A recent federal ruling has changed the landscape for investing in short term rentals in Austin.  Previously, the City was not issuing Type 2 (non-owner occupant) permits unless the property was located in a commercial zone.  That all changed in August of 2023, when the Andings vs. City of Austin case was decided.  It was ruled unconstitutional to discriminate against non-owner occupants.  Within the city limits of Austin, there is still a permitting process.  However, this ruling significantly opened up the ability to get a permit to buy a full-time investment property to use as a short term rental in Austin.

• the City of Austin breaks down short term rentals into three types, permits do NOT transfer with a sale, and permits must be renewed annually
• 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 investor single-family homes.  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 multifamily properties i.e. condos. There are caps on the number of STRs allowed in each condo building. If the condo 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 condo building. For condos located in commercially zoned areas, the max number of STR permits is 25% of total units.
• ​Link to more info on COA regulations

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