Texas short-term rentals: Restrictions, pros and cons, and more

What is a short-term rental in Texas?

Short-term rentals are residential properties rented out for less than 30 days at a time. In Texas, short-term rentals are often listed on platforms like Airbnb and can include single-family homes, condominiums, or units within master-planned communities. Texas short-term rentals are popular in urban areas, near universities, and in tourist destinations like Austin, Dallas, Houston, and San Antonio. While they generate revenue for property owners and offer flexibility for travelers, they can also raise unique challenges in community association settings.

In homeowners associations (HOAs) and condominium communities, the rise of Texas short-term rentals has sparked debate among residents, board members, and property managers. In 2023, there were 82,000 active Airbnb properties across the state. Questions often come up about how these rentals impact security, property values, and community culture. Associations need to balance individual property rights with the collective interests of the community, which can be complicated by state law and local ordinances.

This article is not intended to and does not constitute legal advice or create an attorney-client relationship. Board members should consult their association’s attorney to discuss the legal implications of their decisions or actions prior to proceeding.
 

Potential pros and cons of short-term rentals in your community

Texas short-term rentals can offer several benefits for both owners and communities, but they also come with tradeoffs. Understanding both sides can help boards make informed policy decisions that reflect their community's needs.

Disclaimer: This section provides general insights into the pros and cons of short-term rentals. Please note that short-term rentals are not permitted in our multi-family projects. The information shared is for educational purposes only and does not reflect or alter our community's policies.

Potential pros:

• More flexibility for property owners: Allowing rentals gives owners options when life plans change. Whether they’re traveling, on a temporary work assignment, or caring for a loved one, rental flexibility can help owners stay connected to the community. This can be especially valuable in high-cost markets or during periods of transition. With the right policies in place, boards can offer that flexibility while still protecting the long-term stability of the association.
   
• Increased income for property owners: Short-term rentals can provide homeowners with a new source of revenue, especially in popular Texas travel destinations.
   
• Higher occupancy rates: When units sit empty, the whole community can feel the impact. Allowing rentals can help keep units lived in and cared for, which can support operations, safety, and overall curb appeal. This is especially important in seasonal or commuter communities, where owners may not always be onsite.
   
• Opportunities to convert renters into buyers: Many renters are simply waiting for the right time to buy, and a positive experience in your community can help guide them toward that decision. Clear communication, helpful orientation, and positive everyday interactions with staff can turn short-term renters into long-term residents. When renters feel welcome and informed, they’re more likely to see the value of ownership. For boards, that’s an opportunity to support community stability and build a pipeline of future homeowners.

Potential cons:

• Increased noise and disruption: Short-term renters may not be familiar with or invested in the community's rules, which could lead to noise complaints, parking issues, or misuse of amenities.
   
• Security concerns: Frequent turnover can make it harder to monitor who is in the neighborhood, which can create anxiety among full-time residents.
   
• Renters don’t know emergency procedures: As temporary, unsupervised guests, renters may be unaware of emergency or evacuation plans the association may have in place. As a result, they could cause unnecessary danger to themselves or their neighbors in the event of an actual emergency.

Boards of Texas community associations should weigh these pros and cons carefully. What benefits one homeowner may be a serious inconvenience to others. It’s important to consider how Texas short-term rentals affect not just property values, but also day-to-day operations, budget planning, and resident satisfaction.
 

Legal considerations

Each city has its own regulations on short-term rentals. In Texas, city regulations can vary from being nonexistent to practically prohibiting short-term rentals altogether. In Galveston, for instance, owners of short-term rentals must pay a $50 annual fee. This fee covers the cost for a renter’s brochure explaining the noise ordinance. In Fort Worth, short-term rentals are typically prohibited in single-family residential zones.
 

Short-term rental restrictions

It’s easy to see why the idea of home-sharing and short-term rentals would appeal to homeowners, but as a board member it is your fiduciary obligation to protect the property values and integrity of your community. Make a point of discussing this important topic at your next board meeting. Here are a few methods some Texas communities have implemented to enforce restrictions and address rental violations:

• Know your documents: This might seem a little rudimentary, but it is the best place to start. If there is a clause in place already that speaks to short-term rentals, you may be able to take action immediately.
   
• Create a new policy: If you do not have a policy in place, it’s time to put one together. While developing this new policy, it is a good idea to pair it with a stern fining schedule for any violations. A firm punishment establishes a sense of urgency and deters homeowners from testing the waters. An experienced property management company can help you draft, file, and enforce the specific policies you adopt.
   
• Call in the reinforcements: Once you have a policy and fining schedule, how do you identify policy violators? Monitoring short-term rental sites can be a tall order for your management team to tackle, especially when there are probably more important tasks you’d prefer that they handle.

Consider forming a committee of condo owners who are equally vested in protecting home values. Committee members can regularly peruse online short-term rental sites for listings that resemble homes in your community and inquire as a “secret shopper.” They could then pass along the names of any violators to the management team for policy enforcement.
 

In conclusion

Although short-term vacation rentals may be a hot trend, they can be a cold detriment to your association if not properly addressed. The right community association management company can support you with a clear, well-defined policy. Learn more about how you may benefit from a professional management company that can provide a local, customized experience for your community. Contact FirstService Residential, the leading community management company in Texas.