Default judgment and rental income

Yes.  I'm not familiar with the particular procedures used in Arizona, but I assume they are pretty much the same as the jurisdictions in which I practice primarily.  If you don't satisfy the judgment, the judgment creditor can (a) force you to answer questions about your assets and income (if you refuse you can be held in contempt of court and jailed); (b) garnish any regular income you receive (such as rental income) in the amount allowed by law (there is usually a limit on how much can be garnished from any one payment, but I don't know the limits in Arizona); and (c) force the sale of your assets (including the property you are renting out), using the proceeds to pay the judgment and any attendant fees (for the sheriff, receiver, etc.)  If your assets and/or income are out of state, the same remedies would apply, but it would take a little longer because the judgment creditor would have to get the judgment "domesticated" in the relevant state.