These cities are most profitable for Airbnb hosts. Why are so many Arizona cities on the list?

A new study found that Arizona cities are among the most profitable cities to host an Airbnb, with seven out of the top ten cities located in the Valley of the Sun.

The research, which was conducted by personal finance experts Wealth of Geeks, calculated how much homeowners could earn by renting out their properties. To determine the rankings, the average cost of an Airbnb in each area was compared with the average weekly wage in that same area using data from the U.S. Bureau of Labor Statistics.

Here are the most profitable cities in the country to host an Airbnb.

Most profitable places to host Airbnbs in the United States

According to Wealth of Geeks, these are the most profitable United States cities to host a short-term rental Airbnb:

Arizona cities dominate rankings

The average cost of an Airbnb in Scottsdale was $449 per night, which is 55.9% of the average weekly salary in the city, the study said. Scottsdale is the highest on the list despite also having one of the highest average weekly incomes of any location at $804. The city is home to one of the most popular golf tournaments in the country, the Phoenix Waste Management Open, as well as being home to plenty of beautiful golf courses other amenities.

Tempe was tied for second with Charlestown, South Carolina, according to the study. The average cost of a single night stay at a Tempe Airbnb was $402 a night, which adds up to 50% of the city's average weekly wage. Tempe is home to the main Arizona State campus, which means its downtown area is known for being reliably busy during the school year, especially during orientation season when parents and students flood the city.

Phoenix was third with an average cost per night of $385, equaling 47.9% of the weekly $804 average wage. The capital of Arizona boasts many tourist attractions of its own. Sky Harbor Airport consistently records record-breaking numbers, with Phoenix being one of the most popular cities to move to in the country and with huge events like the Super Bowl being hosted there. In 2022 alone, Phoenix had 19.5 million visitors.

Glendale was fifth on the list, costing $344 on average per night, equating to 42.8% of the state’s average weekly salary. The city is home to the Arizona Cardinals and is the largest city in the West Valley.

Gilbert followed at sixth, with a night’s stay at an Airbnb costing $329 on average, equating to 40.9% of residents' average income per week. Neighboring city Chandler was next at seventh, with the cost of an Airbnb just $7 less than Gilbert, which means it adds up to 40% of the $804 weekly wage.

What are Arizona's rules on short-term rentals?

Unlike ridesharing or food delivery apps, getting started making money on Airbnb can be a bit more of a process.

First of all, you need to meet Maricopa County standards. To operate an Airbnb in Maricopa County, you need to:

• Obtain a city permit.

• Obtain a transaction privilege license from the Arizona Department of Revenue to pay sales taxes.

• Register with the Maricopa County Assessor's Office.

Now things get tricky when accounting for individual city rules in Arizona. Since a 2016 law passed preventing local governments from regulating short-term rentals, the number of rentals and the issues revolving around them have skyrocketed in the Valley.

Reports of disrupting "party houses" that residents claim lower their quality of life began to file in. Once quiet and peaceful communities were now the exact opposite, claimed residents and local officials. In a couple of instances, house parties at short-term rentals even ended in gunfire.

In response to a call for action from the community, many Valley cities, under regulatory power given to them in a new state law, implemented a series of new rules and regulations for short-term rental hosts in 2022 and 2023.

Major regulatory components of the rules are mostly consistent for at least six Valley cities. Tempe, Scottsdale, Mesa, Paradise Valley, Goodyear and Peoria.

• Rental owners must get licensed with their city and pay a fee of up to $250. This will allow local governments to effectively monitor and map the properties for the first time since 2016.

• Permits can be revoked if a court finds three separate violations occurred within 12 months or if one major violation ― like allowing an event-style party ― takes place. This gives local rules teeth that earlier state laws didn't have.

• Background checks are required for the guests who book the stay to ensure they have not been convicted of a serious crime, including sex offenses. Sex offenders also can't operate a rental property.

• Property owners must notify nearby neighbors that they are running a short-term rental and provide a contact number for someone who can respond to resident complaints 24/7.

• A sales tax license and proof of liability insurance are required for local permitting.

Phoenix reformed its rules on short-term rentals in September 2023. The rules are mostly consistent with other Valley cities but its' important to keep an eye out if you're a short-term rental operator. Here is a list of the Phoenix rules:

• Short-term rental operations must apply for and receive a permit and license to operate ($250 fee). The city must approve or deny the applications within seven days.

• Short-term rental owners must display their permits within 10 feet of the primary entrance of the rental.

• Short-term rental platforms must ensure properties are properly permitted before they can be listed on the platform. Failure to comply could result in a daily $2,500 fine for platforms like Airbnb or VRBO.

• Short-term rental owners must undergo a criminal background check to ensure they are not convicted felons or sex offenders.

• Short-term rental owners must conduct sex offender checks on renters.

• Short-term rental owners must send notices to neighboring properties, homeowners associations and neighborhood associations within 600 feet of their intent to operate.

• Short-term rental owners can appeal city rejections, nonrenewals or suspensions of licenses.

• Short-term rental owners must carry $500,000 liability insurance.

This article originally appeared on Arizona Republic: Arizona cities top list of most profitable places to host Airbnbs