Not all investment properties are alike.  I’ve had a few investors inquire about buying homes for short-term rentals or STR’s as they are commonly referred. Keep in mind the devil lives in the details even if he’s just staying for a few days. I wrote recently about building and how restrictions can be stacked between the city, HOA and the deed itself. Short term rental rules are stacked too, but with a slightly different set of blocks. Here’s a little insight into how short-term rentals work in Central Texas and why it’s not safe to assume anything. 

Comparing Short-term rentals in Austin, TX to regulations and processes in other Central Texas cities can be like comparing condominiums to single-family houses

Central Texas includes many different cities. Geographically, the City of Austin and the greater Austin area are not the same and neither are the rules and restrictions when it comes to short-term rentals.

Short term rentals in Austin, TX

The City of Austin has an annual permit process. Unlike long-term investment properties where leases convey, short-term rental permits do not. New owners need to apply for new permits. The only exception I am aware of that doesn’t require an individual permit is if the property is a ‘condotel’. The property as a whole, like Natiivo Austin, is permitted by the city, so individual owners don’t have to.

Cross the border to Dripping Springs and the rules change. Owners don’t need a STR permit but are required to submit a quarterly hotel occupancy tax form and payment within the City Limits and the Extraterritorial Jurisdiction.

Looking in Wimberley? This particular hill country city requires a Conditional Use Permit (CUP) in addition to the required taxes. The permit stays with the property, no matter who owns it. It is considered an amendment to the zoning of that property.

In Lakeway, Texas the city has a website dedicated to short-term rentals that even includes a waiting list.

STRs have hotel occupancy taxes

All cities appear to have a city Hotel Occupancy Tax in addition to the state of Texas’s own Hotel Occupancy Tax (HOT).  An exception to the city tax may be Driftwood, Texas because it is currently unincorporated. 

Long-term advice when planning to buy a short-term rental

Sometimes rules change. Not every city I reached out to like Kyle, TX has a permit process or guidelines to look up, yet, but you can reach out to the city of Kyle and ask a question. Don’t ever assume you are grandfathered based on how the current seller is operating the short-term rental. My advice to investors is to go from a micro to a macro level when reviewing a property. Look at what the deed restrictions say, then turn to the HOA rules if there is a homeowners or property owners association. If all looks promising, turn to the city’s restrictions and state guidelines. If there is still confusion, hire an attorney specializing in real estate for a clearer understanding on potential hurdles to make sure your intended use can become a reality.