Why this matters more than ever
Short-term rental demand pulled a wave of investor capital into San Antonio and the surrounding Hill Country over the last several years, and city councils and HOA boards responded. San Antonio, New Braunfels, and Boerne have each adopted or revised STR ordinances, and New Braunfels' ordinance was challenged in federal court by a homeowner and upheld by the Fifth Circuit Court of Appeals in mid-2026 — a signal that these rules are being actively tested and are likely to hold up where cities have adopted them through proper zoning and permitting authority. The practical takeaway for an investor is simple: a listing's current STR activity, or a host's claim that 'it's fine here,' tells you nothing reliable about whether you can legally operate the same way after closing. Permit status, zoning, and even HOA rules can all differ from what the current owner is doing — and all of this is confirmable before you're under contract, not something to find out afterward.
San Antonio's Type 1/Type 2 system
Within San Antonio city limits, short-term rentals (units rented overnight for stays under 30 consecutive days, including accessory dwelling units) require a permit under the city's Unified Development Code, administered through Development Services. Type 1 permits cover owner-occupied STRs — the owner or operator lives on the property as a primary residence — and are allowed by right with no density limit. Type 2 permits cover non-owner-occupied STRs and are allowed by right only up to a density cap: 12.5% of a block face for single-family homes, or 12.5% of units in multifamily buildings of eight or more units. Once a block or building reaches that cap, operating a new Type 2 STR requires a special exception from the city's Board of Adjustment. Permits are issued per unit, are not transferable to a new owner, and the permit number must appear on any platform listing. Operators also owe Hotel Occupancy Tax — a combined city and county rate — collected and remitted monthly, though platforms have taken on some of that remittance directly in recent years. Fee schedules and density-cap specifics are revised periodically, so confirm current numbers and whether a specific block or building is already at its cap directly with San Antonio Development Services before assuming a Type 2 permit is available.
New Braunfels' zoning-first approach
New Braunfels takes a different approach: rather than a citywide permit-and-density system, its ordinance restricts short-term rentals by zoning district first. Short-term rentals are not allowed in residential zoning districts within city limits at all — the question isn't density, it's whether the parcel sits in a zone where STRs are permitted in the first place. Most non-residential districts require a special use permit to operate one, with a narrower set of commercial districts exempted from that extra step. STRs are also barred in the floodway (though not necessarily the broader floodplain), and operators face an annual life-safety inspection from the Fire Marshal's Office, monthly Hotel Occupancy Tax, occupancy limits tied to the number of sleeping areas, and a minimum off-street parking requirement per sleeping area. A homeowner challenged the ordinance's restriction on leasing residential property short-term, and the Fifth Circuit upheld the city's authority to enforce it in mid-2026, finding no protected property interest in a general right to short-term lease under Texas law. For an investor, the practical implication is that zoning — not a permit application — is the first and most important question to answer before buying anything in New Braunfels with STR income in the model.
Boerne and Hill Country river towns
Boerne regulates short-term rentals under an ordinance adopted in 2023, which applies both inside city limits and in the extra-territorial jurisdiction (ETJ) surrounding it. Every STR must be registered and permitted with the city regardless of zoning. In residential zones, new STRs generally can't operate within a set separation distance of another STR on the same street unless the property was already operating and grandfathered in under the prior rules; outside the Historic, Downtown, and River Road overlay districts, the Unified Development Code requires a special-use permit for short-term rental use. Boerne's own guidance is explicit on one point investors should take seriously: the city's permit does not override a homeowners association's rules, and the city is not responsible for enforcing HOA restrictions — that burden falls on the owner. Other Hill Country river towns and unincorporated county areas (Canyon Lake, parts of Spring Branch and Bulverde) each run their own mix of county authority, HOA restriction, and in some cases no zoning-based STR rule at all — which cuts both ways, since the absence of a city ordinance doesn't mean the absence of a deed restriction.
HOA and deed restrictions — the second layer
Even where a city permits short-term rentals outright, a property's HOA or subdivision deed restrictions can prohibit them independently — and that restriction doesn't show up in a city permit search. Many San Antonio-area and Hill Country subdivisions adopted or tightened short-term-rental bans in their covenants over the last several years specifically in response to STR activity, and enforcement runs through the HOA (fines, liens, sometimes injunctive action), not the city. A buyer who confirms city zoning and permit eligibility but skips the HOA's current covenants, bylaws, and any recent amendment can still end up unable to operate the exact strategy the purchase was underwritten on. This is a documents-and-title-company due-diligence item, not a judgment call — the current, amended covenants (not an outdated copy from a prior sale) and any HOA board meeting minutes referencing STR policy are worth pulling before the option period ends, every time an STR strategy depends on the answer.
Underwriting STR cash flow conservatively
Short-term rental underwriting in 2026 deserves more skepticism than it got in 2021-2022. Revenue in river-adjacent and Hill Country markets concentrates heavily into a shorter high season, which means an annual average daily rate pulled from a full-year platform estimate can overstate what a conservative, shoulder-season-weighted model would show. Property insurance is a separate consideration from a standard homeowners or landlord policy — many carriers require a specific short-term-rental or commercial endorsement, and using a long-term-rental policy on a property actually operated as an STR can jeopardize a claim. Property management, higher turnover cleaning and maintenance cost, and platform fees all run materially higher than a long-term-rental expense model, and should be underwritten from an actual quote or management agreement, not a rule-of-thumb percentage. On the financing side, a conventional second-home loan typically restricts or excludes using short-term rental income to qualify, while some DSCR and investment-property loan programs will consider market rent or a specific STR income analysis — but qualification criteria, permitted income sources, and underwriting treatment vary by lender and loan program, and final approval is always determined by a licensed lender.
Due-diligence checklist before contract
Before going firm on a property with a short-term-rental strategy attached, confirm five things directly with the relevant authority rather than relying on a listing description or the seller's current activity: the property's zoning and whether STR use is allowed in that zoning district; whether the jurisdiction's permit or registration is currently available (not at a density cap) for that specific address; whether an existing STR permit, if any, transfers to a new owner or must be reapplied for from scratch; the current HOA covenants and any STR-specific restriction or amendment; and the realistic insurance and financing path for the property given its intended use. None of this replaces consulting the city's planning or development services department, an HOA directly, and your own attorney and lender — ordinances and covenants are amended periodically, and what was true for a property a year ago may not be true today. We build this verification into the offer and option-period timeline for clients pursuing STR strategy rather than treating it as a closing-week surprise.