Pros, Cons and recent regulations of STR investing in San Antonio

[Justin Brickman]

Short-term rentals (STRs) in San Antonio offer both advantages and challenges, especially in light of recent regulations.

Pros:

1. Increased Income Potential: STRs often generate higher rental income compared to long-term leases, as they charge daily or weekly rates. This is particularly beneficial in popular tourist areas where demand for short-term lodging is high.
2. Flexibility: Owners can choose when to rent their property, allowing them to use it personally during off-peak times.
3. Support for Local Tourism: STRs provide a unique lodging option for tourists, helping to boost the local economy by attracting visitors who may prefer a home-like stay over traditional hotels.
4. Diversification for Investors: STRs provide real estate investors with an additional income stream, especially if they own properties in tourist-heavy areas.

Cons:

1. Strict Regulations and Higher Fees: San Antonio recently updated its STR regulations. Permits are now required for all STRs, with fees increasing as of June 2024. Type 1 (owner-occupied) permits cost $300, while Type 2 (non-owner-occupied) permits cost $450 for three years. This raises the operational costs for hosts.
2. Compliance with Hotel Occupancy Tax (HOT): STR operators must collect and remit the city's HOT (9% for San Antonio and 1.75% for Bexar County)​. Major platforms like Airbnb now remit these taxes directly to the city, which simplifies the process but places more scrutiny on unpermitted listings.
3. Potential for Permit Revocation: Non-compliance with noise ordinances, occupancy limits, or HOT reporting can result in permit revocation. Excessive complaints or three violations in three years could lead to losing the ability to operate​.
4. Impact on Neighborhoods: Non-owner-occupied STRs (Type 2) may cause friction in residential neighborhoods, as they often function like businesses, which can disrupt the local community atmosphere.

Recent Regulations (2024 Updates):

• 1) STR operators must obtain a permit for either Type 1 or Type 2 properties, depending on whether the owner lives on-site.
• 2) Platforms like Airbnb are required to remove any listings that lack a valid permit.
• 3) New noise and occupancy regulations apply, with stricter enforcement through permit revocations and fines

These regulations are part of the city's efforts to balance the benefits of STRs with the preservation of neighborhood quality and local safety standards.

4o