Short term rental regulations can be challenging to navigate. The rules and regulations vary by municipality, property type, zoning, and intended use. To make matters more complicated, these rules often evolve over time. However, if you want to purchase a property to use as an STR, it’s important to understand the regulatory landscape. Here are a few tips to help you hone in on areas where you can legally use a property as an airbnb in Central Texas.
How will you utilize this property?
You need to have an understanding of how you will utilize the property in order to ensure you are looking at properties in areas where there regulations allow you to do what you want with the property. In Texas, short term rentals are regulated on the municipal level. Some cities regulate short term rental use based on the type of owner. Will this be a pure investment property or a property you will live in sometimes and use as an airbnb when you are not there?
What type of property?
Are you looking for a single family home, condo, duplex, or land? The type of property you want will also dictate where and how you can legally operate it as a STR. For example, the City of Lakeway has a waitlist for single-family STR permits, but you can get a permit for a condo short term rental. Austin has different rules for short term rental permit eligibility depending on what type of property it is and for condos, the zoning of the property.
What geographic area will you choose?
Once you know your intended use for your STR investment and the type of property you want to purchase, you can start to look into the different regulations for each geographic area. We have a full breakdown of the various STR rules and regulations for the greater Austin area here. As I mentioned earlier, in central Texas, STRs are regulated on the municipal level. Homes in the ETJ (extraterritorial jurisdiction) of a city usually have no STR rules. Homes in the city limits may be subject to STR restrictions, and these city rules vary from one city to the next. Thus, you should understand these regulations, or lack thereof in order to decide on a favorable location for your airbnb investment. It’s also a good idea to tread cautiously in areas without any current regulations. It’s possible that they could adopt regulations in the future that could hamper your investment goals. You can often view previous city council discussions for each municipality. If a municipality is considering adopting short term rental regulations, they usually discuss it far in advance of implementing official rules. It’s a prudent idea to review previous council agenda’s in such cities.
Confirm HOA and Deed Restrictions
In general, we recommend avoiding properties that are located in a Homeowners Association (HOA). HOAs almost always have minimum rental length restrictions in their governing documents. Even if an HOA currently does not prohibit short term rental use, the possibility that they could do so in the future is a risk. It often takes a simple majority vote to enact policies that would prohibit one from continuing to operate their short term rental. If you do want to purchase a property in an HOA, make sure to review the HOA documents to identify their rental regulations, what constitutes a quorum, and potential fines for violations.
Deed restrictions may also restrict what you can do with a property. You can confirm the deed restrictions for a given property by checking the county’s real property records. One stipulation that frequently appears in deed restrictions is the “residential use” clause. It has been ruled in Texas that residential leasing regardless of the lease length is a residential use. However, if you intend to create numerous tiny homes, make a venue, or sell ancillary services or products you should be sure to check the deed restrictions to make sure your intended use is compatible.
Lost in The Regulatory Maze?
Don’t fret if this all seems like a lot to wrap your head around. Short term rental regulations in the Austin area are complex, and we are here to help. We consistently monitor the various rules and regulations, and court cases that shape the regulatory environment for short term rentals in Central Texas. Schedule a call with us to discuss your unique needs and we will point you towards specific properties that you can legally use for your short term rental investment.
