Sedona, Arizona, is not only a breathtaking destination for nature enthusiasts but also a hotbed for lucrative short-term rental investments. With its iconic red rock views, upscale amenities, and thriving tourism industry, the city offers exceptional opportunities for investors seeking high annual revenues from vacation properties. But which types of homes in Sedona yield the highest returns? Let’s explore the key attributes of these properties and why they dominate the short-term rental market.
Ideal Property Features for Maximum ROI
1. Price Range: $1,300,000 to $2,800,000
Properties within this range hit the sweet spot for balancing affordability (for investors) and premium pricing (for guests). Homes in this bracket offer the high-end features and stunning views that Sedona’s discerning visitors expect while maintaining a manageable upfront cost compared to ultra-luxury estates. There are homes available between $800,000 – $1.3M, but these homes tend to yield lower ROI.
2. Red Rock Views
Red Rocks Sunset in Sedona Arizona
Sedona’s main attraction is its dramatic red rock formations, and properties with views of landmarks like Cathedral Rock, Bell Rock, Courthouse Butte or other red rocks command higher nightly rates, and generally yield higher occupancy rates.
3. Amenities That Stand Out
In Sedona’s competitive short-term rental market, homes with luxury features consistently outperform those without. Consider the following must-haves:
- Pool and Spa: With Sedona’s year-round sunshine, a private pool and spa provide guests with a resort-like experience. Heated pools, in particular, extend usability into cooler months, increasing rental potential.
- Steam Saunas: Perfect for wellness-focused travelers, a steam sauna adds a spa-like touch that appeals to Sedona’s health-conscious audience.
- Game Rooms and Workout Areas: Garage conversions into game rooms (with billiards, air hockey, or arcade games) or workout spaces equipped with gym equipment create family-friendly and fitness-focused retreats. These amenities can set your property apart from others in the same price range.
NOTE: It’s also worth stating that amenities are always important, but become even more critical when properties are not as close to trails, stores, restaurants, etc.
4. Spacious Layouts: 3+ Bedrooms, 2+ Bathrooms
Properties with at least three bedrooms and two bathrooms attract larger groups, such as families or friends traveling together. These groups often prioritize space and comfort over budget, making larger homes highly profitable. Additionally, homes with open-concept living areas, chef’s kitchens, and outdoor entertaining spaces tend to receive stellar reviews, driving repeat bookings. Generally, homes with 5+ bedrooms perform the best, but 3-4 bedrooms can be “cash cows”, as well.
Neighborhoods to Target
1. West Sedona:
- Why It’s Hot: This area offers proximity to grocery stores, restaurants, and hiking trails, making it convenient for guests. Homes here often have stunning views of Thunder Mountain and Coffee Pot Rock.
- Example Properties: Single-family homes with spacious yards, pools, and modern interiors.
2. Uptown Sedona:
- Why It’s Hot: Close to tourist attractions, shopping, and dining, Uptown Sedona is a prime location for short-term rentals. Properties with balconies overlooking Oak Creek Canyon are especially popular. While STR’s do not need to be in Uptown Sedona, it’s a great spot, as long as they hit target for amenities.
- Example Properties: Luxury homes with contemporary designs, large windows showcasing red rock views, and multi-level outdoor decks. Properties with pools + red rock views dominate the rental market in this area.
3. Village of Oak Creek:
- Why It’s Hot: Known for its tranquil atmosphere and proximity to Bell Rock and Courthouse Butte, this area appeals to outdoor enthusiasts and families seeking a peaceful escape. It’s slower paced than most of Sedona.
- Example Properties: Mid-century modern and southwestern-style homes with ample outdoor space, pools, and fire pits.
Revenue Potential
Homes with the features and locations described above can generate substantial annual revenue, often exceeding $200,000-$300,000 depending on their amenities, price and location. Key factors influencing profitability include:
- Nightly Rates: Luxury properties in Sedona typically charge $700 to $1,800 per night.
- Occupancy Rates: Sedona’s year-round appeal means occupancy rates of 70%-90% are achievable for well-maintained homes with desirable features.
- Seasonal Pricing: Demand surges during festivals, holidays, and spring break, allowing you to implement dynamic pricing for maximum returns. Most clients agree that dynamic pricing typically increases revenue by 20% or more.
Tips for Maximizing Your Investment
- Professional Management: Partner with a property management company experienced in Sedona’s market. They can handle bookings, guest communication, and maintenance while optimizing your pricing strategy. Self managing can be extremely successful, as well. Just know it’s not a hobby, it’s a business- so bring your A game if your goal is maximum cash flow. I can help with a strong networking short list of talented and reliable worker bees.
- High-Quality Photos and Marketing: Invest in top shelf professional photography to highlight your property’s unique features and market it on platforms like Airbnb, VRBO, and Booking.com. If you only place the listing on Airbnb, for example, you will take a hit on occupancy rate- make sure you spread it around to multiple platforms and sync them up.
- Personal Touches: Small details, like luxury linens, local artwork, and welcome baskets, can lead to glowing reviews, which are critical for staying competitive. And obviously quick and thoughtful communication with guests goes a long way, as well.
Conclusion
Investing in homes in Sedona between $1,300,000 and $2,800,000 can be a profitable venture if you focus on properties with red rock views, desirable amenities, and family-friendly layouts. By targeting desirable neighborhoods and incorporating features like pools, spas, and game rooms, you’ll attract high-paying guests and maximize your annual revenue, as well as yield better reviews.
Sedona’s combination of natural beauty, year-round tourism, and limited housing supply ensures that demand for high-quality short-term rentals remains strong. For investors ready to dive into this market, the opportunities are as stunning as the views Sedona has to offer.
