Turning Keys into Capital: How Realtors Help Build Equity with Rentals and Ownership

STRs often get a bad rap for negatively affecting the economy, limiting housing supply, and being predominantly owned by large corporate investors. To combat this narrative, the Sedona Verde Valley Association of REALTORS commissioned a Short-Term Rental Impact Study for Yavapai County and the City of Sedona. The findings show that not only do STRs contribute positively to the broader economy, but they also provide a viable pathway for individual homeowners to build equity and long-term wealth. These results help paint a more accurate picture of how STRs support local communities and empower everyday property owners.

To put this into perspective, the STR industry doesn’t just allow homeowners to make financial gains, it is making a significant contribution to our local economy. In 2023 alone, STRs in Yavapai County and Sedona generated nearly $200 million in labor income and added $449 million to the region’s GDP. These numbers from the STR Impact Study demonstrate that STRs aren’t just a personal wealth-building tool for individual homeowners, they are also a vital part of the local economic engine that supports jobs, services and community development.

Whether it’s leasing out a guest room or listing your entire property when you are away, STRs can generate additional income that helps pay down your mortgage at a faster rate. Applying that extra cash directly to your principal balance can fast-track your equity growth.

STR income can also help offset the everyday costs of homeownership, expenses like property taxes, insurance and ongoing maintenance. By using rental revenue to cover these costs, homeowners can free up personal finances to reduce other debts, build savings, or further reinvest in the property.

Many homeowners do choose to use their supplemental income to reinvest in their properties, choosing upgrades that not only enhance guest experience but also boost long-term market value. Upgrades like renovated kitchens, updated bathrooms and refreshed landscaping don’t just attract more STR guests, they can significantly increase your property’s market value.

As a realtor, I often advise clients on which improvements offer the best return on investment, especially in competitive markets. Strategic upgrades make your home more appealing to both renters and future buyers, contributing to both immediate rental income and long-term equity growth.

For clients ready to expand their investment portfolio, purchasing a second home or an investment property specifically for STRs can be a powerful move. In high-demand markets, these properties can generate consistent revenue while also appreciating in value over time. As a realtor, I often help clients identify neighborhoods with strong rental potential, evaluate projected income and guide them through financing and regulatory considerations. Local knowledge makes a big difference when you’re deciding where to invest.

The clients looking for investment properties for STRs aren’t always major private investors or corporations as people often assume. According to the STR Impact Study data, 60% of STRs in Sedona, Prescott and Cottonwood are owned by Arizona residents, including 36% from Yavapai or Coconino counties and 24% from elsewhere in the state. Only 36% are owned out of state, and just 0.5% internationally, meaning the economic benefits from STRs largely stay within Arizona.

Additionally, 92% of STR owners in these areas operate just one unit, demonstrating that this sector is largely composed of individual homeowners, not corporate investors, making independent decisions about how to use their property. Realtors value private property rights and know the importance of advocating for the rights of homeowners to use their properties as they see fit.

Of course, before jumping into the STR market, it’s essential to do your homework. Many cities and homeowners’ associations have restrictions or permitting requirements around STRs. That’s where a knowledgeable realtor becomes especially valuable. We can help you navigate local regulations, ensure compliance and avoid costly surprises.

Additionally, there are tax implications to consider with rental income. I always recommend clients speak with a qualified tax professional to understand how STRs may impact their financial situation. And while managing a rental does require some time and effort, from guest communication to cleaning and maintenance, partnering with a realtor who offers property management services can make the process much smoother and allow homeowners to build equity without doing all the work.

At the end of the day, homeownership remains one of the most reliable paths to financial stability. When paired with a thoughtful STR strategy, it becomes an even more dynamic tool for building equity and creating long-term wealth. Whether you are a first-time buyer exploring your options or a seasoned investor ready for your next property, working with an experienced realtor ensures you have the insight and support needed to make the most of your investment, turning a purchase into profit. QCBN

By Kayla Stazenski

Kayla Stazenski is a local REALTOR at Better Homes and Gardens Real Estate BloomTree Realty. She is the 2025 president of the Prescott Area Association of REALTORS (PAAR). For additional information or to contact PAAR, visit www.paar.org.