Investing in a Short Term Rental in San Antonio

The short term rental San Antonio market is a thriving market. Find the best areas to invest in to be a profitable investor in San Antonio.

The short term rental market is back on its feet after being badly hit by the pandemic that started in early 2020. Following the lifting of travel restrictions in mid-2021, we’re now seeing a significant increase in the demand for vacation rentals. Also, there’s growing interest from new investors across the US looking to venture into the short term rental market.

Table of Contents

Real Estate Market Trends and Forecasts in San Antonio
Tourism and Travel Trends and Forecasts in San Antonio
Short Term Rental Laws in San Antonio
How to Find a Profitable Short Term Rental Property in San Antonio
Top 3 San Antonio Neighborhoods for Short Term Rentals

Texas is one of the best places to own a short term rental due to its affordable property prices and favorable business taxes. One of the most famous cities for investing in short term rentals in Texas is San Antonio. Home to various tourist attractions, San Antonio is one of the US cities often frequented by visitors.

Famous for its museums, great food, and the Alamo, there is no doubt that San Antonio enjoys a thriving tourism industry. However, while the short term rental market in San Antonio is lucrative, not all areas are optimal for investing in vacation rentals. If you’re planning to invest in the short term rental San Antonio market, it’s crucial to know the trends in local neighborhoods.

To find the best San Antonio neighborhoods for investing in short term rentals, use online real estate analytics platforms like Mashvisor. Mashvisor’s database contains hundreds of thousands of available listings to help you find the right investment property.

Real Estate Market Trends and Forecasts in San Antonio

While the San Antonio real estate market saw a slight decline in home sales in April 2022, the San Antonio housing market is not expected to cool down anytime soon. In fact, the median home price in San Antonio is continuously increasing. In addition, the severe shortage in inventory is another factor that will drive the increase in appreciation rates in the next few years.

Here is the recent San Antonio real estate market data based on Mashvisor’s data as of November 2022:

Median Property Price: $359,364
Average Price per Square Foot: $1,084
Days on Market: 65
Number of Long Term Rental Listings: 4,836
Monthly Long Term Rental Income: $1,657
Long Term Rental Cash on Cash Return: 2.39%
Long Term Rental Cap Rate: 2.44%
Price to Rent Ratio: 18
Number of Short Term Rental Listings: 3,329
Monthly Short Term Rental Income: $2,325
Short Term Rental Cash on Cash Return: 2.61%
Short Term Rental Cap Rate: 2.67%
Short Term Rental Daily Rate: $157
Short Term Rental Occupancy Rate: 43%
Walk Score: 39

Based on our research, here are the top 2023 market trends and forecasts for San Antonio real estate:

1. Prices for Single-Family Homes Will Continue to Rise

The most common property type in San Antonio is three to four-bedroom single-detached homes. In fact, single-family homes account for around 62% of the residential units in San Antonio. Single-family homes are the most desirable property type in the city, and it is also considered the best investment property type.

Because of the increasing demand for single-family homes in San Antonio, the single-family home prices in the city are up by around 16% year over year. However, even with the current median property price of $359,364, real estate experts believe that many homes are still undervalued. This means that there are lots of affordable options for homebuyers and investors.

2. Steady Population Growth Drives the San Antonio Real Estate Market

According to an article from Roofstock, San Antonio is among the top 10 major metros that have experienced a high population increase from 2010 to 2020. One of the reasons for this growth is that more people from other states are migrating to San Antonio due to the city’s low cost of living, favorable tax rates, and profitable business environment.

Currently, San Antonio city is home to more than 1.4 million residents. It is one of the fastest-growing cities in the country based on numeric population growth from 2021 to 2022. According to data from the US Census Bureau, more than 13,000 people relocated to San Antonio during the peak days of the pandemic.

In fact, San Antonio ranked first in terms of numeric population growth, followed by Phoenix and Fort Worth in the second and third spots, respectively. San Antonio’s growing population is expected to continue until 2023 and the following years. Because of the steady growth in population, the San Antonio real estate market is also expected to remain hot and strong.

3. San Antonio’s Strong Economy Is Good for Its Real Estate Market

San Antonio is the second-largest city in the Southern US. It is the seventh most populous and one of the fastest-growing cities in the country. San Antonio is the perfect city for college-educated residents because it offers a thriving job market. Additionally, the tourism industry is one of the drivers of its economy, including the short term rental San Antonio market.

The city’s sunny weather, low cost of living, best schools, affordable housing, and several amenities are a few of the reasons why many are moving to San Antonio. Among the people who move to San Antonio include those who invest in a variety of businesses. It is the reason why San Antonio’s real estate market is expected to continue to skyrocket in the following years.

4. San Antonio Offers an Attractive Rental Market

While there are available listings that are considered affordable, almost 47% of San Antonio’s residents are renting a home. With a high price to rent ratio of 18, San Antonio is home to a generous number of renters. The high price to rent ratio means that renting a home is a more practical option for most residents than buying their own.

With a high demand in the rental market, San Antonio real estate is great for those who plan to rent a house. In fact, rent prices are continuously rising in San Antonio, according to a new report by Redfin. Rent hikes are driven by several factors, such as an increase in city-level population due to relocation within the city, low supply of rental homes, and high demand.

According to Mashvisor’s data as of November 2022, there are only around 4,836 available long term rental listings in the city. A long term rental owner in San Antonio can earn an average monthly income of $1,657. Plus, the cash on cash return for long term rentals in San Antonio is 2.39%, which is within a good range given the high housing appreciation rate in the city.

5. San Antonio Offers Affordable Housing Compared to Other Cities in Texas

Despite the rising rental rates and strong real estate demand, San Antonio real estate offers one of the most affordable housing in the state of Texas. As a matter of fact, the median housing price of $359,364, which is significantly lower compared to the average (which is $428,700) and the state’s median home value of $465,249.

The above figures mean that it’s possible for real estate investors to find rental property that is within their budget. If you can find an affordable investment property, you’re more likely to earn better profits. It is more likely to generate a return on your investment quickly. With a long term rental cap rate of 2.44%, you will likely find a profitable investment property.

Tourism and Travel Trends and Forecasts in San Antonio

People visiting Texas will surely drop by San Antonio. Being one of the most favorite places to visit, San Antonio offers a lot to keep both tourists and residents entertained. Known as the “Alamo City,” San Antonio welcomes approximately 34 million visitors annually. No wonder why the hospitality industry and the short term rental San Antonio market are thriving.

Here are a few 2023 tourism and travel trends and forecasts in San Antonio:

1. Leisure Visitors and Business Travelers Will Saturate the City

Since travel restrictions are lifted during the middle of 2021, people from all over the world are eager to travel once again. Since San Antonio offers a wide variety of tourist attractions and fun activities, it is one of the top destinations when it comes to leisure travel. As a result, we expect to see an influx of tourists in Alamo City, which will continue to grow in 2023.

Aside from tourists, San Antonio also expects to welcome business-related visitors. With many companies and large corporations slowly getting back to normal, business meetings are to be anticipated. Consequently, the demand for short term rentals and hotels will also surge.

2. A Hotel Boom Is Underway

According to an article from CultureMap San Antonio, the construction of several new hotels in Alamo City are underway. In the second quarter of 2022, there were around 46 projects, featuring more than 5,000 guest rooms that were either in the planning or development phases in San Antonio. In fact, San Antonio ranks 21^st in the country for hotel construction.

The growth in the hotel industry is proof that the tourism industry in San Antonio is thriving. This means that more demands for short term accommodations are expected in 2023 and the next few years. Another reason for this demand is the heavy trend of population growth and corporate migration to Texas, as well as the state’s business-friendly tax laws.

3. The Short Term Rental San Antonio Market Will Remain Hot

Since the hospitality industry is thriving, the short term rental market in San Antonio will also continue to grow. Even though hotels are available, many travelers still prefer to stay in short term rentals because of the homey atmosphere it offers. Plus, nightly stays at short term rentals are substantially more affordable compared to hotel stays.

As per Mashvisor’s November 2022 real estate data, the average daily rate for short term rentals in San Antonio is $157, which is significantly lower than most hotels’ per-night rates. Travelers who want to save money and enjoy the locality of the place will definitely choose to stay in a short term rental home rather than in a hotel room.

Short Term Rental Laws in San Antonio

If you are planning to buy vacation rental property in San Antonio, it’s crucial to know the short term rental laws and regulations in the state of Texas and the ordinances in the city. In San Antonio, operating short term rentals is generally legal as long as the owner seeks a permit before listing the property.

Here are the local short term rental laws in San Antonio that you should know of:

Permits Are Required for Short Term Rentals in San Antonio

In San Antonio, short term rentals refer to rental spaces that are rented for less than 30 consecutive days. To operate a short term rental in San Antonio, you need to obtain a short term rental permit. San Antonio short term rental property owners shall pay a one-time application fee of $200.

The application for the permit should include the following required information:

List of all owners, operators, and agents
Sketch and description of the available parking spaces in the location
Sketch of the floor plan, including a description of sleep areas, evacuation routes, fire extinguishers, and proposed number of guests
Name, address, and 24/7 contact information of the contact person
Proof of registration with the City of San Antonio Finance Department for Hotel Occupancy Tax collection
Proof of coverage under General Liability Insurance with minimum limits of $500,000 per occurrence and $1 million aggregate

Permits are valid for three years after the date of issuance. To continue the operation of the short term rental unit, the owner should renew the permit before it expires. For the renewal of the permit, a fee of $100 must be paid. Note that the permit to operate a short term rental is not transferable to any person, entity, or location.

Types of Short Term Rentals

In San Antonio, short term rentals comprise two types: owner-occupied and non-owner-occupied.

Regulations for Owner-Occupied Short Term Rentals

Owner-occupied short term rentals are vacation rental properties that are rented out for less than 30 consecutive days while the property is also being occupied by the owner.

Owner-occupied short term rental guests typically rent less than the entire place. A short term rental can also be classified as owner-occupied if guests share the use of a full bathroom with the owner.

The owner of the owner-occupied short term rental home should be present at the property during the guests’ entire stay. Owner-occupied short term rentals should not operate without a permit.

Regulations for Non-Owner-Occupied Short Term Rentals

A non-owner occupied short term rental home is rented out for less than 30 consecutive days and is not occupied by the owner during the stay of the guests. To be classified as non-owner occupied, the entire rental unit should be rented out to the guests. If you want to operate a non-owner occupied short term rental, you also need to secure a permit to do so.

General Standards

San Antonio short term rental owners are required to comply with the general standards and regulations required by the local law. Here are the things that you should be aware of and comply with if you plan to invest in the short term rental San Antonio market:

Occupancy: Make sure to comply with the required maximum occupancy as defined by the San Antonio Property Maintenance Code.
Parking: This should be in compliance with the Unified Development Code.
Life Safety: This includes compliance with safety standards and building codes. Short term rental homes should comply with the mandatory requirements, including fire extinguishers, carbon monoxide and smoke detectors, an evacuation plan, and emergency exits.

In addition, San Antonio short term rental owners shall abide by the other terms and conditions as stated in the permit, as well as the local laws related to operating a short term rental.

If you want to view the short term rental rules and regulations in other cities, visit our short term rental regulations page.

How to Find a Profitable Short Term Rental Property in San Antonio

Since San Antonio is a top tourist destination, it is also one of the most lucrative markets for investing in short term rentals. However, while it is a good idea to invest in the short term rental San Antonio market, not all neighborhoods are optimal for this kind of investment strategy. To find the best short term rentals for sale, it’s important to study and analyze the local market first.

Here are a few tips that can help you determine whether a San Antonio short term rental property will be a profitable investment or not:

1. Find the Right Neighborhood to Invest in

Not all neighborhoods are good for short term rentals. If you want to ensure that your investment will be profitable, you must find a neighborhood that is often frequented by tourists and business travelers. Listed below are a few tricks that can help you identify a good short term rental neighborhood:

Distance to tourist attractions: If your target market is tourists, then choosing a neighborhood that is in close proximity to attractions is a good idea. Most tourists want to stay someplace where they can easily travel to their planned itineraries.
Distance to business districts: If you plan to rent out to business travelers, a neighborhood that is close to business districts is your best bet. Business travelers want to stay in a place where they can just walk to their workplace.
Safety: No one wants to stay in a dangerous neighborhood. Before you choose to invest in a certain area, make sure to check its safety and verify the crime rate in the locality. Avoid buying a property in an area that seems isolated.
Amenities: A good neighborhood for investing in short term rentals offer a lot of amenities that are useful for visitors. They include the availability of public transportation, proximity to shops and dining areas, as well as recreation facilities.

2. Study the Local Short Term Rental Market

Before you choose any investment property, you need to study and analyze the local short term rental San Antonio market first. There are several metrics that can help you determine if the market is good for short term rentals, such as the cash on cash return, occupancy rate, cap rate, and average monthly short term rental income.

Fortunately, you can easily do it through Mashvisor. Mashvisor provides access to rental property analysis so you can decide whether or not such property will be profitable. In addition, you can also access the cash on cash return calculator and rental income calculator to help you estimate your potential returns.

Moreover, it’s essential to get access to accurate and updated real estate data so you can identify which properties are best for short term rental strategy. With Mashvisor’s comprehensive data and analysis, you’ll have everything that you need to make an informed investment decision.

Mashvisor’s rental property analysis feature allows real estate investors to determine whether or not a property will be profitable based on several metrics.

3. Compare the Property With Other Similar Properties in the Area

After you’ve identified a few prospective rental properties that will make a good investment, you should run some rental comps to ensure that you are buying the right investment. The best rental comps are those that are located within the same area as your property and with similar features. The good news is that you can easily find the best rental comps using Mashvisor.

Rental comps allow you to see how similar properties perform in the area. You will also determine how much rental estimate you can charge to your guests. Plus, you’ll be able to see your future competitors and identify how you can make your property stand out among the rest.

Are you ready to find the best investment property in San Antonio? Try Mashvisor for free. Start your 7-day free trial now.

Top 3 San Antonio Neighborhoods for Short Term Rentals

The best neighborhoods for investing in short term rental San Antonio are those that are desirable to both tourists and business travelers. What’s more, these neighborhoods should have favorable real estate data and analysis and can generate sufficient profits from your investment property.

For the list below, we selected the top three neighborhoods for short term rentals in San Antonio based on their occupancy rates (40% or higher) and cash on cash returns (2% or higher). Also, we only included markets with a median property price of less than 1 million.

Here are the top three San Antonio neighborhoods for short term rentals, ranked from the highest to the lowest cash on cash return, based on Mashvisor’s November 2022 location data:

1. Roosevelt Park

Median Property Price: $275,064
Average Price per Square Foot: $471
Days on Market: 113
Number of Short Term Rental Listings: 523
Monthly Short Term Rental Income: $1,856
Short Term Rental Cash on Cash Return: 2.64%
Short Term Rental Cap Rate: 2.70%
Short Term Rental Daily Rate: $148
Short Term Rental Occupancy Rate: 40%
Walk Score: 47

2. Nevada Street

Median Property Price: $265,666
Average Price per Square Foot: $1,187
Days on Market: 115
Number of Short Term Rental Listings: 795
Monthly Short Term Rental Income: $1,848
Short Term Rental Cash on Cash Return: 2.62%
Short Term Rental Cap Rate: 2.69%
Short Term Rental Daily Rate: $167
Short Term Rental Occupancy Rate: 41%
Walk Score: 45

3. Arena District

Median Property Price: $287,402
Average Price per Square Foot: $1,064
Days on Market: 54
Number of Short Term Rental Listings: 511
Monthly Short Term Rental Income: $1,611
Short Term Rental Cash on Cash Return: 2.48%
Short Term Rental Cap Rate: 2.55%
Short Term Rental Daily Rate: $140
Short Term Rental Occupancy Rate: 44%
Walk Score: 59

Start searching for the best short term investment property in your San Antonio neighborhood of choice.

Is It Good to Invest in the San Antonio Short Term Rental Market?

The short term rental San Antonio market will make a lucrative investment. Since San Antonio has a strong economy and a thriving tourism industry, it is no doubt a great location for investing in short term rental properties. To be a profitable real estate investor in San Antonio, you need to ensure that you’re investing in the right neighborhood, depending on your target market.

To find the right neighborhood, make sure to study the market and conduct proper analysis. The top three San Antonio neighborhoods for short term rental investing are Roosevelt Park, Nevada Street, and Arena District. You may also consider investing in Harvard Place – Eastlawn and Denver Heights, with cash on cash returns of 2.31% and 2%, respectively.

With the help of Mashvisor, it would be easy for you to find the right investment property in San Antonio. Our real estate tools, including investment property search and comprehensive real estate data analysis, will help you find a profitable investment based on your preferred budget.

Schedule a demo now to see what else Mashvisor can do for you.

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