short term rental that is also your primary residence

3 Replies

Hello all,

I was wondering if anyone has any input, at all, on this: 

Seeking short-term rental property in Austin TX....that I also live in ~ 25% of the time. 

My job has me out of town for 14 days at a time with 7 days between 2 week rotations.  

Does anyone here have any experience living in / renting out their own short-term rentals in Austin TX.

-- Will HOAs let you do this? 

-- Can you get financed with consideration to "potential rental income?" even if you haven't been a landlord before

(I have a little over a six-figure income, significant down payment ready, and excellent credit but I don't think that is good enough to get financed some of these 450k+units in high rental spots like Rainey or downtown?)

I, myself, am not wealthy enough to purchase in cash.  80% would need to be financed.  

-- which mgmt/cleaning companies do you utilize? 

-- are there other less obvious but otherwise reasonably high rental volume spots other than downtown? The Domain? South East/Riverside that I haven't considered? 

I would love to hear from you if you have done something similar before or feel like offering any advice.  I'm a fan of the BP podcast and read a few books but I'm just struggling to find anything that matches my unique living situation. 

Thanks to all. Have a great New Year!

@William Kazenas

Your best bet will be to buy a condo unit and apply for a 'Type 3' STR licence. Austin won't allow you to do STR with single-family or small residential multifamily (e.g., duplex) because you won't be living there at least 51% of the time. Licenses for non-owner occupied STRs (owners live there less than 51% of the time) are only currently being issued in certain commercially zoned areas. There are also some other restrictions, even with Type 3 licenses. However, that sounds like the best fit for you.

You ask, "Will HOAs let you do this?" In short, no. Condo HOAs almost always forbid rentals shorter than 30 days; even a 6 month minimum lease term is pretty common. However, there are a few condo communities in Austin--some well-known, some under the radar--that do not have any lease duration restrictions in their bylaws or else have a history of the condo board deliberately choosing not to enforce those restrictions.

I didn't do quite what you are proposing, but I'm in a similar circumstance and came up with a different solution in a different expensive, growing city.  Many of the same issues apply.

I bought a home as a "personal residence" in a Seattle suburb.  It had a floor-plan that I liked which allowed me to close-off the walkout basement and create a separate unit.  I got a permit for it (an Accessory Dwelling Unit, required in Bellevue, WA) and I live in that unit (when I am in town).  I then rent out the rest of the house to a nice family (the home is in a great school district so is relatively easy to rent).  One could do this with any home that has a Mother-In-Law suite/unit like capability.

To answer your two non-geographic specific questions:

- HOA's are all over the map with regards to what they will allow you to do. Read the HOA covenants and if you think you're good to go, also ask if anything is being currently being discussed (to change the covenants). But as others have said, a lot of the larger high rise type condos have blocked out short term rentals. I own a condo too, and as a condo owner, I totally understand and generally agree with this "short term rental blocking" policy.

- Financing for "potential rental income" is not something banks look at (in my experience).  Even when they run the numbers on current rentals you already have in place, they typically want 2+ years of rental income before they will incorporate that into you income.

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