STR Occupancy Rate in Austin, TX

[Allen Carpenter]

I am curious about occupancy rates for Short Term Rentals in the Austin Market. What is the average occupancy for anybody doing this in the area?

[Ryan Roberts]

Originally posted by @Gulliver R.:

@Ryan Roberts

So other than STR'ing out my home that I own how do I invest in STRs in Austin?

As others have mentioned, it's very difficult to get the STR permit from the City of Austin for an investment property. The City of Austin defines STRs as "properties rented for less than 30 consecutive days". So a very simple solution (and great alternative to nightly rentals) is requiring a minimum 30-day stay, which still offers many of the same benefits as STRs.

There are MANY advantages to this strategy compared to STRs:

- No STR permit required: the permits are difficult to obtain, and cost $567 for the first year and $310 with each annual renewal.

- Less management: expect 4-5 guests/year vs 3-4 guests/week.

- No hotel occupancy tax: Texas taxes STRs 6% of rents. 

- Higher quality tenants: who's more likely to damage or trash your place? A guest paying thousands/month or a guest paying a few hundred bucks for a weekend?

- Less wear and tear: usually only a couple or small family, while STRs often pack in.

- Cheaper insurance: 'month or longer' landlord insurance costs less than STR insurance.

- And it works great for properties that have HOAs since most HOAs don't allow STRs.

That being said, you can definitely earn more revenue with STRs, but you’ll also have more expenses and more management.

My target market for this strategy is (1) remote workers who want to “vacation” in Austin while continuing to work, and (2) folks relocating to Austin and need a place to stay for a few months while they find a long term housing solution. There's huge demand from these markets, and with more and more companies allowing employees to work remotely and Austin’s insane job/population growth, the demand for this niche will continue to grow.