Arizona Rental Portfolio Guide
What you need to know before building or growing a rental portfolio in Arizona — property tax burden, state income tax, security-deposit rule, source-of-income law, and the metros that actually cash-flow after accounting for local taxes.
Tax burden on Arizona rentals
Property tax
0.63%
effective rate on median home value
At 0.63% effective, the property tax burden sits in the lower half nationally (rank 12 of 51). Modest annual carrying cost keeps cash flow projections realistic on median-priced homes.
State income tax
2.50%
top marginal rate
A top marginal rate of 2.50% is low nationally. Rental income taxed at this level leaves more of each dollar of cash flow after federal tax, and 1031-deferred gains eventually pay this rate on recapture.
Security deposit rule
State law caps security deposits at 1.5 months' rent (with the qualifier noted below). Charging above the cap exposes the landlord to statutory damages in most states, so build lease templates that respect this ceiling from day one.
Note: unfurnished; furnished varies by lease
Deposit rules change; verify current statute before drafting a lease.
Best cash-flow markets in Arizona
Modeled monthly cash flow on a median-priced single-family purchase at 20% down, 30-year fixed, using Arizona’s 0.63% effective property tax rate plus 25% of rent for insurance, maintenance, vacancy and management.
| Market | Median price | Median rent | Annual property tax | CF / month |
|---|---|---|---|---|
| Nogales, AZ | $279,715 | $1,561 | $1,762 | $-442 |
| Safford, AZ | $306,582 | $1,754 | $1,931 | $-452 |
| Yuma, AZ | $281,359 | $1,464 | $1,773 | $-525 |
| Sierra Vista, AZ | $264,784 | $1,221 | $1,668 | $-611 |
| Payson, AZ | $389,536 | $1,904 | $2,454 | $-818 |
| Lake Havasu City, AZ | $354,412 | $1,563 | $2,233 | $-871 |
State median across the metros: $348,996 home, $1,653 rent, $-844/mo modeled cash flow.
Track your Arizona rental portfolio
The Pro Portfolio Tracker rolls up every property in your portfolio, auto-revalues them monthly against local price data, and flags DSCR risk and equity milestones. Each Arizona property carries the state-specific tax burden shown above through to the cash flow calculation.
Property tax rate: Tax Foundation. Security deposit rule: state statute. Verify current law before making decisions — statutes change and this page is a planning reference, not legal or tax advice.