May

09

2024

Short Term Rental State of the Market in Austin, TX – 2024 Edition: Your Most Asked Questions Answered

May. 09. 2024

As a broker, investor, and advisor who’s deeply entrenched in the real estate scene, I’ve got a pretty good handle on the ins and outs of short-term rentals here in Austin, especially when it comes to Airbnb vs. VRBO. For a deeper dive, check out my previous blog on this topic [HERE].

Above: A property we have listed for sale-that is a turnkey STR!

 

 

 

Let’s dive right in with the burning question: Are short-term rentals legal in Austin, Texas?

Yes, they are… but with stipulations. So, how does one snag a permit in Austin? Well, there are a few types to consider:

  • Owner-Occupied Homes: 
    • These are perfectly fine for short-term rentals, provided they’re properly permitted.
  • Investor-Owned Properties:
    • Previously off-limits, these properties are back in action with the recent reopening of Type II permits.
  • Multifamily Properties
    • These too can qualify for permits under certain conditions.

This resurgence of Type II permits is a game-changer, boosting both the city’s revenue and opportunities for homeowners to play by the rules with their investment properties.

 

What’s the state of play for short-term rental property owners right now?

Like the real estate market at large, it’s been quite dynamic. The years 2021 and 2022 saw record-breaking rental income thanks to a surge in remote work and travel. However, the market’s now facing increased competition, leading to a slight dip in average rental rates. Nevertheless, with the city levying an 11% hotel tax on short-term rentals, the potential for lucrative returns remains strong.

Now, onto the nitty-gritty of what makes a short-term rental successful.

Drawing from my own experience as an Airbnb host since 2015, here are some key tips:

  • Aim for Superhost status with stellar guest communication.
  • Keep your calendar up-to-date and never bail on guests.
  • Invest in professional photography to best showcase your space.
  • Focus on top-notch decor and a well-stocked kitchen.
  • Ensure ample seating, quality furnishings, and pay attention to comfort details like pillows and mirrors.

But when it comes to the big question of size—studio apartment or sprawling house—which reigns supreme?

It’s a nuanced decision. Personally, I enjoy having a larger home where I can host my own friends and family. So, there are perks, and it will depend on what is more important to you—earnings or lifestyle. I recommend a cost-benefit analysis if you plan to use your short-term rental for personal use.

 

And what about the legal and logistical side of things?

Short-term rental permits are not transferable upon property sale, and neither are listings unless managed by a property management company that you maintain as the management co.

 

How do I find a great short-term rental deal in Austin?

Finding a short-term rental deal requires patience and strategic planning, with ROI and positive reviews often taking time to materialize. Some listings even sell an income-producing property with furniture, bookings, and turnkey management—however, it will vary based on the ideal buyer for that property.

 

As for management, while it varies by company, expect to shell out around 20% of your earnings in Austin, though rates can climb higher elsewhere.

 

Check out [THIS amazing STR Income Producing property I have in 78704 (SoCo)]—Top Notch Branded Home with $131k in income last year alone!

 

Finally, the perennial debate: short-term vs. long-term rentals?

Both have their merits and drawbacks, depending on your goals and capacity for hands-on management. In my experience, long-term rentals offer stability but lower returns, while short-term rentals can be more lucrative but require ongoing attention and can be subject to market fluctuations.

 

So, there you have it—a snapshot of the ever-evolving landscape of short-term rentals in Austin, Texas. Whether you’re a seasoned investor or just dipping your toes in the water, there’s plenty to consider in this ever-evolving market.

Got questions or insights to share? Drop them in the comments below—I’d love to hear from you! I have a YouTube video or two on this topic as well, so be sure to check out my YouTube Channel. Always happy to consult with you or make recommendations so please don’t hesitate to get in touch if I can help you in your real estate journey! 

Until next time…

AB