Overview: Are Short-Term Rentals Allowed in Waco, TX?

YES, short-term rentals are explicitly allowed in Waco, Texas, but with significant restrictions and regulatory requirements. Waco has implemented a comprehensive regulatory framework that permits STR operations while aiming to protect residential neighborhoods from adverse impacts. The city defines a short-term rental as the rental of a residential property for compensation on a temporary basis for less than 30 consecutive days.

However, Waco has imposed substantial restrictions, particularly effective June 15, 2021, that fundamentally changed the STR landscape:

• Type II STRs (non-owner-occupied single-family/duplex) are PROHIBITED in R-E, R-1A, R-1B, and R-1C zoning districts
• Type III STRs (multifamily units) are PROHIBITED in R-3A, R-3B, R-3C, R-3D, R-3E, O-2, O-3, and C-1 zoning districts
• Existing legally operating properties were grandfathered in if continuously licensed

This creates a two-tier market where existing operators with grandfathered status enjoy protected operations, while new investors face significant barriers to entry, particularly in residential zones.

How to Start a Short-Term Rental Business in Waco

Step 1: Market Research & Property Selection

• Research high-demand areas near major attractions (Magnolia Market at the Silos, Baylor University, downtown Waco)
• Verify zoning compliance using the City of Waco Interactive Zoning Map
• Consider properties in commercial/mixed-use zones (C-4, certain downtown areas) for fewer restrictions
• Budget $350,000-$700,000 for properties near downtown/core attractions

Step 2: Determine STR Category

Waco recognizes five distinct STR categories:

1. Bed & Breakfast Homestay Establishment (BBHE) - Owner stays on property, max 5 guest rooms
2. Bed & Breakfast Inn (B&B Inn) - Resident manager on-site, max 15 guest rooms
3. Short Term Rental Type I - Owner stays on property while operating, single group rental
4. Short Term Rental Type II - Non-owner-occupied, single-family/duplex property
5. Short Term Rental Type III - Non-owner-occupied, multifamily unit

Step 3: Zoning Verification & Special Permit Assessment

• Use the Interactive Zoning Map to determine property zoning
• Special Permits Required For:
  • BBHE in R-E, R-1A, R-1B, R-1C zones
  • B&B Inn in R-3A, R-3B, R-3C, R-3D, R-3E, O-1, O-2 zones
  • STR Type I in R-E, R-1A, R-1B, R-1C zones

Step 4: Special Permit Process (If Required)

• Timeline: 60-90 days for approval
• Process: Plan Commission approval → City Council approval
• Requirements: Public notice to property owners within 200 feet
• Fees: Application fees apply (specific amounts not detailed in sources)

Step 5: License Application

• Apply through Citizen Self Service (CSS) portal
• Initial license fee: $150
• Renewal fee: $50 (every two years)
• Processing time: 2-4 weeks after special permit approval (if required)

Step 6: Life Safety Inspection

• Required for all STR properties
• Schedule by calling (254) 750-5612
• Certificate of Occupancy from last 12 months accepted in lieu of inspection
• Fee: Non-refundable inspection fee applies

Step 7: Tax Registration Setup

• Register with Avenu for City of Waco (7%) and McLennan County (2%) hotel occupancy taxes
• Obtain Texas Taxpayer ID for State Hotel Occupancy Tax (6%)
• Total combined tax rate: 15%

Step 8: Operational Setup

• Display license number and occupancy limits in all advertisements
• Post required signage in property
• Install evacuation plans in sleeping areas
• Ensure compliance with parking requirements

Required Documents, Permits, Licenses, and Guidelines

Primary Licensing Requirements

1. Short-Term Rental License - Valid for two years, renewable
2. Special Permit (if required based on zoning and STR category)
3. Life Safety Inspection Certificate or Certificate of Occupancy (within 12 months)

Required Documentation Package

• Completed online application via Citizen Self Service portal
• Site plan showing property and required parking with dimensions and access points
• Floor plans indicating bedrooms and sleeping areas
• Parking plan demonstrating compliance with off-street parking requirements
• Proof of property ownership
• Designated Operator information (if owner doesn't reside in McLennan County)
• Evidence of compliance with Sections 13-470 through 13-471 of license ordinance
• Evacuation plans for each sleeping area
• Record of hotel occupancy tax payments (if property already operating)

Safety Equipment Requirements

• Smoke detectors in each bedroom and on each level
• Carbon monoxide detectors (if property has gas appliances or attached garage)
• Fire extinguishers accessible on each level
• Posted evacuation plans in each sleeping area
• Exterior lighting and visible address numbers

Tax Compliance Documentation

• Avenu account for city/county hotel occupancy tax collection
• Texas Taxpayer ID for state hotel occupancy tax
• Monthly tax filing documentation and payment records

Specific Regulations for Short-Term Rentals

Zoning and Location Restrictions

• Type II STRs: Prohibited in R-E, R-1A, R-1B, R-1C zones (effective June 15, 2021)
• Type III STRs: Prohibited in R-3A, R-3B, R-3C, R-3D, R-3E, O-2, O-3, C-1 zones (effective June 15, 2021)
• Distance Requirements: 500-foot separation between BBHE and STR Type II in R-E, R-1A, R-1B, R-1C, R-2 zones
• Density Limits: STR Type III properties limited to 5 units as STRs (with specific exemptions)

Occupancy Limits

• Maximum adult occupancy: 2 adults per bedroom plus 2 additional adults per rental unit
• Zoning district limit: In R-E, R-1A, R-1B, R-1C zones, BBHE, STR Type I, and STR Type II may not exceed 4 unrelated adults

Parking Requirements

• Guest parking: STR guests NOT allowed to park on street
• Minimum requirements: 1 off-street parking space per rented room
• Base requirements: For STR Type I, B&B Inn, and BBHE properties - 2 parking spaces plus 1 per rented room
• Exemptions: STRs in C-4 zoning districts exempt from parking requirements
• Standards: Must meet City of Waco Parking and Access Design Standards

Operational Restrictions

• Owner Locality: If license holder doesn't reside in McLennan County, must designate a local operator who resides in the county and is available when STR is in use
• Noise Compliance: Must comply with city's noise requirements in Article VII of Chapter 16
• Food Service: Only allowed in zoning districts that permit restaurants/catering establishments by right
• Events/Meetings: Social events, weddings, receptions permitted only in commercial zoning districts

Marketing and Information Requirements

• License Number Display: Must prominently display license number and occupancy limit in all advertisements and online listings
• Property Signage: Conspicuously displayed sign in common area (provided by Development Services) including owner/operator contact, license number, occupancy limits, and parking requirements
• Guest Information: Evacuation plans required in each sleeping area

Grandfathering Provisions

Properties with existing special permits as of August 1, 2017 are exempt from distance and density requirements if:

1. License granted to same person/entity as special permit
2. License continuously renewed prior to expiration
3. License not revoked after August 1, 2017

Appeal Process

• Grounds: Licensee or applicant may appeal Director of Development Services' decision to deny, suspend, or revoke license
• Timeline: Appeal must be submitted within 15 days of decision
• Process: Written appeal to City Secretary, hearing at next regular City Council meeting 6+ days away
• Decision: City Council renders decision within 10 days of hearing
• Operation: STR must cease operation during appeal process

State-Level Regulations (Texas)

Hotel Occupancy Tax

• State Rate: 6% of gross rental receipts
• Collection: Airbnb collects and remits state tax on behalf of hosts
• Registration: Required through Texas Comptroller of Public Accounts
• Contact: (800) 252-1385 for tax specialist assistance

Local Tax Structure

• City of Waco: 7% of gross rental receipts
• McLennan County: 2% of gross rental receipts
• Total Combined: 15% hotel occupancy tax
• Collection: City and county contracted with Avenu for tax collection

Key State Considerations

• No Statewide Ban: Texas doesn't prohibit STRs at state level, allowing local control
• Platform Collection: Major platforms like Airbnb collect state tax automatically
• Local Preemption: Cities have broad authority to regulate STRs within their jurisdictions

Contact Information

Primary Regulatory Authority

City of Waco Development Services Department (Planning/STR Permits)

• Address: 300 Austin Avenue, Waco, TX 76701
• Mailing Address: PO Box 2570, Waco, TX 76702-2570
• Phone: (254) 750-5650
• Email: planning@wacotx.gov
• Website: Waco STR Information

Life Safety Inspections

Development Services Department

• Phone: (254) 750-5612
• Process: Schedule after application approval and fee payment

Code Compliance (Violations/Complaints)

• Phone: (254) 299-2489
• Online Portal: MyWaco Portal
• Process: Complaint-based enforcement system

Hotel Occupancy Tax Collection

Avenu Insights & Analytics (City/County Tax Collection)

• Phone: 1-877-693-4435 (toll-free)
• Email: Support@avenuinsights.com
• Registration: Avenu Taxpayer Service Center
• Filing: Avenu Online Filing

Texas Comptroller (State Tax)

• Phone: 1-800-252-1385 (hotel tax specialist)
• Website: Texas Hotel Occupancy Tax

Marketing Assistance (Optional)

Waco Convention & Visitors Bureau

• Contact: Hanna Anderson, Administrative Officer
• Email: HannaA@wacotx.gov
• Phone: (254) 750-5827
• Mailing Address: PO Box 2570, Waco, TX 76702-2570
• Website: Waco CVB

Alternative CVB Contact:

• Susan Morton - Tourism Manager
• Email: susanm@wacotx.gov
• Phone: (254) 750-8610

Interactive Tools

• Zoning Map: City of Waco Interactive Zoning Map
• Registered STRs Map: Map of Registered Short-Term Rentals

Source Links

Official City Sources

1. City of Waco STR Main Page
2. Waco STR Steps Guide (PDF)
3. Waco STR District Table (PDF)
4. Waco Code of Ordinances - STR Regulations
5. Interactive Zoning Map

Tax and Registration Sources

6. Citizen Self Service Portal
7. Avenu Taxpayer Registration
8. Texas Comptroller Hotel Tax
9. Hotel Occupancy Tax Information

Safety and Compliance Documents

10. Life Safety Inspection Requirements (PDF)
11. Sample Evacuation Map (PDF)
12. Site Plan Examples (PDF)

Mapping and Reference Tools

13. Registered STRs Map
14. Waco CVB Visitor Website

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Critical Investment Consideration: Waco's 2021 regulatory changes have created a constrained market where new STR investments face significant barriers, particularly for non-owner-occupied properties in residential zones. Existing operators with grandfathered properties enjoy substantial competitive advantages, while new entrants must navigate complex permitting processes and limited location options. The regulatory environment favors owner-occupied models (Type I) or properties in commercial/mixed-use zones, with consideration of the upcoming Magnolia Hotel and other developments that will increase competition in the traditional accommodation sector.