10 Best Airbnb Markets in Texas

Texas is on every investor’s radar for good reason. With its booming economy, growing population and unmatched demand for short-term rentals, the state offers incredible opportunities for real estate investors.

But with so many cities and neighborhoods to choose from, identifying the most profitable markets can be a challenge.

This blog cuts through the noise to highlight the 10 best Airbnb markets in Texas, backed by data and actionable insights to help you make informed decisions and maximize your returns.

Investing in the Best Airbnb Markets in Texas

Saying Texas has plenty of investment properties would be putting it lightly. The Lone Star State offers an abundance of options, with enough supply to meet the growing demand for real estate.

Before diving into why Texas stands out as a hotspot for real estate investors, let’s take a closer look at what makes the Texas market so appealing and why it continues to attract attention from buyers across the country.

Why Texas Is a Magnet for Airbnb Investments

Here’s why investors are flocking to the Lone Star State:

• It is a state that is landlord-friendly. Being on the right side of the law always pays off. Texas is quite kind to landlords and offers them a wide range of benefits, so investors need not worry too much about legal issues.

• Its population is increasing at a steady rate. As more and more individuals continue to move to Texas, the demand for rental properties is still very high.

• It has a flourishing economy. The local housing market will always benefit if an economy is doing extraordinarily well. The greatest rental markets in Texas are characterized by robust economies, low unemployment rates and high median earnings, all of which contribute to a healthy real estate market.

• No income taxes. Every moral person understands that paying taxes is the right and responsible thing to do. The beautiful thing about Texas is that this is not a concern for investors since it is one of the nine states without an income tax. This is great news for investors because it raises their return on investment.

• The properties are reasonably priced. A town or city's affordability is one of the factors that makes it one of the finest rental markets. Texas's high land supply and low cost of living both contribute to the state's low house prices.

Despite the COVID-related interruptions, enthusiasm for Texas real estate was maintained at a solid level as 2021 came to an end. Overall, it's still a fantastic spot to make real estate investments, especially for individuals looking to expand their investment portfolios, create passive income streams or start careers as holiday rental owners or managers.

However, just because the state provides a very large selection for investors does not automatically imply that every property in it is a gold mine. Despite the many reasons why people fall in love with Texas, you still need to do your research if you want to find the rental markets in Texas that will yield the highest returns.

Best Texas Market for Short-term Rentals

To determine the best short-term rental markets in Texas, we analyzed key profitability indicators such as Airbnb occupancy rates, revenue potential and average daily rates.

Source: AirDNA

Here’s the list of top-performing cities for Airbnb investments:

1. Lubbock

Lubbock, known as the "Hub City," is the heart of West Texas. With Texas Tech University anchoring the city, there’s a constant flow of students, parents, sports fans and academic visitors.

Beyond the university, Lubbock boasts unique attractions like the Buddy Holly Center, National Ranching Heritage Center and local wineries, drawing leisure travelers as well.

With an average daily rate of $179.4, a 47% Airbnb occupancy rate and $28.8K in annual revenue potential, Lubbock is a fantastic option for investors. Its affordable home values make it one of the most approachable markets in Texas.

Plus, Lubbock’s regulations are investor-friendly, but properties near Texas Tech may have zoning restrictions. Always verify local laws before listing.

2. McAllen

McAllen is a hidden gem in South Texas, blending cultural richness with a strategic location near the U.S.-Mexico border.

The city is a hub for shopping, medical tourism and eco-tourism, especially with nearby destinations like Quinta Mazatlan and Bentsen-Rio Grande Valley State Park.

McAllen’s average daily rate of $126.8, 47% occupancy rate and $21.4K annual revenue potential make it a solid choice for Airbnb rentals. Its affordability allows investors to secure properties at a lower average price, while its year-round visitor base ensures consistent appeal.

3. Fort Worth

Fort Worth is where Texas’s cowboy roots meet a thriving metropolitan vibe.

Tourists flock to the city to visit the Fort Worth Stockyards, Sundance Square and Cultural District, while families enjoy top-tier destinations like the Fort Worth Zoo. Business travelers also contribute to the city’s strong short-term rental market.

With an average daily rate of $219.5, 50% occupancy rate and $38.8K in annual revenue, Fort Worth offers property owners excellent opportunities to generate monthly rental income. Its proximity to Dallas adds an extra layer of appeal, attracting visitors from around the globe.

4. Houston

Houston is Texas’s economic juggernaut.

Known for its thriving economy, diverse industries and world-class attractions, this largest city attracts millions of business travelers and tourists annually. The Space Center, Museum District and Minute Maid Park are just a few of its many highlights.

Properties in central neighborhoods or near major business hubs consistently achieve high occupancy rates. The city’s average daily rate of $201.2, 52% occupancy rate and $38.8K in annual revenue potential make it one of the most lucrative Airbnb markets in Texas.

While Airbnb laws in Houston require hosts to collect and remit the city’s hotel occupancy tax, there are minimal additional restrictions, making it an investor-friendly environment.

5. Fredericksburg

Nestled in Texas Hill Country, is renowned for its wineries, German-inspired culture and romantic retreats. This picturesque spot attracts affluent travelers seeking luxury getaways, drawn to its serene atmosphere and world-class attractions like Enchanted Rock and Main Street’s vibrant shopping scene.

The appeal for vacation rentals here is high, making it a lucrative market for investors. With an average daily rate of $373.6, an occupancy rate of 44% and $56.6K in annual revenue potential, Fredericksburg offers exceptional returns for those targeting a high-end clientele.

However, strict zoning laws and permitting requirements for short-term rentals necessitate careful research before investing. For those willing to navigate the regulations, Fredericksburg’s premium rental market promises unmatched profitability in the Texas short-term rental market.

6. Amarillo

Located along the historic Route 66, Amarillo is a quirky town with attractions like Cadillac Ranch and Palo Duro Canyon, the second-largest canyon in the U.S. This combination of roadside nostalgia and natural beauty attracts road-trippers and adventure seekers.

Amarillo’s daily rate of $154.2, 52% occupancy rate and $27.8K annual revenue potential make it a great market for real estate investors seeking lower-cost properties with steady returns.

7. Waco

Thanks to Chip and Joanna Gaines’ Magnolia Market, Waco has become a top tourist destination in Texas.

Add Baylor University to the mix and you’ve got a city that attracts families, students and leisure travelers alike. Visitors also enjoy the Dr Pepper Museum and the Waco Mammoth National Monument.

With an average daily rate of $246.7, a 49% occupancy rate and $42.4K annual revenue potential, Waco offers excellent returns. The combination of tourist attractions and university activity ensures consistent bookings for Airbnb listings.

Short-term rentals in Waco must be registered and local taxes apply. Compliance is straightforward, so long as you meet the requirements.

8. San Antonio

San Antonio is one of the most visited cities in Texas, thanks to its rich history and iconic attractions like The Alamo and the River Walk. The city also hosts events and festivals throughout the year, boosting tourism.

San Antonio’s daily rate of $231.9, 50% occupancy rate and $40.7K annual revenue potential make it a top-tier market for Airbnb investors. Visitors enjoy a mix of historical landmarks, family-friendly attractions and modern amenities.

9. Texas West Area

The Texas West Area, which includes charming towns like Marfa and Alpine, is perfect for travelers seeking quiet, scenic escapes. With natural attractions like Big Bend National Park and artistic hotspots like Marfa’s famous installations, this region attracts a niche audience.

With a daily rate of $186.2, 48% occupancy rate and $31.3K annual revenue potential, this area is a smart choice for investors looking to cater to adventure-seeking travelers.

Rules vary by town, so check the specific regulations for the area where you plan to invest.

10. Dallas

This vibrant city has something for everyone. From its booming economy and strong corporate presence to cultural attractions like the local arboretum, it attracts both business and leisure travelers. Events at the nearby stadium also bring in visitors from all over the world.

The city boasts a daily rate of $212.8, a 53% Airbnb occupancy rate and $41.4K annual revenue potential, making it one of the best markets for Airbnb rentals. Its appreciation potential adds long-term value for property owners.

Short-term rentals in this area must be registered and zoning restrictions may apply in some neighborhoods. Research local ordinances to avoid complications.

Tips for Investing in Texas’s Rental Market

Conduct market research

Not all Texas cities offer the same opportunities, so take the time to explore various local markets. Look into occupancy rates, average daily rates and trends in interest for vacation rentals in different cities.

For instance, a bustling city like Houston might cater to business travelers, while a serene destination like Fredericksburg attracts high-paying luxury tourists.

Tools like Airbnb analytics and real estate platforms can help you zero in on the best markets for your goals.

Understand local regulations

Texas is known for being landlord-friendly, but Airbnb laws vary from city to city.

Some cities like Houston, have minimal restrictions, while others like Fredericksburg, require strict zoning compliance and permits for short-term rental properties.

Make sure you’re familiar with local zoning laws, tax obligations and permitting requirements before buying an investment property to avoid legal headaches.

Analyze economic indicators

The thriving economy in Texas is one of its biggest draws for real estate investors, but not all areas grow at the same pace.

Focus on cities with strong job markets, low unemployment rates and population growth. A strong job market typically leads to a higher occupancy rate and steady interest for rental properties.

Choose the right property type

Each city in Texas has unique investment property opportunities. For instance, a modern condo in downtown Austin might appeal to business travelers, while a cozy cabin in the Texas Hill Country is perfect for weekend tourists.

Consider the popularity of vacation rentals, single-family homes or multi-family properties in your target area and evaluate which type aligns best with your budget and goals.

Plan for property management

If you’re managing properties from out of town, having a strong property management strategy is essential.

Decide whether to handle everything yourself using property management software like Hostaway to streamline operations by automating bookings, guest communication and pricing across multiple platforms like Airbnb and Vrbo, or hire a property manager to oversee day-to-day operations.

Reliable property management can make all the difference in maintaining positive guest experiences, keeping your Airbnb occupancy rate high and ensuring steady monthly rental income.

Is Texas Calling?

Texas stands as a land of opportunity, offering the perfect mix of affordability, demand and growth potential. Its diverse cities and towns cater to every type of traveler, making it a hotspot for short-term rental success.

Whether you’re looking to break into the market or expand your portfolio, Texas provides the tools to build a profitable future. The next step is yours — start exploring, investing and making the most of what the Lone Star State has to offer.

FAQs

1. What are the best short-term rental markets in Texas?

Top markets include Houston, Dallas, Austin, Fredericksburg, Waco and Crystal Beach. Each offers unique opportunities for short-term rental properties based on interest and target audiences.

2. How do local laws affect Airbnb investments in Texas?

Airbnb laws vary by city, with requirements like hotel tax collection in Houston and zoning restrictions in Fredericksburg. Research local regulations before investing.

3. What factors should I consider before investing in a Texas Airbnb property?

Evaluate local markets, occupancy rates, daily rates, property prices and regulations. Proximity to popular tourist destinations or business hubs is also crucial for success.

4. Is Texas a good state for real estate investment?

Yes! With its thriving economy, growing population and landlord-friendly laws, Texas is ideal for real estate investors seeking strong returns.

5. How can I maximize my Airbnb rental income in Texas?

Invest in high-demand markets, optimize pricing with platforms like Hostaway and provide excellent guest experiences to maintain high occupancy rates.