Top 5 short-term rental markets in Texas

Texas has quickly become one of the top destinations in the U.S. for short-term rental investors. With a fast-growing population, steady tourism, and business hubs from Austin to Dallas, the Lone Star State offers a rare blend of affordability, demand, and landlord-friendly laws.

If you’re looking to scale your Airbnb or VRBO portfolio, it’s worth first reviewing how insurance, licensing, and taxes work here. Before buying or listing your next property, take a moment to explore short-term rental insurance in Texas—a must-have safeguard for landlords operating in this competitive market.

In this guide, we’ll break down the top 5 short-term rental markets in Texas for 2025 and highlight what makes each one appealing for investors—along with insights into regulations, property management, and local tax considerations.

Why Texas stands out for short-term rental investors

Few states match Texas’s mix of economic growth, tourism, and real estate opportunity. The absence of a state income tax, diverse job market, and steady inflow of residents make it an ideal place for landlords to build wealth through short-term rentals.

The state’s laws also favor property owners. There’s no statewide ban on STRs, and while cities can enforce their own rules, many municipalities still encourage responsible hosting. Understanding how these local regulations differ is crucial—our guide to Airbnb and short-term rental laws in Texas breaks them down in detail.

Texas landlords should also stay informed about lease protections and dispute procedures. You can find more context in our overview of Texas landlord-tenant laws, which covers everything from deposits to eviction timelines.

Finally, as you plan your STR strategy, factor in Texas rental property tax regulations—including the state’s 6% hotel occupancy tax on stays under 30 days, plus local add-ons that can vary by city.

What makes a top-performing Texas STR market

To pinpoint the most promising markets for short-term rentals, we evaluated:

• Occupancy rates and average daily revenue
• Tourism, event, and business-travel demand
• Acquisition costs and long-term appreciation potential
• City-level licensing requirements and regulatory friendliness
• Access to attractions, amenities, and transportation
  

Here are the five cities that currently offer the best balance of profit potential, legal clarity, and guest demand.

Austin

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Austin remains Texas’s flagship short-term rental market. The city’s combination of tech jobs, music festivals, and outdoor lifestyle makes it one of the most resilient and in-demand markets for Airbnb hosts nationwide.

Average occupancy rates hover above 60%, and high nightly rates—especially downtown and around Zilker Park—keep annual revenues strong. The city’s regulatory environment is more restrictive than most, requiring licensing and compliance checks, but investors who follow the rules tend to see consistent returns.

You can find localized insights and coverage options for your short-term rental listings in Austin, TX at Steadily.

Best for: High-yield investors looking for stable demand and premium nightly rates.

Dallas

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The Dallas–Fort Worth metro is a powerhouse for both business and leisure travel. With more than 5,000 active listings, occupancy rates in the low 60s, and ADRs around $150, Dallas continues to perform strongly for Airbnb and VRBO hosts.

The city has recently updated its zoning and registration process for short-term rentals, so understanding where your property falls is key. Our article on property management laws in Texas offers guidance on maintaining compliance while scaling across multiple units.

There are lots of market-specific insurance and regulation updates, so be sure to visit short-term rentals in Dallas, TX page for more information.

Best for: Investors seeking scale and consistent urban occupancy.

Houston

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Houston’s massive metro area gives investors a variety of short-term rental opportunities—from luxury apartments downtown to family-friendly homes near the Medical Center.

The city’s regulatory framework is still relatively open, though proposals for new registration requirements have surfaced. That flexibility, paired with a strong medical and business travel sector, makes Houston a top performer.

Average daily rates are moderate, but steady guest demand supports healthy cash flow. For guidance on protecting your listings, explore short-term rentals in Houston, TX.

Best for: Investors seeking flexibility, affordability, and year-round business travel demand.

San Antonio

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San Antonio is one of Texas’s most underrated short-term rental markets. Tourism drives the city’s demand, from family vacations along the River Walk to historical attractions like the Alamo.

With average occupancy near 63% and nightly rates around $140, San Antonio offers dependable income potential without the steep acquisition costs of Austin or Dallas. City ordinances require permits and adherence to safety standards, but the overall regulatory landscape is fair and predictable.

Best for: Investors looking for affordable entry and consistent family and cultural tourism.

Port Aransas and Galveston

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If your investment strategy leans toward vacation rentals, Texas’s Gulf Coast offers high seasonal returns. Port Aransas and Galveston both attract millions of beachgoers annually, pushing average daily rates well above inland cities during peak months.

These markets can be more seasonal and require weather-related planning, but they’re excellent for investors prioritizing cash flow. Properties such as beachfront condos or resort-style apartments tend to perform best.

Best for: Vacation-rental investors optimizing for strong seasonal returns.

Taxes, regulations, and the short-term rental loophole

Each Texas city has its own approach to short-term rental taxation and licensing. Most collect both state and local hotel occupancy taxes, which hosts are required to remit—Airbnb and VRBO often handle this automatically.

It’s important to understand where your property fits within local zoning codes and whether HOAs restrict STR activity. Some landlords have explored the short-term rental loophole to manage compliance or tax treatment, but this should always be reviewed with a licensed professional.

Insurance and risk management

Operating a short-term rental involves unique risks—guest damage, liability exposure, and the high turnover that comes with frequent bookings. That’s why comprehensive short-term rental insurance in Texas is essential.

Traditional homeowners or landlord policies rarely cover commercial guest stays. A dedicated policy ensures protection for your structure, furnishings, and liability in the event of accidents or unexpected damage.

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Read more: Top 5 short-term rental markets in Arizona

Final thoughts

Texas remains one of the strongest states in the U.S. for short-term rental investors. The top markets—Austin, Dallas, Houston, San Antonio, and Port Aransas/Galveston—offer a mix of occupancy stability, legal clarity, and yield potential across different property types and budgets.

From a modern condo in downtown Austin to a coastal apartment in Galveston, every Texas market rewards landlords who stay informed, insured, and compliant.

At Steadily, we help property owners protect their rentals with flexible, landlord-focused coverage. Get a quote today to keep your Texas short-term rentals secure and profitable.