Introduction

As short-term rental (STR) regulations tighten across Texas, property owners are finding it increasingly difficult to navigate the complex landscape of compliance, zoning restrictions, and taxes. For those seeking to maintain enhanced cash flow without the scrutiny and challenges of STRs, midterm rentals (MTRs) provide an ideal solution. With leases lasting 30 days or longer, MTRs bypass many of the regulatory hurdles associated with STRs while offering stable income and high-quality tenants.

At Texas Corporate Homes (TCH), we specialize in converting STR properties into profitable midterm rentals in as little as a week or two. Let’s explore how current STR regulations in major Texas cities create opportunities for midterm rentals and why TCH is your go-to partner for making the switch.

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Overview of Short-Term Rental Regulations in Major Texas Cities

Here’s a snapshot of STR regulations across Austin, Houston, Fort Worth, Dallas, and nearby suburbs, highlighting the growing challenges for STR operators:

Austin

• Regulatory Structure: Austin categorizes STRs into three types:
  • Type 1: Owner-occupied or associated with an owner-occupied residence.
  • Type 2: Non-owner-occupied single-family or duplex properties.
  • Type 3: Non-owner-occupied multifamily units.
• Compliance Requirements: Licensing is mandatory, with an application fee of $779.14. Operators must provide proof of insurance, meet occupancy limits, and supply renters with detailed guidelines.
• Recent Changes: A federal judge ruled Austin’s ban on non-owner-occupied STRs in residential zones unconstitutional. However, the city is reevaluating its policies, creating uncertainty for operators.

Houston

• Current Status: Houston lacks specific STR regulations but is actively drafting ordinances. Proposed rules would require registration, liability insurance, and adherence to operational standards, with penalties for non-compliance. Final implementation is expected by 2025.

Fort Worth

• Permissible Zones: STRs are limited to mixed-use, commercial, and industrial zones, prohibiting operations in residential areas.
• Registration and Taxes: Operators must register properties, pay a $150 fee, and collect a 9% Hotel Occupancy Tax. Non-compliance can result in fines up to $2,000 per violation.
• Enforcement: Fort Worth has ramped up enforcement with 180+ citations issued in 2023 alone, emphasizing the risks of non-compliance.

Dallas

• Prohibited Zones: STRs are banned in single-family residential zones, restricted to multifamily areas with strict occupancy and parking rules.
• Registration Requirements: Operators must register annually and adhere to noise limits and other operational standards.
• Enforcement: Enforcement is complaint-driven, with initial reliance on resident reports.‍
• Recent Changes: A recent injunction has put enforcement of two policies on temporary hold

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The Case for Midterm Rentals Over Short-Term Rentals

The regulatory landscape for STRs makes midterm rentals an attractive alternative. Here’s why MTRs are the smarter choice:

1. Avoid Regulatory Hurdles

Midterm rentals are defined as leases lasting 30 days or more, allowing them to bypass most STR regulations, including zoning restrictions, licensing requirements, and hotel occupancy taxes.

2. Similar or Better Cash Flow

With professionally managed MTRs, property owners can achieve comparable or better cash flow than STRs. TCH has demonstrated that MTRs generate 50-100% more revenue than long-term rentals without the volatility of nightly bookings.

3. High-Quality Tenants

MTRs attract corporate executives, traveling professionals, and insurance-displaced families—tenants who are more stable and respectful of the property, reducing wear and tear.

4. Simplified Management

TCH provides turnkey property management services, handling everything from marketing and tenant screening to maintenance and compliance, so property owners can enjoy passive income without the hassle.

5. Flexibility for Property Owners

Unlike STRs, MTRs allow for flexible leasing terms tailored to market demand without risking regulatory violations or penalties.

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How Texas Corporate Homes Converts STRs to MTRs in Less Than Two Weeks

Converting your STR into a midterm rental with TCH is a seamless process. Here’s how we do it:

1. Property Evaluation

We assess your property to ensure it meets the needs of midterm renters, focusing on location, amenities, and market potential.

2. Professional Furnishings

Our team curates furnishings that appeal to midterm tenants, including corporate executives and families, ensuring your property stands out in the market.

3. Tenant Sourcing

TCH leverages partnerships with 35+ corporate and insurance housing companies to fill your property with reliable, high-quality tenants.

4. Comprehensive Management

From tenant communications to property maintenance, TCH handles every aspect of management, ensuring your property operates smoothly and profitably.

5. Compliance Assurance

With MTRs exempt from STR regulations, TCH ensures your property remains fully compliant with local laws while maximizing its earning potential.

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How Much Will You Make? Short-Term vs. Mid-Term Rentals

The income potential of short-term and mid-term rentals varies significantly based on several factors, including location, demand, and property quality. Here’s a simplified breakdown:

• Short-Term Rentals: Can earn the highest nightly rate but are subject to seasonal demand and higher vacancy rates.
• Mid-Term Rentals: Typically offer more stable income than STRs and generate 50-100% more than long-term rentals, with longer tenancy and fewer management costs.

For example, a property in Texas Corporate Homes’ Owner Program earned $62,000 annually as a mid-term rental, compared to $25,000 as a traditional long-term rental. This illustrates the potential for significantly higher returns from mid-term leases without the constant turnover associated with STRs​.

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Conclusion

The tightening regulations on STRs across Texas make midterm rentals an increasingly attractive solution for property owners seeking stable income and reduced regulatory risks. By partnering with Texas Corporate Homes, you can transition your STR into a lucrative midterm rental in as little as two weeks, unlocking the benefits of higher cash flow, high-quality tenants, and hassle-free management.

Ready to make the switch? Explore how Texas Corporate Homes can help you maximize your property’s potential with midterm rentals. To find out if your home is a good fit for mid-term rentals, inquire here.

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