Austin, Texas: Market data, Laws & Investor Guide

Austin, the vibrant capital of Texas, has emerged as a hotspot for Airbnb entrepreneurs in 2024. With its thriving tourism industry, diverse attractions, and growing population, Austin presents a golden opportunity for those looking to start a profitable short-term rental business. The city's unique blend of culture, music, and technology draws visitors from around the globe, creating a consistent demand for comfortable and conveniently located accommodations.

In July 2024, the average home value in Austin reached an impressive $920,171, reflecting the city's booming real estate market. Moreover, Austin has witnessed a remarkable 84% year-over-year growth in new Airbnb listings, indicating a strong and growing short-term rental market. With 6,902 active Airbnb listings, Austin ranks as the third-highest city in the United States for Airbnb rentals, solidifying its position as a prime location for Airbnb hosts.

The appeal of starting an Airbnb business in Austin extends beyond the city's impressive statistics. Austin's vibrant events calendar, which includes the renowned South by Southwest (SXSW) festival and Austin City Limits Music Festival, attracts a diverse array of visitors throughout the year. This consistent influx of tourists ensures a steady stream of potential guests for your Airbnb property.

Furthermore, Austin's strong job market and growing population contribute to the city's allure for Airbnb hosts. With major tech companies like Apple, Google, and Facebook establishing offices in Austin, the city has become a magnet for young professionals seeking short-term accommodations. This demographic shift has created a lucrative opportunity for Airbnb hosts to cater to the needs of both leisure and business travelers.

Austin Short-Term Rental Market Analysis

According to data from AirDNA, Austin's short-term rental market has shown steady growth and strong performance over the past two years:

• Average Airbnb occupancy rate in Austin: 61%
• Peak season occupancy rate: 77% in April
• Average daily rate: $303
• Average monthly revenue: $24,936

Comparing 2024 data to the previous year:

1. Active listings increased by 8%
2. Average monthly occupancy increased by 3%
3. Average daily rate increased by 5%
4. Average monthly revenue increased by 5%

Austin's tourism industry has experienced significant growth in recent years. In 2022, travelers spent $8.2 billion in Austin, generating $837 million in local taxes. The city's visitor traffic has recovered to 86%-94% of 2019 levels, while Austin-Bergstrom International Airport hit record highs in 2023.

Key local events and festivals that boost tourism in Austin include:

1. SXSW Music, Film and Interactive Conferences and Festivals (March)
2. Austin Food + Wine Festival (November)
3. Texas Craft Brewers Festival (November)
4. Texas Book Festival (November)
5. Austin Trail of Lights (December)

According to Airbnb host forums and rental platforms, there is demand for mid-term rentals (stays of 30 days or longer) in central Austin. However, hosts should ensure that their units and buildings allow for 30-day rentals, as some have minimum stay requirements of 3 or 6 months.

Best Neighborhoods in Austin for an Airbnb Business

When searching for the ideal location to start an Airbnb business in Austin, hosts should consider factors such as proximity to popular attractions, up-and-coming areas, and tourist hotspots. By analyzing data from reputable sources like AirDNA and Mashvisor, as well as incorporating local knowledge, we have identified the top 5 neighborhoods in Austin for starting an Airbnb business.

1. Downtown Austin

Downtown Austin is the heart of the city, offering a vibrant atmosphere and easy access to numerous attractions, restaurants, and nightlife. This area is perfect for hosts looking to cater to tourists and business travelers alike.

1. Average Occupancy Rate: 72%
2. Average Daily Rate: $321.7
3. Airbnb Seasonality: Peak in March, with an occupancy rate of 85% and an ADR of $378
4. Estimated Annual Revenue: $84,000

According to Zillow, the median home value in Downtown Austin is $599,000 as of June 2024. For the best return on investment, consider investing in a 2-bedroom property, as they generate the highest estimated annual revenue in the area.

2. East Austin (EaDo)

East Austin, also known as EaDo, is an up-and-coming neighborhood that has seen significant growth in recent years. With its unique blend of art, culture, and proximity to Downtown, EaDo is an attractive option for Airbnb hosts.

1. Average Occupancy Rate: 69%
2. Average Daily Rate: $377.6
3. Airbnb Seasonality: Peak in March, with an occupancy rate of 81% and an ADR of $420
4. Estimated Annual Revenue: $95,100

The median home value in East Austin is $550,000 as of June 2024, according to Mashvisor. Investing in a 2-bedroom property in this neighborhood can provide a strong return on investment.

3. South Congress (SoCo)

South Congress, or SoCo, is a trendy neighborhood known for its eclectic mix of shops, restaurants, and live music venues. This area attracts a diverse range of visitors, making it an excellent choice for Airbnb hosts.

1. Average Occupancy Rate: 67%
2. Average Daily Rate: $291.4
3. Airbnb Seasonality: Peak in October, with an occupancy rate of 78% and an ADR of $335
4. Estimated Annual Revenue: $71,300 for a 2-bedroom property

The median home value in South Congress is $720,000 as of June 2024, according to Zillow. While housing prices are higher in this area, investing in a 2-bedroom property can still yield a good return on investment.

4. Zilker

Zilker is a highly sought-after neighborhood, thanks to its proximity to Zilker Park, Barton Springs Pool, and other outdoor attractions. This area is perfect for hosts looking to attract nature enthusiasts and families.

1. Average Occupancy Rate: 65%
2. Average Daily Rate: $441.8
3. Airbnb Seasonality: Peak in October, with an occupancy rate of 68% and an ADR of $560
4. Estimated Annual Revenue: $104,800 for a 3-bedroom property

According to Mashvisor, the median home value in Zilker is $1,100,000 as of June 2024. Investing in a 3-bedroom property in this neighborhood can provide the best return on investment, given the higher average daily rates and estimated annual revenue.

5. University of Texas Area

The University of Texas area is an excellent choice for hosts looking to cater to students, visiting families, and academic professionals. This neighborhood offers a mix of affordability and proximity to the university campus.

1. Average Occupancy Rate: 62%
2. Average Daily Rate: $173.2
3. Airbnb Seasonality: Peak in March, with an occupancy rate of 68% and an ADR of $200
4. Estimated Annual Revenue: $39,200 for a 1-bedroom property

The median home value in the University of Texas area is $450,000 as of June 2024, according to Zillow. Investing in a 1-bedroom property can provide a good return on investment, as they are in high demand among students and solo travelers.

By considering these top neighborhoods and their respective data, hosts can make informed decisions when starting an Airbnb business in Austin. Remember to stay up-to-date with local regulations and market trends to ensure the success of your short-term rental venture.

Maximizing Your Revenue Through In-Demand Amenities and Properties in Austin

To set competitive prices for your Airbnb listing in Austin, it's essential to consider factors such as location, property type, amenities, seasonality, and market demand. By analyzing the most successful listings on Airbnb and other short-term rental platforms, you can identify the key elements that contribute to their performance and implement them in your own property to maximize revenue.

In-Demand Amenities

Based on our analysis of top-performing Airbnb listings in Austin, the following amenities are highly sought-after by guests and can help you stand out in the competitive market:

1. Pool: Properties with a private or shared pool are in high demand, especially during the hot Texas summers. Listings with a pool can command higher nightly rates and attract more bookings.
2. Outdoor space: Guests appreciate properties with a balcony, patio, or backyard where they can relax and enjoy the outdoors. Consider adding comfortable seating, a grill, or a fire pit to enhance the appeal of your outdoor space.
3. Smart home features: Integrating smart home technology, such as keyless entry, smart thermostats, and voice-controlled devices, can streamline the guest experience and increase the perceived value of your property.
4. Pet-friendly accommodations: Many travelers prefer to bring their furry friends along, so allowing pets in your Airbnb can expand your potential guest pool. Be sure to set clear guidelines and consider charging a pet fee to cover any additional cleaning or maintenance costs.
5. Unique design elements: Listings with distinctive architectural features, such as exposed brick walls, high ceilings, or custom artwork, tend to stand out and attract more bookings. Incorporate local flair and personality into your property's design to create a memorable experience for your guests.

Popular Property Types and Revenue Potential

According to recent data, the following property types are most popular among Airbnb guests in Austin:

Townhouses

• 1-bedroom: Average property price: $450,000 | Potential annual revenue: $35,000
• 2-bedroom: Average property price: $600,000 | Potential annual revenue: $50,000
• 3-bedroom: Average property price: $750,000 | Potential annual revenue: $65,000

Apartments

• Studio: Average property price: $250,000 | Potential annual revenue: $25,000
• 1-bedroom: Average property price: $350,000 | Potential annual revenue: $35,000
• 2-bedroom: Average property price: $450,000 | Potential annual revenue: $45,000

Condos

• 1-bedroom: Average property price: $400,000 | Potential annual revenue: $40,000
• 2-bedroom: Average property price: $550,000 | Potential annual revenue: $55,000
• 3-bedroom: Average property price: $700,000 | Potential annual revenue: $70,000

Single-Family Homes

• 2-bedroom: Average property price: $650,000 | Potential annual revenue: $60,000
• 3-bedroom: Average property price: $850,000 | Potential annual revenue: $80,000
• 4-bedroom: Average property price: $1,100,000 | Potential annual revenue: $100,000

It's important to note that these figures are averages and may vary depending on the specific location, condition, and amenities of your property. To maximize your revenue potential, consider investing in a property type that aligns with your budget and target guest demographic.

By incorporating in-demand amenities and selecting a popular property type, you can create a competitive Airbnb listing that appeals to a wide range of guests and maximizes your revenue potential in the thriving Austin short-term rental market.

Understanding Austin Short-Term Rental Regulations

Austin, Texas, has a comprehensive set of regulations governing short-term rentals, defined as residential properties rented for less than 30 consecutive days. The city recognizes three types of STRs: Type 1 (owner-occupied), Type 2 (non-owner occupied), and Type 3 (multifamily). To legally operate an STR in Austin, hosts must obtain an annual operating license from the city, which can be applied for online or by mail. The application process requires essential documents such as proof of ownership and a certificate of occupancy.

Zoning restrictions play a significant role in determining eligibility for a Type 2 STR license, as the city has implemented restrictions in certain residential areas to maintain neighborhood character. STR hosts in Austin are also required to collect and remit both city (11%) and state hotel occupancy taxes, with failure to comply resulting in hefty fines. The city has partnered with booking platforms like Airbnb, VRBO, and HomeAway to automatically collect and remit the city's Hotel Occupancy Tax on behalf of hosts.

Austin enforces strict occupancy limits for STRs based on the number of bedrooms, with a maximum of six unrelated adults or ten related adults allowed at any given time. When advertising an STR, hosts must include their license number and occupancy limit to ensure transparency and compliance with city regulations.

For those seeking to start a short-term rental business in Austin, the most viable path often lies in the Type 1, owner-occupied category. By residing on the premises, hosts can legally rent out a portion of their home or an accessory dwelling unit (ADU) on a short-term basis, aligning with the city's regulations and fostering a personalized guest experience.

Read our full STR regulations guide for more detailed information on Austin short-term rental regulations, including insights from local hosts and a closer look at other policies.

Keys to Success as an Austin Airbnb Host

To thrive as an Airbnb host in Austin, it's essential to understand the preferences of local customers and incorporate popular amenities and design themes into your property. By catering to the needs and desires of Austin's unique visitor demographic, you can attract more bookings and achieve long-term success in this competitive market.

Popular Amenities and Design Themes

Austin's Airbnb guests appreciate properties that reflect the city's vibrant culture and laid-back lifestyle. Some popular amenities and design themes include:

• Outdoor spaces: Properties with well-maintained backyards, patios, or balconies are highly sought-after, as they allow guests to enjoy Austin's pleasant weather and outdoor lifestyle.
• Unique decor: Incorporating local art, music-themed decor, or quirky design elements can help your property stand out and appeal to Austin's creative crowd.
• Smart home features: Guests value the convenience of keyless entry, smart thermostats, and voice-controlled devices, which streamline their stay and enhance the overall experience.
• Pet-friendly accommodations: Many travelers prefer to bring their furry friends along, so allowing pets in your Airbnb can expand your potential guest pool.
• Fully-equipped kitchens: Providing a well-stocked kitchen with essential appliances, cookware, and basic pantry items can attract guests who prefer to cook their own meals.

Attracting Austin Customers

To appeal to Austin's diverse visitor base, consider the following strategies:

• Highlight local attractions: Emphasize your property's proximity to popular destinations like Zilker Park, Sixth Street, and the Texas State Capitol in your listing description and photos.
• Offer local recommendations: Provide guests with insider tips on the best restaurants, bars, live music venues, and hidden gems in Austin, showcasing your local expertise and enhancing their experience.
• Cater to specific niches: Target specific guest segments, such as business travelers, families, or event attendees, by tailoring your amenities and marketing efforts to their needs.
• Leverage social media: Use platforms like Instagram and Facebook to showcase your property's unique features and engage with potential guests.

Potential Challenges and Guidelines for Success

While Austin's thriving tourism industry presents significant opportunities for Airbnb hosts, it's crucial to be aware of potential challenges and adhere to best practices for success:

• Regulatory compliance: Ensure your property meets all local regulations, including obtaining necessary licenses and permits, and complying with zoning restrictions and tax requirements.
• Competition: With a growing number of Airbnb listings in Austin, it's essential to differentiate your property through unique amenities, competitive pricing, and exceptional guest experiences.
• Maintenance and cleanliness: Consistently maintain a high standard of cleanliness and promptly address any maintenance issues to ensure positive guest reviews and repeat bookings.
• Effective communication: Respond promptly to guest inquiries, provide clear check-in instructions, and maintain open lines of communication throughout their stay to build trust and foster positive relationships.
• Pricing strategy: Regularly review and adjust your pricing based on local demand, seasonality, and competitor rates to maximize occupancy and revenue.

By focusing on these key areas and adapting to the unique needs of the Austin market, Airbnb hosts can position themselves for long-term success in this dynamic and rewarding industry.

Using BNBCalc to Find Profitable Properties in Austin, Texas

BNBCalc is a powerful tool that can help aspiring short-term rental business owners find and analyze profitable properties in Austin, Texas. By following these steps, you can leverage BNBCalc to make informed decisions and maximize your investment potential.

1. Analyze Properties Using BNBCalc

To get started, simply enter the address of the property you're interested in or paste a Zillow link into BNBCalc. The platform will instantly generate revenue projections, as well as provide detailed financial summaries, including expenses and financing options. BNBCalc's user-friendly interface allows you to easily edit expenses, mortgage rates, setup costs, and tax savings to get a comprehensive understanding of a property's profitability.

2. Benchmark Comparable Rentals

One of the key features of BNBCalc is its ability to benchmark your property against other short-term rentals in the area. By analyzing comparable properties, you can gain valuable insights into pricing strategies, amenities, and occupancy rates. This information can help you optimize your listing and fetch top dollar for your rental. BNBCalc provides data on up to 40 short-term and long-term rental comps, along with their revenues, allowing you to make data-driven decisions.

3. Determine the Right Price and Property Size

BNBCalc can help you determine the optimal number of bedrooms, bathrooms, and purchase price to maximize your revenue potential. The platform provides detailed breakdowns of upfront costs, allowing you to customize each calculated field and account for hidden expenses that many investors overlook. By analyzing different property configurations and price points, you can identify the sweet spot that offers the highest returns on your investment.

4. Make an Offer

Once you've identified a promising property and determined its profitability using BNBCalc, it's time to make an offer. BNBCalc's partnered short-term rental lender can help you get prequalified and secure financing at competitive rates. Our team recommends working with Brian Bockholdt at Alliant Credit Union for the lowest interest rates available.

5. Use the Tax Calculator

BNBCalc's tax calculator is a valuable tool for understanding the potential tax deductions you can claim through bonus depreciation. By inputting your property's details, you can estimate the tax savings you may be eligible for, which can significantly impact your overall profitability. The platform's tax calculator takes into account factors such as accelerated depreciation, cost segregation, and other tax strategies specific to short-term rentals.

6. Come Up with a Buy Box

Finally, use BNBCalc to determine if a specific property meets your investment criteria and falls within your "buy box." By considering factors such as cash-on-cash return, annual revenue, and tax savings, you can establish a set of parameters that define your ideal investment property. This will help you quickly identify and pursue opportunities that align with your goals and maximize your chances of success in the Austin short-term rental market.

By leveraging the power of BNBCalc and following these steps, aspiring short-term rental business owners can find, analyze, and acquire profitable properties in Austin, Texas. With its comprehensive data, user-friendly interface, and powerful features, BNBCalc is an essential tool for anyone looking to succeed in the competitive world of short-term rentals.

Ready to start your Airbnb journey in Austin? Use BNBCalc to analyze potential properties and make informed investment decisions. Our powerful tool provides comprehensive data to help you maximize your profits. Check out this pre-analyzed Austin Airbnb opportunity and see how BNBCalc can help you succeed in the short-term rental market. Visit BNBCalc.com today and take the first step towards building your Airbnb business.