 Last week, the city of Austin released a series of working drafts to change the current rules surrounding short term rentals in the city. This comprehensive update to the way the city will license and regulate STRS moving forward has been in the works for over a year. It all started, when a series of court cases made the current short term rental ordinance no longer viable. The court cases established a few principles that will have to be integrated into whatever version of the proposed changes eventually gets passed.
In 2019, the Zatari vs. City of Austin case established that occupancy limits could not be created for STRs specifically. The city can regulate occupancy for single-family homes but that is determined by the property maintenance code. Thus, any future amendment addressing short-term rental use in the city code will be without respect to occupancy limits. In 2023, the Anding vs. City of Austin case made it to the federal court, where the judge ruled the city’s limiting of permits to only owner-occupants unconstitutional. This case forced the City of Austin to begin issuing STR licenses regardless of whether that home was a primary residence or an investment property. In the future, any Austin STR rules must not be based on the primary-residence requirement. The City’s overhaul plan involves changing the Land Development Code to include STR use as an accessory use, and adding Short Term Rentals to the Business Regulations section of the city code. I have reviewed the working drafts, and attended the first two public-input sessions. In my opinion, there are various oversights with the drafted new licensing requirements, but the proposed rules are actually quite lenient. These code changes are only proposed at this time, but the earliest time these changes could go into effect would be 2/27/23. Anyone who has applied for or been granted a permit before this date would be grandfathered in and allowed to continue to operate indefinitely so long as they are a “good actor” and renew the permit timely. As has been the case previously, permits will be non-transferable when real estate is sold. The working draft specifies the following:
The other requirements are fairly typical and lenient in my opinion. For example, STR owners must complete a self-administered life-safety test and provide a $1,000,000 liability policy. The City is currently gathering public-input on these revisions. Now, is your time to ask questions, make comments, and shape the way this policy forms. You can Sign Up to Attend One of These Information Sessions
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 If you’re considering selling your airbnb investment property, there are quite a few things you should consider. Listing your Austin area vacation rental for sale is far more complex than listing your personal home for sale, and is entirely different than listing a long term rental for sale too. You’re going to need to think about your market seasonality, existing bookings, furnishings and much more. Here are five things to consider before selling your Austin area vacation rental investment property.
1. Timing the Sale The most popular days for buyers to tour properties for sale and the most frequently occupied days for an airbnb both fall on the weekends! Naturally, this creates a bit of a predicament. If you want to sell your active short term rental you’ll want to ensure prospective buyers can actually get into the home to see it! As you can imagine, most airbnb guests would not welcome this inconvenience. Thus, you should likely block off your calendar for a few weeks following the date you list the vacation rental for sale. I can already hear your anxiety, “Block the calendar!”, she says, “We can’t do that, we will lose bookings and revenue!” Yes, you may. However, if your calendar is fully booked and you list your home for sale, you will sacrifice revenue on the sale. See, the thing is, when your home just sits on the market, buyers start to worry. They don’t consider the fact that the only time for a prospective buyer to see your home was during turnover last Tuesday. All they see is that your home has been on the market for 20+ days, and that will cost you far more than a few lost bookings. The best thing to do when considering the timing of your airbnb sale is to compare the seasonality of the sales market with the seasonality for your short term rental. March is a great time to list your Austin property for sale, BUT this is SXSW season in the short-term game and obviously not the time to block off the calendar! Identify a month where sacrificing a few stays won’t kill you, and median sales prices are historically high. 2. What Will Convey with Your Airbnb Sale When listing your Austin area vacation rental you are selling real estate, but you are also selling a whole lot more! You’re selling all the furnishings, the business, and the property itself. Do you know what all is even in the house anymore? Do you have a detailed inventory list? Do you have personal items you don’t want to convey? You need to get a full grasp on all of these things before you list the vacation home for sale. What about your short term rental listing? Do you plan to transfer this to a new owner? Can you transfer this to a new owner? Will you give a new owner all of your previously earned reviews, maid connections, contractor relationships? These are all questions you will want to ask yourself. 3. Rental History and Performance If you’re selling your vacation rental, you will most likely be advertising your property to savvy investors who will want to know what kind of ROI they can expect from your home. Thus, you have to know your numbers! Do you have a detailed profit and loss statement you can provide? If you don’t, can you make one? You need to make it as easy as possible for an investor to see the income potential in your property. Did you block the calendar for 2 months so Aunt Nancy could stay there last May? You’ll want to make note of that fact, and show what revenue you could have brought in if Aunt Nancy wasn’t such a freeloader. Did you not know about variable pricing until two months ago? Make note of that too. Show investors how with a few tweaks, your property could be a profit house! 4. Marketing Your STR Effectively While in no way is simply listing your property on the MLS an effective marketing strategy for any real estate sale, it’s particularly ineffective when you are marketing the sale of an airbnb. Your STR should be listed on the MLS, but it also needs to be marketed to those most likely to buy it- investors searching for a vacation rental investment opportunity. There are plenty of platforms out there for just that! These should be utilized, and networking with other local Austin airbnb owners and managers is also a great way to get the word out about your airbnb for sale. Effective marketing for a vacation rental home includes advertising the property, the airbnb listing, the furnishings, and the revenue! When you get the word out about all of these features to the right people in the right way, your vacation rental will sell quickly! 5. Choosing the Right Person to Sell Your Vacation Rental Given that selling a vacation rental property is drastically different from selling a regular home, you need an experienced real estate agent who understands the process for selling your Austin airbnb. A thorough, knowledgeable real estate agent in the STR space will ask you about many of the points above during your very first interaction. They will know where and how to market your vacation rental, and they will have the technical experience to make sure all the details are appropriately addressed contractually. If you’re considering selling your vacation rental in the greater Austin area, the E-Rae Realty team has the skills and experience to assist you with your sale. Outfitting Your Short Term Rental - Tips to Enhance the Guest Experience and Maximize Profits1/18/2022 If you’re interested in purchasing a home to use as an airbnb, you may be thinking about how you will furnish the home. Should you have a king bed or a room full of bunk beds? Can I furnish it with things I already own? How important is it that I have cable TV? All of these are great questions, and the answers ultimately depend on the guests you are looking to attract. First things first, I recommend creating a vision board for your property. This board will define how you furnish and outfit the home. It will illustrate colors, style, and the general vibe for your airbnb. You’ll want to begin by getting a clear picture of who your ideal guest is. What do they value? Where do they shop? How old are they? How do you want them to feel when they arrive? Then, think about the attributes of the home. If your home is built with a rustic ranch style does modern decor really make sense? Is the main selling point of this home it’s fabulous location on the lake? Then, you’ll want to make sure your furniture isn’t so big it blocks the water views and you may want to add a dedicated area for water toys and towels. Take all of the information you know about the property and consider your ideal guest preferences in order to design your board. You can compile all of your ideas in a binder, make a pinterest board or make a collage on a large piece of paper. Whatever medium you choose, add inspirational photos, define a color palette, and find a way to visually bring a cohesive plan together.  Furnishing your airbnb is different then furnishing your home. You want to think of furnishing a home like you would stage a home. Have you ever walked through a builder’s model home? There are no family photos and the space is clean and inviting. Less is more when it comes to furnishings, and while you should have decor items, you don’t want them to be personalized. Make sure you have art on the walls that is in line with your vision, and consider adding items that will enhance the guest experience such as a well-curated guide book on the coffee table or a selection of games on the shelf. Furthermore, there will be considerable traffic through this home, and you want to keep this in mind when procuring furniture. You want items that are durable, easy to clean, and don’t show imperfections. You would think that white would be a huge no-no here, but white slipcovered furniture items are actually great because they can easily be bleached. A good rule of thumb here is that if it’s white and you can wash it, it’s a win. Leather couches and chairs are also relatively easy to maintain and clean, especially if you Scotchgard them first. A rug in a darker hue or one that’s heavily patterned will show stains less easily. When you’re furnishing your short term rental (STR), you don’t have to buy everything new. In fact, mixing in some antique or second-hand items will likely elevate the look of your airbnb. However, you don’t want your furniture to look like you found it on the side of the road. The key here is to add character, and potentially save money by utilizing the right furnishings. A used mattress, probably not the best idea. One case of bed bugs and you're out of the airbnb biz. An antique sideboard you found on the side of the road, now that could work. However, if you're utilizing second-hand furnishings make sure they are a)clean and b)functional. No one wants to eat at a table that wobbles, but with a little elbow grease you can fix that wobble. Speaking of tables, ideally, you want enough seats for the maximum number of guests your home allows in both the living and dining rooms. So if your home sleeps 10, you want a dining room table that seats 10. However, don’t cram a ton of chairs into the small dining space simply to accommodate this. Scale is equally important, and you don’t want a room to appear over-stuffed. Ditto with beds. Sure you could put four full size beds in that room, but would that result in a great experience for your guests? Probably not. Simply putting as many heads in beds as possible does not equate to max revenue. The easiest way to be able to accommodate extra guests is a pull out couch. Thus, you often see pull out couches in vacation rental homes. Alternatively, you could add a daybed or supply air mattresses if you determine that having these extra sleeping spots would be beneficial to your ideal guest. When you are outfitting your kitchen, you want to make sure you have enough plates, cups, and silverware for all of your guests. In an ideal world, I recommend you take your max occupancy and multiply that times three when determining quantities for kitchen ware. For example, let’s say your max occupancy is 10. Purchase at least 30 cups, 30 plates, 30 bowls, etc. Take one set of each item and reserve these in your owner's closet. This way, when a bowl disappears you can simply replace it from your reserves without having to buy an entirely new set. Find kitchenware that matches your vision, but it doesn’t need to be expensive. You can find great deals on kitchen items at discount stores like Homegoods. Open cabinets or cabinets with glass doors are great for STRs. It makes it easy for guests to find what they need. If you’re remodeling the home before it becomes an airbnb, you may want to consider replacing the cabinet doors with glass ones, or opting for low cost open shelves. Don’t overdo it with kitchen tools and appliances. If you have too many things in the kitchen, it will be harder for guests to find what they need. Think about what guests will really use. Just because you have a giant set of cookie cutters doesn’t mean they should go in your airbnb. At the same time, make sure they will have all the essentials. Guests will need a few different sized pots and pans, baking trays, mixing bowls, serving bowls, and a variety of knives, spatulas and serving utensils. If you have a grill, make sure there are grilling tools. Guests often are staying at an airbnb because they want to be able to cook. Make sure they have all of the essentials to do so, and make sure everything is as organized as possible so they can easily locate it when they need it. You MUST have a coffee maker in your STR, there are no exceptions. 64% of Americans drink coffee everyday so the odds are high that each booking you have will contain at least one coffee drinker. Personally, I recommend a decent drip coffee maker; however if your STR is smaller you may want to consider a Keurig. BUT if you get a Keurig, you really should provide pods too.  Bedrooms, and more specifically, beds are so important. Do yourself a favor and buy nice mattresses and ample pillows, at least two pillows per head. Quality linens are also a good purchase. Buy a minimum of two sets of linens per bed to allow for speedy turnovers. Have you ever noticed that hotels almost always have white sheets? That’s because they can be bleached. Do yourself a favor and purchase white sheets for your Airbnb. Duvet covers are great for bedding since they’re easier to wash than a full comforter. You can add color with decorative throw blankets and pillows. An airbnb bedroom doesn’t necessarily need a closet but it is helpful for guests to have someplace to store their clothes. You can do hanging racks, dressers, or even hooks on the back of the doors depending on your anticipated average rental length. Bedrooms should have at least one nightstand. A nice touch is to make it easy for guests to charge their devices. A nightstand with easy access to an outlet is wonderful. If there’s no outlet nearby, consider adding one or using an extension cord.
For the bathrooms, you will want to consider what type of products you plan to provide. Again, these should match your vision in terms of quality as well as product packaging. You need to provide hand towels, bath towels and washcloths, and you should have at least enough towels to match your maximum guest count. More is always better so you aren’t waiting for laundry to be done in order to check the next guest in, and remember white can be bleached. Don’t forget bath mats and shower curtains that match your vision. You’ll want to make sure you have at least one plunger in the home, a toilet bowl cleaner for every toilet, and a first-aid kit for the home. A blow dryer in each bath is also a nice touch. Preparing your home to be an airbnb is about much more than furnishing it, you’ll need to consider how you will market it, how you will maintain it, and how you will price it. However, a good aesthetic goes a long way when attracting guests. Make a vision and stick to it! One of the best ways to ensure that your home performs the way you want it to is by staying there personally. As soon as you think you’re done, stay for a night or two or invite a friend to relax in your airbnb. You’ll quickly realize where you may have neglected an important item or failed to provide instructions on where to find or operate something. If you’re looking to purchase a property to use as a vacation rental in the greater Austin area, I’d love to connect with you. My specialty is helping people locate and purchase homes that can be used as STRs in central Texas. Contact me today so we can find the perfect one for you  If you're looking for a great opportunity to invest in the Austin market, owning a short term rental may be the answer for you. You can expect to make around three times what you could with a long term rental by renting your home out as a vacation rental. However, in order to take advantage of investing in a STR, you need a thorough understanding of the rules and regulations regarding short term rentals (STRs). They vary immensely throughout central Texas, and the success or legality of your investment property rests on understanding these various rules. No matter where you are looking to purchase, it's important to understand that STRs are generally classified as rentals less than 30 days. If you are planning to rent your home out monthly or for even longer durations there are far less rules. If you are planning to use your property as a vacation rental where guests stay for a few days or weeks, this post is for you! Texas leaves short term rental oversight to the local government. Thus, STR rules, regulations or ordinances are predominantly created by local municipalities. If a property is located in an unincorporated area or an extraterritorial jurisdiction, it's highly unlikely that there will be municipal regulations since there is no city that has the authority to regulate the area. Within the city limits of Austin, the regulations regarding short term rentals are pretty strict. They have a comprehensive permitting process and caps on the number of short term rentals allowed. In fact, in the City of Austin, it's almost impossible to get a permit to operate a short term rental for a single family home if it's not your primary residence. However, a plethora of nearby Austin suburbs have no STR rules at all, and there are unincorporated areas that aren't subject to any municipal oversight! Dive into the list below to know what the regulations are like throughout central Texas. Austin:
Bee Cave:
Boerne:
Buda:
Cedar Park:
Dripping Springs:
Driftwood:
Fredericksburg:
Georgetown:
Horseshoe Bay:
Johnson City:
Jonestown:
Kyle:
Lago Vista:
Lakeway:
Leander:
Lockhart:
Marble Falls:
New Braunfels:
Pflugerville:
Point Venture:
Rollingwood:
Round Rock:
San Marcos:
Sunrise Beach:
Sunset Valley:
Spicewood:
The Hills:
Volente:
Westlake Hills:
Wimberly: To obtain a permit to operate a bed & breakfast or vacation rental, an applicant must go through the Conditional Use Permit (CUP) process and receive an approved permit. The CUP process includes:
*****We do our best to provide accurate information; however, these rules and regulations are constantly evolving. Make sure to confirm current rules with the local governing bodies. This post was last updated on 2/14/2024*** ***PS IF YOU LIKE THIS CONTENT AND INTEND TO COPY IT, PLEASE REACH OUT FIRST OR AT LEAST INCLUDE A BACKLINK TO THIS SITE*** Interested in purchasing a property to use as a short term rental in the Austin area? We can help you navigate the various rules and regulations, identify options that will make the most sense for your unique situation and guide you in determining which properties will yield the highest returns.  If you’re looking for a great investment opportunity in the Austin real estate market, you may be considering purchasing a property to use as a full-time vacation rental. With the rising popularity of websites such as Airbnb, VRBO, and homeaway visitors to the Austin area have simpler ways to identify places to stay besides hotels. Furthermore, renting out a property as a short term rental (STR) may be even more lucrative than a traditional long term rental.  Unfortunately, in order to use a home as a short term rental in the Austin city limits, you must have a permit. At this time, they are no longer issuing any more Type 2 permits. Type 2 permits apply to single family, non-owner occupied homes. Even if you find a home for sale that is currently operating as a STR with a Type 2 permit, that permit does not transfer with the sale of the home. Thus, if you would like to purchase a property to use as a full-time short term rental in the Austin area, you have two options. Find a condo that allows short term rentals, or look for a property outside the city limits to use as a short term rental. Homes located in the City of Austin’s ETJ can be used as vacation rentals, and do not require a permit. Homes located in the LTD do require a permit; however, they do not have to pay City of Austin hotel taxes.  If you identify a property outside of the city limits that you would like to use as a short term rental, you must verify that there are no HOA restrictions that prohibit the use of the home as a vacation rental. You will also want to check that the home is not in another city’s jurisdiction. For example, the City of Lakeway has developed its own guidelines and regulations regarding short term rentals.
If you are looking for a property to use as a short term rental in the Austin Area, you can find all sorts of useful information on this dedicated Austin short term rental investments page. You may also be interested in reading these other posts. SHORT TERM RENTALS- UNDERSTANDING REGULATIONS FINDING AN AUSTIN INVESTMENT PROPERTY TO USE AS A SHORT TERM RENTAL Contact me today for help finding the perfect investment property for your needs.  If you’re looking to invest in Austin, you may be considering purchasing a property to use as a short term rental. Oftentimes, you can earn significantly more renting your property out short term than you can long term. Unfortunately, it has become more and more difficult to find properties you can use as vacation rentals in Austin as the city limits the number of permits available for short term rentals. The City of Austin classifies short term rentals into 3 categories: STR Type 1, STR Type 2, and STR Type 3. Type 1 refers to primary residences used occasionally for vacation rental purposes. Type 2 refers to non-owner occupied single-family investment properties, and Type 3 refers to multifamily short term rentals. Take a look at this article to learn more about the different types of short term rentals. The City of Austin is no longer issuing Type 2 permits. So, if you want to purchase a property to use solely as a vacation rental in Austin, you have two options. You can look outside the city limits to find a single family property or you can find a unit in a multi-family building to use as a short-term rental.  If you want to buy a single family home, consider the type of people that would like to procure a short-term rental in the Austin area. Austin has become a very popular wedding destination. Consider looking for homes outside the city limits near wedding venues. Areas like Dripping Springs, Driftwood, and Bee Cave are all outside the city limits of Austin and popular for tourists coming into Austin for weddings or simply for a weekend getaway to check out the breweries/wineries. A home with a pool tends to perform well as a short term rental as well. Guests are willing to stay a little bit further out if they can envision a group get-together with plenty of room to relax and play poolside. A number of tourists also come to Austin to enjoy the lakes. Consider looking at lakefront communities in the Austin ETJ such as Apache Shores, Volente, Hudson Bend, and Cuernavaca.  If you want to purchase a condo to use a short term rental, you will want to make sure the condo allows for short term rentals, and that there are STR Type 3 permits available for the building. Below is a list of downtown condo buildings that have units which have been issued STR Type 3 permits in the past. This list is for informational purposes only, please note that condo regulations can change and that permit availability is not guaranteed.
If you are interested in purchasing a property to use as a short term rental in Austin, contact me today. My background in vacation rental management coupled with my real estate experience is sure to give you the upper hand in procuring a solid vacation rental investment property. With the rise of popular sites such as Airbnb and Homeaway, a growing number of Austin residents are considering renting their properties out as short term rentals. Renting your home out during events like SXSW and the Austin City Limits can easily provide you with enough money to go on vacation yourself and pocket some extra cash.
However, there are a plethora of regulations one must be aware of in order to earn extra money hosting out of town guests. First, if your property is in the city of Austin limits, you must have a permit to operate. Obtaining a Short Term Rental (STR) permit is not particularly challenging; however, you must understand the types of permits. Type 1 refers to owner-occupied residences. A Type 1 STR means that this must be the primary residence as shown in tax records. A few examples of Type 1 STRs are: you go on vacation and rent your home while you are away, you rent out 1 room in your home and stay there too, you rent out your guest house while you stay in your main house. Type 2 refers to a non-owner occupied STR that is either a single family home or a duplex, NOT a condo. A Type 2 STR is an investment property that you rent out for short term rentals. The number of Type 2 units per geographic area is limited by the City of Austin. At this time, they are not issuing any more permits for Type 2 STRs. Also, it is important to note, the STR permit does NOT convey with the sale of a property. Type 3 refers to multi-family short term rentals that are not owner occupied. The number of non-primary residence condos that can be used as STRs is also regulated by the city based on geographic regions. You must check with the city to see if your condo could be used as an STR. However, you will first want to check with your condo association to see if they allow you to rent out your condo as a STR. Similarly, many HOAs will prohibit the use of residences as STRs. If you’re thinking of purchasing a property, and would like to use it as an STR, give me a call today! I can help guide you in the right direction. |