Thinking about running a short-term rental and not sure whether Lakeway, Austin, or West Lake Hills makes the most sense? You are not alone. The right pick can boost revenue, simplify permitting, and reduce headaches over the long term. In this guide, you will learn how each city typically approaches STRs, how to confirm if a specific address is eligible, what rules and costs to expect, and how to score properties with a decision matrix that fits your goals. Let’s dive in.
What sets Lakeway, Austin, and West Lake Hills apart
Austin: large program and active enforcement
Austin has historically used a comprehensive STR program with mandatory registration, local contact requirements, neighborhood protections, and active enforcement. You should expect a clear framework that often distinguishes between owner-occupied and non-owner-occupied rentals, plus operational rules at the neighborhood level. Always check the current Austin Code and Short-Term Rental program before you move forward.
Lakeway: local permits with practical oversight
Lakeway operates a local permitting and registration model. You should expect to register your property, provide contact information, follow local noise, parking, and occupancy rules, and remit required taxes. Processes are typically more streamlined than bigger-city programs, but you still need address-level verification to confirm eligibility.
West Lake Hills: small, residential, often more restrictive
West Lake Hills is a small city with a strong residential character and land-use focus. Smaller municipalities sometimes require owner-occupancy, impose tight conditions, or severely restrict STRs in single-family areas. Expect a more restrictive stance than larger programs and get written confirmation from the city before you plan on STR income.
Can your address operate? Step-by-step check
Use this checklist to confirm a property’s legal ability to run as an STR.
Identify municipal jurisdiction
- Confirm whether the address sits in Lakeway, Austin, West Lake Hills, or unincorporated Travis County. The city determines which rules apply.
Check zoning and land use
- Look up the zoning district and any overlays, like environmental or floodplain. Verify whether STRs are allowed, conditional, or prohibited in that district.
Review municipal code and licensing records
- Read the city’s STR ordinance for permit steps, caps, occupancy limits, and parking rules. If a city keeps a public license registry, check it for neighborhood density and prior applications.
Confirm address-specific overlays or constraints
- Look for special districts or environmental buffers that could limit or condition STR use. Verify sewer or septic capacity, especially for occupancy.
Get a written eligibility determination
- Ask the city planning, building, or STR office for a written statement confirming eligibility, required permits, fees, and inspections. If there is an online portal, search for existing permits or violations.
Review HOA and CC&Rs
- Obtain the latest HOA rules and CC&Rs. Some HOAs prohibit or tightly limit STRs even when the city allows them.
Check title and subdivision restrictions
- Review deed restrictions or plat notes that limit rentals or short stays.
Confirm insurance and lender consent
- Make sure your insurance covers STR activity. If financed, ask your lender whether short-term rentals are permitted and whether you need consent.
Register for taxes
- Confirm city and state hotel occupancy tax and sales/use tax registration and remittance steps. Platforms may collect some taxes, but you are responsible for compliance.
Review enforcement history and neighborhood context
- Check code-enforcement records and recent public meeting notes. Look for signs of active neighborhood enforcement or moratoria.
Common rules and constraints to expect
Licensing and registration
- Most cities require registration, fees, and a 24/7 local contact. Renewal is common.
Zoning and location
- Single-family zones can have stricter rules. Overlays like lake buffers or floodplains may add conditions.
Owner-occupied vs non-owner-occupied
- Expect different treatment. Owner-occupied homes may face fewer limits, while non-owner-occupied rentals may see caps or tighter rules.
Density caps and separation buffers
- Some cities cap licenses in a given area or require distance between STRs. Others do not. Always confirm current policy.
Occupancy and minimum stays
- Expect occupancy limits by bedroom count or square footage, plus possible minimum-night stays.
Parking and traffic
- Off-street parking minimums and on-street restrictions are common. HOAs often add rules.
Nuisance controls
- Noise rules, trash pickup standards, and party policies are typical. Repeat violations lead to fines or license action.
Safety and inspections
- Smoke and CO detectors, egress windows, and fire extinguishers are common requirements. Some cities inspect before issuing permits.
Taxes and remittance
- You will need to collect and remit state hotel occupancy taxes and any local TOT. Even if a platform collects, you remain responsible for full compliance.
Insurance and liability
- STR-specific or commercial coverage is often needed. Waterfront features can increase liability considerations.
Costs that impact your returns
Planning your underwriting around real costs helps you avoid surprises.
Fixed costs
- Property taxes, mortgage payments, STR-ready insurance, HOA dues, utilities, management fees, and license renewals.
Variable costs
- Cleaning and turnovers, consumables, maintenance, platform fees, and payment processing.
One-time and compliance costs
- Application and inspection fees, safety upgrades, HOA application or surcharge fees, neighbor-mitigation tools like noise monitors, and professional guidance.
Tax compliance costs
- Accounting, software, or third-party remittance services to manage hotel and sales taxes.
Vacancy and seasonality
- Expect seasonality in lake markets, with stronger demand in peak months and lower occupancy in shoulder seasons.
Capital expenditures
- Furnishings, durable finishes, landscape and pool care, dock or waterfront maintenance if applicable.
Investor vs second-home: choose your strategy
Start by clarifying your profile. Investors usually aim for revenue and regulatory certainty. Second-home owners want personal-use value with occasional, compliant rentals.
For investors
- Prioritize regulatory permissibility, revenue potential, ease and cost of licensing, and enforcement risk. Include financing constraints if your returns depend on leverage.
For second-home owners
- Prioritize personal-use value, HOA compatibility, simple operations, and insurance and safety. Revenue matters, but it may sit behind lifestyle fit.
Build a decision matrix that fits your goals
Use a simple 1 to 5 scoring model and weight criteria according to your profile.
Scoring approach
- Score each criterion 1 to 5 for every property. Multiply by the weight. Add the totals and compare across addresses and cities.
Suggested investor weights
- Regulatory permissibility and certainty: 20%
- Revenue potential: 20%
- Operational costs: 15%
- HOA restriction risk: 10%
- Enforcement risk: 10%
- Financing constraints: 10%
- Amenities and proximity: 10%
- Personal-use value: 5%
Suggested second-home weights
- Personal-use value: 25%
- HOA restriction risk: 20%
- Regulatory permissibility: 15%
- Ease of operation: 15%
- Insurance and safety: 10%
- Revenue potential: 10%
- Amenities and proximity: 5%
Interpretation tips
- A property that is theoretically permitted but sits under tight HOA rules may not work for investors.
- Waterfront and lake-adjacent addresses can drive strong seasonal revenue, but they may face stricter environmental or parking conditions.
- Hosted, owner-occupied setups often face fewer regulatory hurdles, but they limit revenue and flexibility.
Due diligence timeline you can trust
Before you buy
- Verify jurisdiction and zoning for the exact address.
- Get a written eligibility statement from the city that lists required permits and inspections.
- Obtain and review HOA CC&Rs and a written position on STRs from the HOA manager or counsel.
- Request code-enforcement history and check for nearby STR disputes or caps.
- Confirm tax registration steps for city and state hotel and sales taxes.
- Speak with lenders about STR underwriting for the specific property.
- Obtain insurance quotes tailored to STR use and waterfront risk if applicable.
- Model revenue and expenses with conservative occupancy and a capital reserve.
After you buy and before you list
- Display the required STR license or registration number in all listings.
- Complete safety and inspection steps before hosting your first guest.
- Implement neighbor-mitigation: local contact, parking plan, house rules, and approved noise monitoring.
- Register for applicable taxes and set up your accounting.
- Maintain organized records of bookings and tax remittances.
Avoid these costly pitfalls
- Relying only on platform tax collection without registering and filing your own returns.
- Assuming HOA rules allow STRs because the city does.
- Overlooking neighborhood caps or proximity buffers that block future licensing.
- Underestimating seasonality in lake markets and over-projecting off-season demand.
- Acting on verbal assurances rather than securing written confirmations from the city, HOA, and lender.
What this means for your three-city comparison
If you want clearer processes and detailed rules
- Austin’s program is built for that, with formal registration and established enforcement. Plan for more steps and careful compliance.
If you want a smaller-city process near the lake
- Lakeway’s local model can feel more straightforward, but you still need to confirm address-level eligibility and stay current on local rules.
If you value a quieter residential setting and can accept tighter limits
- West Lake Hills may fit your lifestyle, but it can be more restrictive for non-owner-occupied or high-frequency STR models. Get written guidance before you underwrite income.
Lake-focused operating tips
Align house rules with lake-life realities
- Set clear quiet hours, parking instructions, and trash schedules. Share lake-safety reminders and local contact info.
Budget for peak and shoulder seasons
- Use higher summer projections and conservative off-season projections. Keep a reserve for months with low or zero revenue.
Plan for property wear
- Lake gear and outdoor usage increase turnover tasks. Invest in durable finishes and a reliable cleaning schedule.
Ready to compare addresses with confidence?
If you want a disciplined, end-to-end process to evaluate eligibility, costs, and returns across Lakeway, Austin, and West Lake Hills, you are in the right place. With a background in finance and hands-on vendor management, I help you confirm the rules, run conservative models, and position your STR for smooth operations. Let’s build your decision matrix and map the steps from offer to license to first booking.
Let’s talk strategy today. Connect with Unknown Company to get started.
FAQs
How do short-term rental rules differ between Lakeway, Austin, and West Lake Hills?
- Austin operates a large program with registration and active enforcement, Lakeway uses a local permitting model with operational rules, and West Lake Hills is smaller and often more restrictive. Always confirm current ordinances before acting.
What is the first step to confirm if my address can be an STR?
- Identify which city your property is in, then check zoning and the city’s STR ordinance. Request a written eligibility determination from the city’s STR or planning office.
Do HOAs override city allowances for STRs?
- Yes. HOAs can prohibit or restrict STRs even when the city allows them. Obtain current CC&Rs and a written HOA position before you underwrite rental income.
What taxes do I need to plan for with an STR in this area?
- Expect state hotel occupancy taxes and sales/use taxes, plus any local TOT. Platforms may collect some taxes, but you remain responsible for registration and full remittance.
Are owner-occupied STRs treated differently than non-owner-occupied?
- In many cities, yes. Owner-occupied rentals often have fewer restrictions, while non-owner-occupied units may face caps, stricter conditions, or prohibitions depending on the district.
What are the biggest cost drivers for STRs near the lake?
- Seasonality, professional management, cleanings, insurance suitable for STR use, utilities, and potential waterfront-related maintenance. Furnishing and durable finishes are important one-time investments.
How should investors compare properties across these cities?
- Use a weighted decision matrix that scores regulatory certainty, revenue potential, operating costs, HOA risk, enforcement risk, financing constraints, amenities, and personal-use value.
