Thinking about buying a Short Term Rental in the Austin Area? Here's Your Complete Breakdown on the Rules and Regulations for Operating a Vacation Rental in Central Texas

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: 

• the City of Austin breaks down short term rentals into three types, Type 1 (owner-occupant), Type 2 (investor-owned), Type 3 (multi-family)
  
• STR Type 1  permits can be issued for single family homes where the owner has a homestead exemption on the subject property. These permits are used when you live in the home, and want to rent out the entire home from time to time, OR if you only want to rent out part of the home ie. a room or guest house on the property.
  
• STR Type 2 permits are for non-owner occupant, full-time investment use short term rentals.  A federal court ruling reversed the previous limitations of the City of Austin's ordinance which essentially prohibited Type 2 permits.  As of August of 2023, the City of Austin is issuing Type 2 investor permits!
  
• STR Type 3 permits are for units in multi-family properties.  Apartments, condos, and fourplexes are all considered multi-family properties.  There are caps on the number of STRs allowed in each multi-family building. If the building is located in a residentially zoned area the maximum number of units that can have a Type 3 permit is 3% of the total units in the building. For buildings located in commercially zoned areas, the max number of STR Type 3 permits available is 25% of the total units in the building.
  
• Duplexes constructed after December 7th, 2023 and two-unit residential properties constructed after October 1st, 2015 are subject to the following restriction: only one unit may be used as a short term rental for more than 30 days in a calendar year. 
  
• Link to more info on COA regulations
  

Bee Cave:

• no restrictions on STRs

Boerne:

• Permit required for properties in the city limits and Boerne ETJ
• Link to full ordinance

Buda:

• permit required
• ​must demonstrate to the satisfaction of the Director of Planning that the unit and property do not have any outstanding issues related to taxes or building, electrical, plumbing, fire, health, housing, police, planning, noise, or code enforcement provisions
• must provide proof of insurance and payment of hotel occupancy tax annually
• ​Full details on page 51 of Buda’s Unified Development Code

Cedar Park:

• no restrictions on STRs

Dripping Springs:

• no restrictions on STRs

Driftwood:

• Driftwood is an unincorporated area, thus there are no restrictions on STRs

Fredericksburg:

• permit required
• STR's allowed in some zoning districts but not all, short term rental use is based on property zoning and type of STR i.e owner occupied, non-owner occupied, accessory building, etc. link to zoning map
• Properties that received a STR Permit prior to April 1, 2022 are considered “Legal Non-Conforming” uses and allowed to operate conditioned upon conformity with Section 5.401 and Section 6.110, Continuance of a Nonconforming Use
• Generally, permits may be transfered to new owners, a new owner must submit a transfer of permit application
• Click here to view the UPDATED complete STR ordinance

Georgetown:

• no restrictions on STRs

Horseshoe Bay:

• No regulations yet, but a short term rental ordinance was discussed at the council meeting in November 2022
• no restrictions on STRs within Horseshoe Bay Property Owners’ Association
• some properties are in additional HOAs and those may restrict STR use

Johnson City:

• permits required for properties located in the city limits or ETJ
• Link to complete ordinance

Jonestown:

• ​STRs are only permitted in the STR Overlay District
• events are not permitted on site
• residence may not house more than 15 people at a time
• Link to more details

Kyle:

• no restrictions on STRs

Lago Vista:

• must apply for an STR permit if the property is located in any of the following zoning districts: R-1, R-O, RR-A, R-2
• link to zoning map
• STRs must have two parking spots per dwelling, no street parking
• Link to more details

Lakeway:

• maximum of 25 single family homes can be used as STRs
• currently, there is a 2 year waiting list to get a permit
• there's no limit for permits for condos
• Link to STR map

Leander:

• According to city officials, vacation rentals are currently classified as hotels within the City of Leander. You will need to ensure that you have the correct zoning (General Commercial) before operating a vacation rental. Because these are considered a commercial business, the rental would be subject to commercial building standards and permits.
• The City of Leander constitutes a short term rental as anything less than 6 months.
• Leander is generally unfriendly towards STRs at the current moment; however Leander has no official STR rules currently
• In May of 2023, they discussed creating rules and regulations, you can see the slides from the City of Leander Short Term Rental Briefing Workshop here

Lockhart:

• STR registration required for all properties located in a residential zoning district
• No more than 2 adults per bedroom permitted
• Link to full Lockhart STR ordinance

Marble Falls:

• In January of 2021, Marble Falls adopted a short term rental ordinance. This ordinance requires all STR operators to obtain a permit from the city in order to operate as a vacation rental. In order to obtain a permit, owners must demonstrate proof of liability insurance, document payment of hotel occupancy tax, and pass a life safety inspection among other requirements.
• The complete rules can be found here

New Braunfels:

• short term rentals are not allowed in any residential zoning districts
• ​a special use permit must be obtained for all properties located in non-residential zoning districts, except those located in the following zoning districts: C-4, C-4A, and C-4B
• short-term rentals are not allowed in the floodway
• annual life safety inspections are required
• ​maximum occupancy of two adults per sleeping area, plus an additional two occupants
• ​a minimum of one off-street parking space, not including the garage, must be provided per sleeping area
• Link to complete ordinance

Pflugerville:

• no regulations, but lots of HOAS with rules regarding STRs​

Point Venture:

• STRS permitted in most sections except they're not allowed in Section 3-1
• permit is required
• owners must provide guests with important operation information such as emergency contacts, location of water shut off, parking requirements, trash collection, etc.
• view the complete STR ordinance for Point Venture

Rollingwood:

• STRs prohibited
• no rentals less than 30 days

Round Rock:

• no restrictions on STRs

San Marcos:

• Home Share Rental Registration required
• ​Proof that the premises is the primary residence of the applicant, including at least two of the following: motor vehicle registration, driver's license, Texas State Identification card, voter registration, tax documents, or utility bill
• Only permits one STR/owner in city limits
• Occupancy limits
• Required safety features
• Link to more details

Sunrise Beach:

• not permitted

Sunset Valley:

• permit required
• no limitations based on owner-occupancy
• Link to full Sunset Valley Short Term Rental Requirements

Spicewood:

• no restrictions on STRs​

The Hills:

• no restrictions on STRs​
• There are extensive HOA rules you must follow.  Link to more details.

Volente:

• must apply for a short term rental conditional use permit
• maximum number of guests is 2 people, over the age of 16, per bedroom +3
• $150 permit fee, permit is non-transferable with a sale
• Village of Volente short term rental ordinance

Westlake Hills:

• The following criteria pertains to properties zoned R-1, R-2, and R-3
• ​only a homestead owner may apply for a short-term rental special use permit, but may do so for the homestead or another property owned by the homestead owner
• only one permit will be issued per homestead, regardless of whether the permit is for the homestead or another property owned by the homestead owner
• essentially you must own a primary residence in Westlake in order to get an STR permit, but if you own two homes in Westlake, you can get a permit for the one you don't live in
• a guesthouse can not be used as a short term rental
• Link to more details and link to Westlake Hills STR map

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:

• complete Application
• application Fee (non-refundable)
• the city notifies those within 200’ of your application, publishes in the local newspaper and posts a sign on the subject tract
• Planning & Zoning hearing for recommendation and City Council hearing for ultimate decision

Per state & local statute, if 20% of property owners within 200' oppose the application a super majority vote of the City Council (4 out of 5)  is required for CUP approval.


​*****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***

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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. 

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