The Arizona real estate market is booming in 2018 and everyone wants to get a piece. The question is, however, where to invest in real estate in Arizona? The Scottsdale real estate market or the Phoenix real estate market?
Making money in real estate depends on a couple of different factors. One of the biggest factors is location. We’ve spoken about the impact of location on the performance of an investment property before on this blog. That’s because it really does affect everything else in real estate. The real estate market conditions, trends, and forecasts can all point you in the direction of a booming real estate market. There are many factors driving the Arizona real estate investment market, no question. However, even when you’re investing in a hot real estate market such as Arizona, choosing between all the spots available in one region could be overwhelming. That’s why we’re here to provide some direction. So what’s better- Scottsdale real estate or Phoenix real estate? Let’s get into the data.
Related: The Best Real Estate Investing Tips for Choosing a Top Location
Scottsdale Real Estate Market vs. Phoenix Real Estate Market – The Data
Where can you find a higher return on investment? Where will your rental properties have higher occupancy rates? Should you follow an Airbnb rental strategy or stick to traditional? All these questions and more can be quickly answered with the data provided by Mashvisor’s investment property calculator. Our calculator has collected data on Scottsdale real estate and Phoenix real estate from reliable sources like MLS and Airbnb. Based on this data, we are now able to provide you with accurate information. We’ll first list the average numbers of the return on investment metrics for each city and then discuss.
Scottsdale Real Estate Market 2018- City-Level Data
- Median Property Price: $871,027
- Monthly Airbnb Rental Income: $1,583
- Monthly Traditional Rental Income: $3,369
- Airbnb Cap Rate: 1.20%
- Traditional Cap Rate: 2.34%
- Airbnb Cash on Cash Return: 1.20%
- Traditional Cash on Cash Return: 2.34%
Related: Is Buying a Scottsdale Investment Property a Smart Choice?
Phoenix Real Estate Market 2018- City-Level Data
- Median Property Price: $432,731
- Monthly Airbnb Rental Income: $872
- Monthly Traditional Rental Income: $1,391
- Airbnb Cap Rate: 0.48%
- Traditional Cap Rate: 0.82%
- Airbnb Cash on Cash Return: 0.48%
- Traditional Cash on Cash Return: 0.82%
Related: Is Phoenix Real Estate Market The Place to Invest at the Beginning of 2018?
Scottsdale Real Estate or Phoenix Real Estate?
#1. Median Property Price
Right off the bat, you can clearly see the difference in property price of Scottsdale investment property and Phoenix investment property. The Phoenix real estate market holds more affordable investment properties with a median property price of $432,731. This number makes sense seeing that the Phoenix real estate market is currently a buyer’s market. However, just because Scottsdale real estate comes out to a median property price of $871,027, that doesn’t mean you shouldn’t invest. Quite the contrary actually. The Scottsdale real estate market is currently also a buyer’s market. Higher prices mean higher value, and in real estate investing market value is very important whether you’re in a buyer’s market or seller’s market.
An important thing to note is that these numbers are averaged numbers based on the data collected from investment properties in each city. This means that you are bound to find properties listed at higher and lower prices in each city. But to give you a final verdict when it comes to property prices, if you’re searching for affordable investment properties, you should focus on Phoenix real estate, and if market value is what you’re after, start with Scottsdale real estate.
#2. Monthly Rental Income
Both Phoenix real estate and Scottsdale real estate seem to be experiencing higher rental income for traditional rentals rather than Airbnb rentals. Don’t get us wrong, Airbnb Scottsdale and Airbnb Phoenix could definitely pull in high numbers, but based on average rates, traditional seems to be the safe bet.
Phoenix real estate has been getting a lot of attention lately, and all for good reason, but Scottsdale seems to be gaining more momentum. Scottsdale investment property is generating a higher average monthly rental income for both traditional rentals and Airbnb rentals. I think it’s safe to say that Scottsdale real estate wins when it comes to rental income.
#3. Cap Rate & Cash on Cash Return
We’ve already covered the fact that based on numbers, traditional rental properties seem to perform better in both cities. The average cap rate and cash on cash return for both Scottsdale real estate and Phoenix real estate back that up as well. In real estate investing, you typically aim for a higher cap rate and cash on cash return. Scottsdale investment property seems to be taking the win when it comes to these metrics as well. Low cap rates signify low risk whereas high cap rates signify higher levels of risk (in theory). In real estate investing, you always need to be prepared to face some level of risk. The higher the risk, the higher the expected returns. If you want a high return on investment, invest in Scottsdale real estate. If you want good returns with less associated risk, invest in Phoenix real estate.
Related: Low Risk Investments: How to Lower the Risk of Your Real Estate Investment
Final Word- Scottsdale Real Estate or Phoenix Real Estate?
It’s always difficult trying to find a cookie-cutter answer when it comes to real estate markets. If we had to choose based on first sight, Scottsdale real estate is the clear winner. However, both cities have the potential for great real estate investments. We said how the mentioned numbers are average numbers based on the collected data from each city. If you actually search for investment properties in the Scottsdale real estate market and the Phoenix real estate market, you will definitely find investment properties with different numbers. That’s how it is; every investment property differs from the next. Just because Scottsdale scores higher on the average rental income, doesn’t mean all properties in Phoenix will generate lower levels of rental income. To show you how true this is, we’re going to list the specifics of investment properties actually listed for sale right now in each city. These properties were found using Mashvisor’s Property Finder Tool.
Scottsdale, AZ
- Neighborhood: North Scottsdale
- Property Type: Single Family Home
- Listed Property Price: $390,000
- $1,704 Sq/Ft
- $229 per Sq/Ft
- 4 Beds and 3 Baths
- Traditional Cap Rate: 5.65%
- Traditional Occupancy Rate: 94%
- Airbnb Cap Rate: 3.32%
- Short Description: Remodeled two-story home with a beautiful mountain view. The backyard contains both a pool and a spa. This light, bright, and cheery home is close to shopping, schools, and restaurants.
For more details on this property and others in the Scottsdale Real Estate Market, click here.
Phoenix, AZ
- Neighborhood: Camelback East
- Property Type: Single Family Home
- Listed Property Price: $235,900
- 1,458 Sq/Ft
- $162 per Sq/Ft
- 4 Beds and 2 Baths
- Traditional Cap Rate: 5.85%
- Traditional Occupancy Rate: 94%
- Airbnb Cap Rate: 11.03%
- Airbnb Occupancy Rate: 53%
- Short Description: A Red Brick beauty. This home features fresh neutral paint throughout, larger kitchen with oak cabinets, ceramic tile in all the right places, renovated bathroom and shower, carport spaces, RV gate and lots of storage. The super spacious backyard is comprised of covered patio areas, storage shed/workshop.
For more details on this property and others in the Phoenix Real Estate Market, click here.
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