Tucson has long been known for its beautiful desert landscapes and unbeatable sunsets, but in recent years it has also become one of Arizona’s most promising real estate investment markets. For investors looking to diversify their portfolio with rental properties, multifamily homes, or short-term rentals, Tucson offers the perfect blend of affordability, strong rental demand, and steady appreciation. In this post, I'll walk you through the top reasons Tucson real estate investors are looking to Tucson in 2025.

1 | Strong Rental Demand Driven by Steady Population Growth

With a growing population fueled by the University of Arizona, healthcare and defense job sector expansion, and those migrating due to the high cost of living in other states and cities, Tucson’s rental demand continues to climb. Investors benefit from:

• Consistent occupancy rates across student housing, single-family rentals, and multifamily units.
• Steady demand in high-traffic neighborhoods such as Downtown Tucson and the University area.

2 | Affordable Entry Prices Compared to Phoenix

Unlike neighboring Phoenix, Tucson still offers relatively affordable real estate investment opportunities. The median home price in Tucson remains significantly lower than in Phoenix, giving investors more room for cash flow.

• Investors can find hundreds of single-family homes under $300,000.
• Multifamily and duplex properties present attractive cap rates for long-term investors.

3 | Attractive Cap Rates & ROI Potential

Okay, so what returns can I expect? In 2025, Tucson cap rates have averaged between 5.5% and 6.7%, depending on property type and location. While newer Class A buildings trade at the lower end, older and value-add opportunities can deliver higher yields. Compared to markets like Phoenix (where Class A deals can trade closer to 4–5%), Tucson remains attractive for investors seeking stronger returns without sacrificing market stability.

• Short-term rentals (Airbnb) near downtown and the Foothills bring in higher nightly rates.
• Long-term rentals provide steady monthly income with low vacancy rates.

Ready to run the numbers on an investment property? I offer a free Tucson Investment Property Calculator that provides insight into best/base/worst-case outcomes.

4 | Diverse Investment Opportunities

Whether you’re interested in fix-and-flip, buy-and-hold, or short-term rentals, Tucson has options for you.

• Single-family homes for steady appreciation.
• Duplexes and multifamily units for cash-flow investors.
• Vacation rentals near Sabino Canyon or Downtown Tucson for Airbnb strategies.

5 | Investor-Friendly Market & Growing Economy

Arizona is known for being tax-friendly and landlord-friendly, and Tucson is no exception. Add in a strong economy driven by the defense, education, and healthcare industries, and you’ve got a resilient investment market.

• Landlord-friendly laws make it easier to manage rental properties.
• Employers like Raytheon, multiple large hospitals such as Banner UMC, and the University of Arizona ensure a steady stream of renters.

Conclusion

For real estate investors looking at where to put their money in 2025, Tucson continues to stand out as a profitable, investor-friendly real estate market. Given its consistently strong rental demand, affordable entry points, and diverse range of investment opportunities, Tucson is a fantastic choice of place to build wealth through real estate.

Ready to explore Tucson investment properties?

Feel free to take a look at my process for helping Tucson real estate investors invest in and sell their properties or contact me directly for a personalized consultation and access to the best opportunities in the market.