SHORT-TERM RENTALS IN WACO: DEMAND, RULES, AND HOW TO GET STARTED
An inside look at the Waco Airbnb market for buyers who want the story behind the numbers; not just a listing, but a strategy.
Not long ago, Waco was the town you passed through on the way to Austin or Dallas. Then a set of silos, a farmhouse aesthetic, and a television show turned it into a destination; today visitors plan whole weekends around the Silos, Baylor game days, Cameron Park, and a day spent thrifting at cute secondhand shops . That steady stream of guests is exactly what makes a short-term rental here worth a serious look; it is also why the rules around them have grown more deliberate. If you are weighing an Airbnb in Waco, here is the honest picture: where demand stands, what the competition and taxes look like, and the exact order of steps to buy the right property the right way.
THE DEMAND IS REAL; HERE IS WHAT THE NUMBERS SAY
Waco is not a quiet corner of the short-term rental map. According to AirDNA, the market tracks roughly 1,049 active vacation rentals and earns a market score of 96 out of 100; a figure that places it among the stronger small-city markets in the country. The average listing runs about 49% occupancy at a $206 average daily rate, producing close to $24,800 in annual revenue; and well-run operators regularly clear more than that. Supply has grown about 8% over the past year, a clear sign that other investors see the same opportunity you do.
A quick read: demand is healthy and rising, but so is competition; the winners here are the properties with the right location, the right permits, and a story guests want to book.
HOTELS, TAXES, AND A TIGHTENING MARGIN
Two forces are squeezing the easy money out of this market.
First, hotels. Waco's tourism boom has pulled in new hotel development — more rooms downtown means more competition for the same weekend traveler. Short-term rentals still win on space, character, and group travel, but they no longer have the field to themselves.
Second, taxes and compliance. A Waco short-term rental now carries the same lodging-tax load as a hotel: the 6% Texas state hotel occupancy tax, the City of Waco's 7% tax, and applicable McLennan County tax, which together push the combined rate into roughly the 13% to 15% range. Layer in the annual license, the required Life Safety Inspection, insurance, and management, and the gap between gross revenue and take-home profit is real. None of this makes Waco a bad market; it makes it a market that rewards operators who run the numbers before they buy, not after.
HOW TO GET STARTED THE RIGHT WAY
The single most expensive mistake in this market is buying a house first and asking about the rules second. Do it in this order.
STEP 1: CHECK THE ZONING BEFORE YOU FALL IN LOVE
Waco's 2021 ordinance sorted short-term rentals into three types and tied them to zoning. Type I is owner-occupied. Type II, a non-owner-occupied single-family home or duplex, is prohibited in several residential districts, including R-E, R-1A, R-1B, and R-1C. Type III, multifamily, is prohibited in a further set of districts, including R-3A through R-3E, O-2, O-3, and C-1. Properties that were legally operating before the change were largely grandfathered in; which is part of why an existing, licensed short-term rental can carry a premium price.
Before you make an offer, do two things on the City of Waco website: pull the property up on the interactive zoning map to confirm its district, then check the Short-Term Rental Map to see how the address/area is classified and what already operates nearby. If the zoning does not allow the short-term rental type you have in mind, the deal is over before it starts; far better to learn that from a map than from a denied application. The city keeps the full framework on its Short-Term Rentals page.
STEP 2: START THE APPLICATION BEFORE YOU BUY
Zoning is the gate; the license is the process. A Waco short-term rental license runs one year and is renewable, and the initial application requires a Life Safety Inspection (a separate fee), documentation of off-street parking (generally two spaces plus one per rented room, with C-4 properties exempt), and registration to collect and remit hotel occupancy tax through Avenu. The full set of requirements lives in Chapter 13, Article XIII of the city code.
Here is the move that protects you: treat short-term rental eligibility as a contingency. Write your offer so that your ability to license the property is confirmed during your option period, and lean on your agent and the city Planning and Development Services team to verify the path before your money is at risk. Buying first and hoping is how investors end up with a beautiful house they are not allowed to rent.
STEP 3: RUN THE NUMBERS WITH AIRDNA
Once a property clears zoning, pressure-test the income. AirDNA's Rentalizer lets you drop in a specific Waco address and project revenue, occupancy, and nightly rate from real comparable listings; it is the difference between a hopeful guess and a defensible pro forma. Compare that projection against your true carrying costs (mortgage, taxes, insurance, the 13% to 15% occupancy tax, cleaning, management, and furnishing) and you will know whether the property is a business or just a pretty listing.
The historic Dr. Pepper House located on Washington Avenue in Downtown Waco
FIVE WACO STAYS WORTH KNOWING
The best way to understand what books in Waco is to study the properties already winning. These five span the range of what guests here pay for, from a tiny couples retreat to a large-group estate; and every one leans on character, not square footage alone.
1. The Shotgun House. Designed and built by Chip and Joanna Gaines and made famous on Fixer Upper, this one-bedroom sits a block from the Silos; proof that a small, story-rich home in the right spot can out-earn a larger house in the wrong one.
2. The Wishing House. The Wishing House was created as a sanctuary of relaxation & making memories together. It’s a modern house with high end features that includes 2 master bedroom suites, fantastic outdoor living spaces with an outdoor movie wall, firepit, grill, and a balcony overlooking downtown Waco.
3. The Dr. Pepper House. The Dr Pepper House is one of Waco's most beautiful and historic homes. Built in 1885 by Wade Morrison, the original founder of Dr Pepper, the home has since been renovated in the early 2000's by Christian rock singer, David Crowder.
4. Green Door Lofts-Urban Cowboy. Green Door Lofts, featured on Fixer Upper Urban Loft Challenge and referred to as "Funky Town" by Chip, is a 9-unit luxury loft complex in the heart of Waco's bustling Silo District.
5. The Pink Cheetah-Downtown Loft. Located in the historic Behrens loft building in the heart of downtown Waco. This unit sits over the famous Fabled Book store, where patrons can eat and drink while they nose through crisp book pages.
Want to see the full field? Browse every current Waco stay on Airbnb.
THE BOTTOM LINE
Waco short-term rental market is healthy, competitive, and more regulated than it used to be; which is good news for the investor willing to do the work. Demand is strong, the Magnolia effect is not slowing, and the buyers who win are the ones who check zoning first, secure the license before closing, and let the data set the price. That is exactly the kind of guidance we built Storied Real Estate Group to provide.
WACO AIRBNB QUESTIONS, ANSWERED
Do you need a permit to run an Airbnb in Waco?
Yes. Waco requires a short-term rental license, renewed yearly, along with a Life Safety Inspection and registration to collect hotel occupancy tax.
Can you run a non-owner-occupied Airbnb anywhere in Waco?
No. Non-owner-occupied single-family and duplex rentals (Type II) are prohibited in several residential zones; always confirm the specific address on the city zoning and short-term rental maps first.
How much are Waco's short-term rental taxes?
Combined state, city, and county lodging taxes land in roughly the 13% to 15% range, collected through Avenu.
Is Waco still a good market with more hotels opening?
Demand remains strong per AirDNA, but competition and taxes have grown; success now depends on location, compliance, and running the numbers before buying.
THINKING ABOUT A SHORT-TERM RENTAL IN WACO?
Let's find you a property that is both beautiful and buildable into a business. Reach out to Storied Real Estate Group; we will help you check the zoning, navigate the permits, and run the numbers before you ever write an offer.
Sources: AirDNA Waco market data (June 2026); City of Waco Planning/Development Services and Hotel Occupancy Tax pages