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 may be interesting in reading these other posts.
SHORT TERM RENTALS- UNDERSTANDING REGULATIONS
FINDING AN AUSTIN INVESTMENT PROPERTY TO USE AS A SHORT TERM RENTAL
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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 fest 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.
Erika Rae Albert
Sharing my Austin real estate updates, home owner tips, & more.