How to Buy a Short Term Rental In Austin – Rules, and Regulations

It seems like everyone wants a piece of Austin. If you are wanting to learn how to buy a short-term rental in Austin you have come to the right place! Learn all about how to find a place, what rules you must follow (and where), and how to get up and running quickly.

Folks hear about our amazing city, come to visit for a long weekend, eventually move here and rent for a year or two, and then settle down and buy a house.

One way people stay here is in Short Term rentals. According to Hostway (a property management program), there are approximately 10,000 STRs in Austin.

That may seem like a lot but if you consider all the events and festivals we have going on I believe we still have the capacity for a lot more opportunities.

Who permits for Short Term Rentals?

First of all, short-term rentals are not governed by the state or even county. They are on a city-by-city basis. Some cities like Austin have ordinances in place to manage the number. Other nearby cities don’t have any STR restrictions (like Cedar Park or Dripping Springs).

Cities are free to make (or not) the requirements and terms for these properties.

A short-term rental is typically defined as less than 30-days. Sometimes it is as short as 1 night, but usually, it is 3-7 days.

Each city may have an application process or fees. They may want to collect a hotel tax.

In addition to looking at nearby cities for their regulations, you may want to look at areas outside of the city to purchase a property.

One common misconception is that a vacation home needs to be in a “prime” location.

You don’t need a house near 6th st or South Congress, or Rainey, to be successful. I know people with homes in Manor that are making lots of money with short-term rentals.

I’ve learned it just needs to be clean, cute, and affordable.

How to get an Austin short-term rental license

To get a Short term rental it needs to fit into one of three categories:

  • Owner Occupied Single Family Residence – Type 1
  • Non-owner Occupied Single Family Residence – Type 2
  • Apartment or other Multi-Family – Type 3

NOTE – Austin is not allowing any more Type 2 STR Permits as of May 2022, and the process is taking up to 2 months currently for the paperwork

For all others just visit the City webpage and follow the instructions once you own the property. If you want a breakdown of each part I have written up the different parts of the Austin STR application process.

Austin short-term rental license lookup

Are you wondering which houses in your neighborhood are Short Term Rentals?

The city of Austin has a web tool you can use to look up short-term rentals.

Visualization of some of Austin’s Short Term Rental Locations

Other STR rules to think about

The city Ordinances in Austin are NOT the only things to consider when looking to purchase an STR Investment House.

  • Is the House in an HOA?
  • Is the property a Condo or a Townhome?
  • How is the parking for the property? Will there be enough spots for all the guests?
  • Are there any any neighborhood amenities that will be available for the people staying there?

Zoning typically isn’t an issue with short term rentals, however, a good agent will check that and make sure you are free and clear while you investigate candidate properties.

Do the Numbers for the STR Work?

Finally – do the numbers work?

First, determine how much you want to invest – your down payment is a major factor, but also consider furnishing costs, marketing, management, and cleaning just to name a few.

Is this a long-term buy-and-hold proposition where you just want to break even every month?

Are you looking for Cash Flow, and if so what is your minimum amount?

I’ve written a complete article on STR financials you can access. I hope you find it helpful for How to Buy a Short Term Rental In Austin.

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