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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.
5 Comments
Tom
3/19/2021 05:28:35 pm
How are the prospects of STR condo in downtown Austin in the post pandemic world. Should I buy a single family home and put it for long term rent or purchase a condo and put it on short term rental
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Erika Rae Albert
3/19/2021 09:29:36 pm
Long term rental investments will likely not be cash-flow positive given our current market. You most-likely will do quite well with appreciation gains in either scenario. However, in the short-term market you may find better monthly returns. That being said condos will have HOA fees that will need to be taken account when running rental projections. If it were me, I may consider a short-term rental investment of a single-family home outside of the Austin City limits. Huge homes have taken a hit as a result of COVID of but a modest home could actually do well considering many would prefer a vacation rental to a hotel in the current climate.
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Tom
3/20/2021 12:53:57 pm
Thank You Erika! Sounds like buying a condo for short term rental might not be a good investment in the current environment. Would it work if I bought a condo kept it as a long term rental for a year and later convert it to short term rental after a year or so.
Erika Rae Albert
3/20/2021 01:10:39 pm
Hi Tom,
kari
2/17/2022 01:24:51 pm
HI Erika
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