prices that make these revenue levels profitable after all expenses.
The Hidden Costs That Kill Profitability
Let me share the expenses that many new short-term rental investors don't anticipate, because these can make or break your investment.
Management and Operations:
•Professional management: 15-25% of gross revenue
•Cleaning between guests: $100-200+ per turnover
•Maintenance and repairs: $200-500+ monthly
•Utilities (higher than long-term rentals): $150-400+ monthly
Marketing and Technology:
•Professional photography: $300-800 initially
•Listing platform fees: 3-5% of bookings
•Dynamic pricing software: $20-50+ monthly
•Guest communication and booking management
Regulatory and Insurance:
•Business licenses and permits: $200-500+ annually
•Short-term rental insurance: $1,500-3,000+ annually
•Additional liability coverage
•Tax preparation and compliance
Real Example: A property generating $40,000 annually might have $25,000+ in expenses, leaving $15,000 before mortgage payments, property taxes, and income taxes. On a $400,000 property, this might represent a 3-4% return—not the 15-20% many investors expect.
What Actually Works in 2025
Based on my experience with successful East Valley short-term rental investors, here are the strategies that still generate solid returns:
The Niche Strategy: Instead of competing in oversaturated markets, successful investors find underserved niches:
•Large group accommodations (8+ bedrooms)
•Pet-friendly properties in areas with limited options
•Accessible properties for guests with mobility needs
•Extended-stay properties for corporate relocations
The Experience Strategy: Properties that offer unique experiences command premium rates:
•Homes with resort-style backyards and pools
•Properties with game rooms, home theaters, or special amenities
•Locations near specific attractions (golf, hiking, sports venues)
•Themed properties that create Instagram-worthy experiences
The Professional Management Strategy: Treating the investment like a real business:
•Professional property management with proven track records
•Dynamic pricing that adjusts to market conditions
•Consistent 5-star guest experiences
•Strategic marketing across multiple platforms
The Financing Reality for Investment Properties
Let me address the financing challenges that many potential investors don't anticipate.
Down Payment Requirements: Investment properties typically require 20-25% down, and some lenders require even more for properties intended as short-term rentals.
Interest Rate Premiums: Investment property rates are typically 0.5-1% higher than owner-occupied rates, significantly impacting cash flow.
Debt-to-Income Considerations: Lenders are increasingly conservative about projected rental income, often requiring significant personal income to qualify.
Cash Reserve Requirements: Many lenders require 2-6 months of mortgage payments in reserves for investment properties.
The Exit Strategy Question
Here's something many investors don't consider: what's your exit strategy if short-term rental regulations change or profitability declines?
Long-Term Rental Conversion: Can the property generate positive cash flow as a traditional rental? In many East Valley markets, long-term rental rates don't support current purchase prices.
Owner-Occupancy Option: Is the property in a location where you'd want to live if the investment doesn't work out?
Resale Potential: Will the property appreciate enough to provide returns even if rental income disappoints?
Here's My Take
Short-term rentals can still be profitable investments in the East Valley, but the bar for success is much higher than it was a few years ago. The investors who succeed in 2025 are those who approach it as a serious business, not a passive income strategy.
The key insight: Don't buy a property hoping it will work as a short-term rental. Buy a property that makes financial sense even if short-term rental income disappoints, then optimize it for maximum rental performance.
What I always tell potential investors: If you can't afford to carry the property without rental income for 6-12 months, you're not financially ready for short-term rental investment. The market is too volatile and competitive for highly leveraged investments.
What You Should Do Next
If you're considering short-term rental investment in the East Valley, start with thorough market research and realistic financial projections. I can help you analyze specific neighborhoods, understand local regulations, and connect you with successful property managers who can provide realistic revenue projections.
Because here's the thing: real estate investment should build wealth, not create stress. Understanding the current market realities helps ensure you make decisions that align with your financial goals and risk tolerance.
Ready to explore East Valley investment opportunities with a realistic understanding of today's short-term rental market? Let's chat about what strategies might work for your investment goals and budget.
