Flagstaff Short-Term Rental Rules in 2026: What Owners and Investors Should Know

What counts as a short-term rental in Flagstaff

The City of Flagstaff defines a short-term rental, or STR, as the rental of part or all of a legally permitted dwelling unit for fewer than 30 consecutive days. That definition covers a wide range of property types: single-family homes, buildings with up to four units, condos and townhouses, individual rooms, guest houses, casitas, and mother-in-law quarters.

Since November 1, 2023, every STR in Flagstaff has been required to hold an annual Short-Term Rental License under Chapter 3-12 of the City Code. The requirement applies to each unit separately, so a property with multiple rentable units needs a license for each one. Operating a short-term rental without a license is unlawful.

How the annual license works

One license is issued per STR unit, valid for one year, renewed annually, and not transferable between owners. That last point matters for buyers: when you purchase a property that is currently operating as a short-term rental, you do not inherit its license. The new owner has to apply for their own.

To get a license, an applicant must provide an Arizona Transaction Privilege Tax (TPT) license number, designate an emergency point of contact, and complete the city's neighbor notification steps. The city reviews completed applications within seven business days.

What changed on July 1, 2026

Flagstaff City Council adopted updates to the short-term rental ordinance on May 19, 2026, and the changes took effect July 1, 2026. Four items matter most to owners and investors:

• The annual license fee rose to the state maximum of $250, up from $185.
• Owners must carry a minimum of $500,000 in liability insurance before offering the property as an STR.
• The owner or a designated representative must check each booking guest against the National Sex Offender Public Website no later than 24 hours before the stay.
• Units must have a fire extinguisher plus smoke and carbon monoxide detectors, and the new rules require specific postings inside the rental.

These requirements raise both the fixed and the ongoing cost of running a short-term rental, so they are worth building into any underwriting. The insurance minimum and the per-stay background check are recurring obligations, not one-time setup costs.

How many short-term rentals operate in Flagstaff

Flagstaff Business News reported in 2026 that the city has roughly 1,055 licensed short-term rentals, up from 573 registered in 2021. The city also launched a public map of licensed STRs in November 2025, which showed about 990 licensed properties at launch and gives residents and buyers a way to see what is licensed and where.

In context, city reporting has long estimated short-term rentals at roughly three percent of Flagstaff's housing stock. An Arizona Daily Sun report in 2023 put the share at 3.3 percent, based on about 1,045 STRs among roughly 31,000 housing units. The percentage is small, but in a market with limited inventory every unit used as a short-term rental is one not available as a long-term home, which is why the rules stay a live topic at City Hall.

Owner-occupancy and the accessory dwelling unit rule

One of the most common questions is whether an owner has to live on the property to run a short-term rental. In Flagstaff there is no general owner-occupancy requirement; Arizona state law generally preempts cities from imposing occupancy rules on STRs.

There is one important exception. An accessory dwelling unit, or ADU, whose certificate of occupancy was issued on or after September 14, 2024, can only be licensed as a short-term rental if the owner resides on the property as a primary residence. This mirrors Arizona HB 2928, which took effect in 2025. ADUs with earlier certificates of occupancy are grandfathered under the previous rules.

What this means for buyers and investors

For buyers, the non-transferable license is the most practical detail to plan around. If you are buying a property that currently operates as a short-term rental, confirm whether the current owner holds a valid license, and plan to apply for your own after closing. A gap between the ownership change and your new license can mean downtime, or an operating period that is not in compliance.

For investors, the 2026 updates change the financial picture in three ways. First, the fee and the insurance requirement add a fixed cost floor to every STR. Second, the per-stay background check adds a recurring administrative step that matters whether you manage the property yourself or through a manager. Third, the continuing tightening of the rules makes it worth comparing a short-term strategy against a traditional lease before you commit capital.

Flagstaff's tourism-driven market can support short-term rental income, but the strongest approach treats it as a business: underwrite licensing, insurance, cleaning, and management costs, understand the seasonal demand curve, and keep the property in full compliance from day one. For a deeper look at evaluating income property, see the investment property analyzer, the investing in Northern Arizona overview, and current multifamily listings on this site.

The bottom line

Flagstaff's short-term rental rules are clearer and stricter than they were a year ago. Every STR needs a city license, the annual fee is $250, and as of July 1, 2026, owners must carry $500,000 in liability insurance, screen guests against the National Sex Offender Public Website, and meet specific fire-safety requirements. With roughly 1,055 licensed properties, short-term rentals are a meaningful but manageable slice of Flagstaff's housing stock.

If you are weighing a short-term rental purchase, or deciding between an STR and a long-term lease, it helps to run the numbers with someone who knows the Flagstaff market. Mike Konefal can help you evaluate a property, its zoning, and its realistic income picture. Contact Mike for a conversation about your situation.

Sources

• City of Flagstaff, Short-Term Rental Ordinance Updates (flagstaff.az.gov)
• City of Flagstaff, Short-Term Rentals overview (flagstaff.az.gov)
• City of Flagstaff, Short-Term Rental Frequently Asked Questions (flagstaff.az.gov)
• City of Flagstaff, Short-Term Rentals TPT Information Sheet (updated July 2026) (flagstaff.az.gov)
• Flagstaff City Code, Chapter 3-12, Short-Term Rentals (codepublishing.com)
• "Flagstaff Raises Fee, Rules for Short-Term Rentals," Flagstaff Business News (2026) (flagstaffbusinessnews.com)
• "Flagstaff debuts map of short-term rentals," Arizona Daily Sun (November 2025) (azdailysun.com)
• Arizona Legislature, HB 2928 Senate Fact Sheet (ADU owner-occupancy, 2025) (azleg.gov)

License fees, insurance requirements, and ordinance details are drawn from the City of Flagstaff and the sources above as published in 2026 and can change. This article is informational and is not legal advice; verify current requirements with the City of Flagstaff before relying on them.