If you are researching the best places to buy an Airbnb in Austin, you will find plenty of articles ranking neighborhoods by average occupancy, nightly rates or projected annual revenue.
The problem is that average performance is not the goal.
When I help investors evaluate Austin short-term rentals, I am looking for properties that have the potential to perform around the 90th percentile of their competitive set. That does not happen simply because a property is in a desirable ZIP code or because someone puts attractive furniture in a spare bedroom. It happens when the location, layout, bedroom count, amenities, design and purchase price all work together.
In most cases, the properties I like best are larger homes with at least four bedrooms, the ability to create a fifth bedroom, and either an existing pool or enough usable yard space to add one.
Smaller homes can work too, but they have to be priced accordingly. A two-bedroom house cannot be underwritten like a five-bedroom home designed for group travel.
The strongest short-term rental investment is not always in the most expensive neighborhood. Sometimes the better opportunity is a property slightly farther from the center of town that offers more bedrooms, a larger lot and enough room in the budget to create an exceptional guest experience.
Why Average Airbnb Revenue Is the Wrong Starting Point
Most STR market reports show average annual revenue for a ZIP code. That can help you understand the overall market, but it does not tell you what a well-positioned, professionally designed property might generate.
For example, my 2025 Austin STR revenue data shows that the average annual revenue across all properties in 78745 was approximately $44,000. That number includes listings with different bedroom counts, amenities, locations, operating strategies and levels of quality.
Five-bedroom properties in the same ZIP code averaged approximately $76,000 in annual revenue. When you add together the monthly 90th-percentile benchmarks for five-bedroom properties, the figure rises to approximately $145,000.
I have also had clients generate more than $200,000 in annual revenue with STR properties in 78745.
That does not mean every five-bedroom house in South Austin can produce $200,000. It does show why ZIP-code averages alone can be misleading when you are evaluating properties designed to compete at the top of the market.
The difference becomes even more pronounced in other parts of Austin. In 78741, the overall average annual revenue was approximately $52,000, while five-bedroom properties averaged approximately $103,000. The sum of monthly 90th-percentile benchmarks for five-bedroom properties was approximately $268,000.
The goal is to determine whether a specific property has the location, layout, amenities and operating plan required to compete at that level.
The Austin Airbnb Property Profile I Would Target
If I were shopping for an Austin Airbnb investment today, I would prioritize properties with:
- Four or more bedrooms, or a practical opportunity to create a fifth.
- An existing pool or enough usable yard space to add one.
- A layout that works well for groups.
- Attractive outdoor space.
- Convenient access to the parts of Austin guests actually want to visit.
- No HOA or deed restrictions that prohibit short-term rentals.
- A purchase price that leaves room for furnishing, improvements and operating reserves.
- Enough differentiation to compete with the strongest properties in the area.
Austin attracts groups traveling for weddings, University of Texas events, festivals, corporate gatherings, birthdays, concerts and weekend trips. Those guests often want to stay together rather than book multiple hotel rooms.
A well-designed four- or five-bedroom home with a pool gives them a reason to choose one property over another.
But a pool and additional bedrooms do not automatically create a successful investment. The property still has to be legally eligible for short-term rental use, positioned correctly within its neighborhood and purchased at a price that supports the operating model.
78704: Excellent Guest Demand, More Difficult Investment Math
78704 has everything visitors associate with Austin: South Congress, South Lamar, Zilker, Barton Springs and easy access to downtown.
I live in 78704, so I understand the appeal. I also know the ZIP code’s popularity makes it harder to find properties that pencil as STR investments.
My 2025 data shows a median single-family sales price of approximately $1.09 million in 78704. Four-bedroom properties generated approximately $94,000 in average annual revenue, while five-bedroom properties averaged approximately $140,000.
At the top of the market, the sum of monthly 90th-percentile revenue benchmarks reached approximately $184,000 for four-bedroom properties and $299,000 for five-bedroom properties.
That is meaningful revenue potential, but the acquisition cost still matters. A property purchased well above the ZIP code’s median may require an exceptional combination of bedrooms, pool, walkability, design and outdoor space to justify the investment.
I would absolutely consider 78704 for the right buyer. I would not pay a premium simply because a property has a 78704 address.
The best opportunities here are typically larger homes with a pool, properties that can be converted into five-bedroom rentals, or houses with enough upside to create a stronger guest experience than competing listings.
78745: More Flexibility at a Lower Entry Price
78745 is often one of the first areas I suggest when an investor wants the appeal of South Austin without paying 78704 prices.
The median single-family sales price in my 2025 data was approximately $485,000, compared with approximately $1.09 million in 78704. The right four- or five-bedroom STR property will not necessarily be available at that median, but the difference illustrates why this ZIP code can create more room for a thoughtful acquisition strategy.
Four-bedroom properties in 78745 averaged approximately $57,000 in annual revenue, while five-bedroom properties averaged approximately $76,000. The sum of monthly 90th-percentile benchmarks reached approximately $113,000 for four-bedroom properties and $145,000 for five-bedroom properties.
Even those higher-end benchmarks do not capture everything. I have had clients generate more than $200,000 in annual revenue with STR properties in 78745. Those results are not typical or guaranteed, but they show what is possible when the right property combines guest capacity, strong design, outdoor amenities and effective management.
That is why I do not evaluate a property based on ZIP-code averages alone. A well-executed five-bedroom home with a pool can perform very differently from the broader pool of smaller or less differentiated listings.
What I like about 78745 is the opportunity to find a home with a larger yard, a practical floor plan and enough room in the budget to create that kind of guest experience. A buyer who pays less for the property itself may be able to invest more in a pool, outdoor entertaining space, furnishing and design without exceeding their total acquisition budget.
The exact location still matters. Some parts of 78745 offer better access to South Lamar, South Congress and central Austin than others. But for the right investor, this ZIP code can offer the combination that is harder to find in 78704: a more manageable purchase price and a real path to exceptional performance.
78741: Focus on the Close-In Locations
78741 can be compelling when the property is located in the parts of the ZIP code closest to downtown, Lady Bird Lake, Riverside and established East Austin demand.
The 2025 data makes the potential clear.
The median single-family sales price was approximately $414,000. Four-bedroom properties averaged approximately $68,000 in annual revenue, while five-bedroom properties averaged approximately $103,000.
At the high end, the sum of monthly 90th-percentile revenue benchmarks was approximately $124,000 for four-bedroom homes and $268,000 for five-bedroom homes.
That spread reinforces why I care so much about the individual property rather than the average ZIP-code performance.
A larger home in a desirable close-in location, with a pool or the ability to add one, can compete in a different segment of the market from the typical smaller rental.
I would focus on the property’s proximity to downtown, Lady Bird Lake and the parts of East Austin guests want to visit, along with its layout, surrounding homes and ability to offer privacy and a strong outdoor experience.
78702: Strong Revenue Potential, but Watch for Condo Regimes
78702 is one of Austin’s most recognizable STR markets because of its proximity to downtown, East Sixth, restaurants, coffee shops and nightlife.
My 2025 data shows a median single-family sales price of approximately $750,000. Four-bedroom properties averaged approximately $81,000 in annual revenue, while five-bedroom homes averaged approximately $133,000.
The sum of monthly 90th-percentile benchmarks reached approximately $158,000 for four-bedroom properties and $278,000 for five-bedroom properties.
Those numbers are compelling, but there is a property type I would approach carefully in 78702: homes addressed as Unit 1, Unit 2, Unit A, Unit B, #A or #B.
These properties are often part of a condominium regime, even when they look like detached single-family homes.
That can create several issues for STR investors. The lots may be smaller, outdoor space can be limited, and there may not be enough room to add a pool or create the type of guest experience that supports higher-end performance. The property may also be subject to condominium documents, HOA rules or private restrictions that limit or prohibit short-term rentals.
An address with a unit designation does not automatically mean the property cannot be used as an STR. It does mean you need to investigate the ownership structure, governing documents, lot configuration and applicable licensing requirements before assuming it will work.
In 78702, I am generally more interested in properties with usable land, clear STR eligibility, enough bedrooms for group travel and the ability to offer something beyond proximity to East Austin restaurants.
78721: Look for Close-In East Austin Opportunities
78721 can offer a more attractive entry point for investors who want access to East Austin without paying 78702 prices.
The median single-family sales price in my 2025 data was approximately $500,000. Four-bedroom properties averaged approximately $55,000 in annual revenue, while five-bedroom properties averaged approximately $95,000.
The sum of monthly 90th-percentile benchmarks was approximately $110,000 for four-bedroom properties and $132,000 for five-bedroom properties.
Here, the exact location matters a lot.
I would focus on the parts of 78721 closest to established East Austin demand, rather than assuming every property within the ZIP code will appeal to the same guests.
The strongest opportunities are likely to be homes with enough bedrooms, outdoor space and renovation potential to create a noticeably better product than the surrounding competition.
A four-bedroom home that can become a five-bedroom home, especially one with room for a pool, may be more interesting than a smaller property in a more expensive ZIP code.
78723: Mueller, UT and More Room to Work With
78723 can make sense for investors looking for proximity to Mueller, the University of Texas, downtown and East Austin.
The ZIP code also includes properties with larger lots and more flexible layouts than buyers may find in some of the more expensive central neighborhoods.
My 2025 data shows a median single-family sales price of approximately $557,000. Four-bedroom properties averaged approximately $53,000 in annual revenue, while five-bedroom properties averaged approximately $83,000.
At the top of the market, the sum of monthly 90th-percentile benchmarks was approximately $85,000 for four-bedroom homes and $137,000 for five-bedroom homes.
The appeal here is not just one demand driver. A well-located property can attract guests visiting Mueller, attending University of Texas events, spending time downtown or exploring East Austin.
As in the other ZIP codes, I would prioritize larger homes with usable outdoor space, a pool or pool potential, and enough room in the acquisition budget to create a property that stands out.
The Austin–Dripping Springs Corridor: Larger Homes, More Land and ETJ Opportunities
The area between Austin and Dripping Springs is another market I like, especially when a property is located within Austin’s extraterritorial jurisdiction.
These properties often offer something harder to find closer to downtown: larger lots, more privacy, Hill Country views, pools and outdoor spaces designed for groups.
The revenue data supports the idea that larger homes can perform well in this corridor.
In 78736, four-bedroom properties averaged approximately $72,000 in annual revenue, while five-bedroom properties averaged approximately $149,000. The sum of monthly 90th-percentile benchmarks reached approximately $211,000 for four-bedroom properties and $257,000 for five-bedroom properties.
In 78737, four-bedroom homes averaged approximately $64,000 in annual revenue, while five-bedroom homes averaged approximately $106,000. The sum of monthly 90th-percentile benchmarks was approximately $136,000 for four-bedroom homes and $247,000 for five-bedroom homes.
These ZIP codes include properties in different jurisdictions, so it is essential to confirm whether a specific home is within Austin city limits, Austin’s ETJ, another city’s jurisdiction or an unincorporated area.
Properties located within Austin’s ETJ do not require a City of Austin STR permit and are not subject to City of Austin hotel occupancy tax. State hotel occupancy tax, deed restrictions, HOA rules and other property-specific requirements may still apply.
You can review additional local rules in my Central Texas STR Regulations Guide.
For the right buyer, this corridor offers a combination I find especially attractive: larger homes, room for a pool, a more private guest experience and, in some cases, fewer Austin-specific regulatory requirements.
The Difference Between an Average Airbnb and a 90th-Percentile Airbnb
A property does not perform in the 90th percentile just because it has five bedrooms.
Top-performing STRs usually have several advantages working together: a location guests actually want, a layout that works for groups, thoughtful design, strong photography, comfortable furnishings, a pool or other compelling outdoor amenities, and an operating strategy that accounts for seasonality and guest demand.
That is why I am willing to consider a property that needs improvements.
A house that looks average on the MLS may become a much stronger investment if there is a clear opportunity to add a bedroom, install a pool, redesign the outdoor space or create a more cohesive guest experience.
But I do not assume those improvements will automatically produce top-tier revenue. I want to compare the property against actual high-performing listings in the same area, evaluate the cost of the upgrades and determine whether the finished product can realistically compete.
The objective is to identify a property with a credible path to becoming one of the strongest listings in its market.
Why I Get More Cautious Above $2 Million
A more expensive property does not necessarily generate proportionally more STR revenue.
Once a purchase price moves above approximately $2 million, I want to see a property that is genuinely exceptional: a standout location, enough bedrooms for larger groups, an impressive pool, compelling outdoor space, distinctive design or another clear advantage that separates it from competing listings.
A $2.5 million house does not automatically earn twice as much as a $1.25 million house.
But the buyer still has to account for the higher purchase price, financing costs, property taxes, insurance, maintenance and operating expenses.
In many cases, I would rather see an investor purchase below the top of their budget and reserve capital for improvements that directly affect guest demand.
A buyer might purchase a $1.05 million property, add an $80,000 pool and spend another $70,000 on furnishings and design. That produces an approximate $1.2 million investment before closing costs and other expenses.
If the finished property has five bedrooms, a strong location and a compelling outdoor experience, it may present a better opportunity than a more expensive home that offers fewer bedrooms and no pool.
The right answer depends on the property and the buyer’s goals. But spending more on the purchase price is not always the best way to create a higher-performing STR.
Why the Land-to-Improvement Ratio Matters for Tax-Focused Buyers
For investors pursuing an STR tax strategy, revenue potential is only part of the analysis.
I also look at the relationship between land value and improvement value.
Land is not depreciable. The structure and certain qualifying improvements may be.
That means two properties with the same purchase price can offer different depreciation potential depending on how much of their value is attributable to the land versus the improvements.
For example, a $1.2 million property with a large portion of its value tied to the land may offer a smaller depreciable basis than a similarly priced property with a newer home, more substantial improvements and a lower land allocation.
Furniture, qualifying renovations, pools and certain other property improvements may also influence the analysis, depending on how the assets are classified and how the investor’s CPA structures the strategy.
This is one reason I do not evaluate potential STR acquisitions based on ZIP code and projected revenue alone. A property’s purchase price, improvement value, planned upgrades and operating potential all matter.
I am not a CPA, and tax benefits should never be treated as a substitute for sound underwriting. But for buyers considering cost segregation, bonus depreciation and material participation, these details can materially affect which property makes the most sense.
Learn more about the approach here: Austin STR Tax Strategy.
What I Look for Before an Investor Makes an Offer
Before recommending an Austin-area STR purchase, I want to answer a few practical questions:
- What jurisdiction governs the property?
- Is the property eligible for a short-term rental permit if one is required?
- Are there HOA restrictions, deed restrictions or condominium documents that limit STR use?
- Does the address include a unit designation that suggests a condo regime?
- How many bedrooms does the property have, and can another bedroom be created legally?
- Is there already a pool, or can the lot accommodate one?
- How do the best-performing nearby properties compare?
- What would it cost to furnish, improve and launch the property?
- What do property taxes, insurance, management, utilities and maintenance look like?
- How much of the property’s value is allocated to land versus improvements?
- Does the property have a credible path to performing near the top of its competitive set?
A strong investment requires more than an attractive location and a promising revenue estimate. The purchase price, legal eligibility, physical layout, guest experience and operating strategy all have to support the same outcome.
Where I Would Start Looking
If I were buying an Austin Airbnb in 2026, I would focus on four- and five-bedroom homes with pools or pool potential in 78745, close-in 78741, 78702, close-in 78721, 78723 and select parts of 78704 where the acquisition price can be justified.
I would also keep a close eye on larger properties between Austin and Dripping Springs, especially homes in Austin’s ETJ that offer more land, privacy and room for amenities.
There is no ZIP code where every property works. There is also no reason to settle for average performance when the goal is to buy and create a property that can compete with the best listings in its market.
If you are considering an Austin-area Airbnb investment, send me the properties you are evaluating. I can help you assess the jurisdiction, permit requirements, revenue potential, improvement opportunities and overall acquisition costs before you decide whether a property is worth pursuing.
Call/text Erika at (512) 779-7597.
Revenue figures reflect 2025 data from the ATX|STRS revenue overview. The 90th-percentile figures represent the sum of monthly 90th-percentile revenue benchmarks. They are not a guarantee of annual performance or a calculation of annual revenue earned by any specific listing.
