Sedona gets the attention, but a growing share of the 1031 exchanges I work on close twenty minutes down the road in Cottonwood. If you are exchanging out of a higher priced market and want cash flowing rental property instead of one expensive trophy asset, the Verde Valley deserves a serious look.
Earlier this year I closed exactly this kind of deal: a 1031 exchange into a long term rental at 1865 W Wagon Wheel Road in Cottonwood for $360,000, for an out of state investor referred to me by a repeat referral agent in Washington State. No drama, clean timeline, closed inside the exchange window. That transaction is a good picture of what this page is about.
If you want the full breakdown of how a 1031 works and who does what, read my Sedona 1031 exchange guide. This page covers what is different about exchanging into Cottonwood and the surrounding Verde Valley towns.
Why investors 1031 into Cottonwood
The price point changes the whole strategy. As of mid 2026, the median single family sale price in Cottonwood sits in the high $300Ks, roughly a third of Sedona’s $1.2M median. That means the proceeds from one relinquished property in California or Washington can become two or three rental properties here instead of one. The IRS three property rule lets you identify up to three replacement properties, and I have clients using it to spread one sale across multiple Cottonwood rentals. More doors, diversified tenants, and no single vacancy wipes out your cash flow.
Long term rental demand is structural. Cottonwood is the workforce hub of the Verde Valley. The people who staff Sedona’s hotels, restaurants, and galleries largely cannot afford to live in Sedona, and many of them rent in Cottonwood. Add Verde Valley Medical Center, the schools, and the wine industry centered on Old Town, and you have steady tenant demand that does not depend on tourism.
It is a buyer’s market right now. Inventory in Cottonwood expanded through the first half of 2026 and homes are taking 60 to 75 days to sell, with meaningful spread between list and sale prices. For a 1031 buyer on a 45 day identification clock, that is a gift: more candidates to choose from, sellers willing to negotiate, and less risk of losing your identified property to a competing offer.
Simpler operations than a Sedona STR. A long term rental in Cottonwood has no nightly turnovers, no licensing process, and no hospitality operation to run. For investors who want the 1031 deferral and dependable income without building a short term rental business, this is the cleaner path. If you do want the STR strategy, that conversation usually points back to Sedona and the tax stack that comes with it.
What your money buys in the Verde Valley
Rough shape of the market as of mid 2026:
$250K to $350K. Smaller single family homes, older stock, and manufactured homes on owned land. This is the entry point for long term rentals, and it is where the numbers often pencil best on a pure rent to price basis.
$350K to $450K. The heart of the Cottonwood market. Three bedroom single family homes in established neighborhoods, the bread and butter long term rental. The Wagon Wheel Road deal closed in this range.
$450K to $600K. Newer construction, larger homes, and properties in Clarkdale or the Verde Village area with views or acreage. These attract longer term, higher quality tenants and stronger appreciation profiles.
$600K and up. Cornville acreage properties, Page Springs area homes near the creek and wineries, and the top end of Clarkdale. Some of these work as STRs or hybrid arrangements depending on county rules and location.
The other Verde Valley towns
Cornville and Page Springs. Rural residential, acreage, horse property, and homes along Oak Creek near the wineries. Attracts tenants and buyers who want land.
Clarkdale. A small historic smelter town that has quietly become one of the more desirable addresses in the valley. Newer subdivisions, views of the Verde River valley, and a short drive to everything.
Camp Verde. The most affordable entry point in the valley, right on I-17, which matters for tenants commuting in either direction. Larger lots and agricultural property are common.
Jerome. A historic mining town on the hill with a tiny, quirky housing stock. Occasionally a 1031 fit for an STR play, but inventory is scarce and the properties are old. Worth a conversation before you commit an identification slot to it.
How this works with me
The mechanics are the same as any exchange I run on the Sedona side: your Qualified Intermediary holds the funds, your CPA confirms the strategy, and I handle the Arizona property side. The full role breakdown, including the accommodators I work with and how I can introduce you to one, is on the Sedona 1031 page.
What matters for Cottonwood specifically: I build your candidate list before your relinquished property closes so the 45 day clock starts with a short list already in hand, I flag the properties with well and septic issues or park model complications that can blow a 180 day timeline, and I run the closing so the QI disbursement, title work, and deadline all line up. If we are spreading your proceeds across multiple properties, I sequence the closings so one delayed inspection does not put the whole exchange at risk.
I live in Sedona and work the entire Verde Valley. Same MLS, same title companies, same twenty minute drive I have been making my whole life.
Are you a Realtor?
The Wagon Wheel Road exchange came from a referral agent in Washington State who has sent me business more than once. If you have a client exchanging into Cottonwood, the Verde Valley, or Sedona, I handle the Arizona side and you stay in the loop from identification through closing. We sign a standard referral agreement between our brokerages before I ever speak with your client, and your referral fee is paid at closing through Realty ONE Group Mountain Desert. Call or text 928-300-8277, or email will@owninsedona.com with “Agent referral” in the subject line.
Start with a 15 minute call
If you are considering a 1031 into the Verde Valley, the useful first step is a short conversation about your relinquished property, your timeline, and whether Cottonwood’s numbers fit what you are trying to do. I will tell you honestly if Sedona, Cottonwood, or neither is the right fit. No charge, no obligation.
Book a 15-Minute Call With Will
Or call me on my cell: 928-300-8277
Important disclosure. William Hamburg is an Associate Broker, not a CPA, tax attorney, or Qualified Intermediary. Nothing on this page is tax, legal, or financial advice. 1031 exchanges are governed by IRC Section 1031 and the regulations and revenue procedures thereunder. Specific transaction outcomes depend on your tax situation, the relinquished and replacement properties, the structure of your exchange, the qualifications of your QI, and many other factors. Market figures are approximate as of mid 2026 and change monthly. Consult a qualified CPA or tax attorney before executing any 1031 exchange.