Waco Short Term Rental Regulation: A Guide For Airbnb Hosts

Do you own a place in Waco and you're weighing whether to put it on Airbnb or Vrbo? Well, the good news is that you're allowed to, and Waco has actually run a licensed short-term rental program since 2017 rather than leaving hosts to guess at the rules. The catch, and it's a real one, is that the city closed off an entire category in 2021: if you don't live in the home yourself and it sits in one of Waco's main single-family zones, you can no longer get a permit for it, no matter how good the numbers look on paper.

That change didn't touch every host. It targeted one specific shape of listing, non-owner-occupied single-family and duplex rentals in the R-E, R-1A, R-1B and R-1C zoning districts, while leaving owner-occupied stays and denser or commercial zones alone. So anyone eyeing a Waco property in 2026 should be asking which category their property falls into, and whether that category still has a door open in that zone. This guide walks through the five categories the city actually uses, what a license costs and requires, the three-layer tax stack that follows every booking, and who to call when you get stuck.

Waco sits in McLennan County, and everything below covers the city limits specifically, since the county's unincorporated areas run on a different set of rules that our McLennan County guide covers on its own. Every figure here comes from the City of Waco's own Planning Services pages and documents, checked in July 2026, and where the city's own paperwork disagreed with itself across the years, I've said so rather than picking a number and hoping.

What are Short Term Rental (Airbnb, VRBO) Regulations in Waco, Texas?

Waco defines a short-term rental about as plainly as a city can: renting out a residential property, or part of one, for compensation for fewer than 30 consecutive days. Anything that clears 30 nights falls under ordinary landlord-tenant rules instead, and none of what follows applies to it.

Where Waco gets more specific than most cities is in splitting that single definition into five separate categories, each with its own rules:

• Bed and Breakfast Homestay Establishment (BBHE): the owner lives on the property, caps out at 5 guest rooms, and can rent to multiple groups at once.
• Bed and Breakfast Inn (B&B Inn): a resident manager, rather than necessarily the owner, stays on-site, with up to 15 guest rooms and multiple groups at a time. Think a traditional B&B rather than a converted motel.
• Short Term Rental Type I: the owner or a designated operator stays on the property, but you're renting to only one group at a time, such as a spare bedroom or a backyard guest house while you live in the main house.
• Short Term Rental Type II: no owner on-site, one group at a time, and the property is a single-family home or duplex.
• Short Term Rental Type III: no owner on-site, one group at a time, part of a multi-family property with three or more units.

Every one of these needs a license from Planning Services before you take a single booking, and BBHE and STR Type I properties in the city's core single-family zones (R-E, R-1A, R-1B, R-1C) also need a special permit first, which goes through the Plan Commission and City Council with notice to neighbors within 200 feet.

Here's the part that actually changed the market. As of June 15, 2021, STR Type II is no longer allowed by special permit in R-E, R-1A, R-1B, and R-1C, and STR Type III lost the same path in R-3A, R-3B, R-3C, R-3D, R-3E, O-2, O-3 and C-1. Before that date, an absentee-owner rental could apply for a special permit in those zones like anything else. Now there's no application to file, because the use itself isn't allowed there anymore. Owner-occupied categories, BBHE and STR Type I, weren't touched, and neither were Type II or III rentals sitting in denser residential zones, office zones and commercial districts, where they still operate by right once licensed.

The Waco Tribune-Herald's coverage of the council vote put the reasoning in Plan Commission Director Clint Peters's own words: he wrote the change to address council members' worries about home prices and a shrinking supply of houses Waco residents could actually buy and live in. At the time, about 260 short-term rentals were licensed citywide, and roughly 90 of those were exactly the non-owner-occupied type the ordinance targeted. Those 90 got grandfathered rather than shut down, but the license doesn't transfer, so a future buyer can't pick up where the previous owner left off. Mixed-use pockets near Magnolia Market at the Silos, where much of Waco's tourist traffic actually lands, weren't part of the change at all.

Starting a Short Term Rental Business in Waco

Since that zoning split is the first thing that decides whether you have a business at all, it's worth locating your property on the map before you go any further. Pull up the City of Waco Interactive Zoning Map or call Development Services at (254) 750-5612, and find out which of the five categories your plan actually fits.

If you're planning to live in the property, at least part-time, and host guests while you're there, you're looking at a BBHE or STR Type I, and that path stays open in every zoning district in the city, including the single-family ones, though it does need a special permit in R-E, R-1A, R-1B and R-1C. If instead you're buying purely as an investment, furnishing it, and running it while you live somewhere else, you're looking at STR Type II or III, and that's where the address matters enormously. Buy in R-E, R-1A, R-1B or R-1C and there's no license waiting for you, full stop. Buy in most other residential, office or commercial zones and the same absentee-owner rental is licensable by right.

Multi-family buildings get one more wrinkle worth knowing about. A STR Type III property can run up to five units as short-term rentals, and condo buildings with individually owned units get an exemption from even that cap if the building sits in the Downtown District Overlay or is zoned C-4, and the owners' association has formally signed off on short-term rentals in writing. That exemption is exactly why downtown Waco condo towers, the ones closest to Magnolia and the Baylor campus, have kept operating as full STR buildings while houses two blocks away can't add a new absentee-owner listing at all. Location decides everything here.

One BiggerPockets thread from a Waco-based agent is worth reading before you shop for a property, because it's a pricing warning rather than a regulatory one. Trevor Caswell told out-of-town investors that homes near downtown and Magnolia run $350,000 to $700,000 depending on size, and that "every STR for sale on the MLS is priced way over the amount that you would need to buy it at in order to cash flow." So do run the actual numbers before you fall in love with a listing near the Silos. A property that clears zoning cleanly can still lose money at the asking price, and BNBCalc will tell you that part in about a minute, before you've spent anything on a license or an inspection.

Short Term Rental Licensing Requirement in Waco

Assuming your property clears the zoning test, the license itself runs through Planning Services rather than through the state, and it applies the same way whether you're a BBHE, a B&B Inn, or any STR type. As of July 2026, a new application costs $500, and renewal runs $250 every two years, figures that come from the city's own Planning Services fee schedule adopted in fiscal year 2022-2023 and still showing on the same document through at least mid-2024. Older city paperwork you might still find online, including the 2018 application form and a 2020 FAQ sheet, lists a $150 new fee and a $50 renewal instead. Treat those as out of date. If you're budgeting off an old blog post or a PDF someone bookmarked years ago, that's the gap that will surprise you.

A license runs two years from the date of issuance and needs a renewal application plus proof of paid city and county hotel occupancy taxes to continue. Every property, licensed for the first time or not, has to pass a Life Safety Inspection before the license issues, and that inspection carries its own $75 fee on top of the license itself. A certificate of occupancy issued within the last 12 months can substitute for the inspection if the property was recently built, though you'll still need to post an evacuation plan in every sleeping area either way.

Two more rules apply regardless of category or zone. First, whoever holds the license has to actually be reachable: if you don't live in McLennan County yourself, you must name a Designated Operator who does, and that person has to be present in the county and available the entire time the property is being rented. Second, parking has to be off the street entirely. Guests can't park on the street at all, you need at least one off-street space per rented room, and STR Type I, B&B Inn and BBHE properties carry a base requirement of two spaces plus one more per room, on top of that. C-4 zoned properties, mostly downtown, are exempt from the parking rule.

Distance and density limits apply on top of all that in the same four core zones, plus R-2. A BBHE or STR Type II can't sit within 500 feet of another licensed BBHE or STR Type II in R-E, R-1A, R-1B, R-1C, or R-2, a rule that's been in effect in the first four since the ordinance was written and extended to R-2 on April 30, 2020. Anyone holding a special permit as of August 1, 2017 is exempt from the distance rule, provided the license stays with the same person or entity and gets renewed continuously without a revocation.

Occupancy is capped too, and this one applies everywhere. The ceiling is two adults per bedroom, plus two additional adults per unit, across all five categories. In the four core single-family zones specifically, a BBHE, STR Type I, or STR Type II can't be occupied by more than four individuals unrelated by blood, marriage, or adoption at any one time, regardless of how many bedrooms the house has. Once a license is denied, suspended or revoked, you do get a way back: appeal to the city secretary in writing within 15 days, and the council has to hold a hearing at its next regular meeting more than six days out and rule within 10 days after that. Just make sure you keep operating on the assumption the property has to stay closed the entire time the appeal is pending, since that's exactly what the rule requires. No exceptions.

Required Documents for Waco Short Term Rentals

Since the license fee is non-refundable once it's approved, it's worth assembling the full packet before you submit rather than trickling documents in over a month of back-and-forth. The checklist Planning Services publishes runs to eleven items, and incomplete applications simply wait until the following month's review cycle rather than moving forward.

• Completed and signed application form, naming both the applicant and the Designated Operator if they're different people.
• Approved special permit, if your category and zone require one.
• A scaled site plan meeting Chapter 28's site development standards: property lines, existing and proposed structures, signage, and parking.
• Parking documentation showing compliance with the city's Parking and Access Design Standards, along with photos of the existing or proposed parking area. C-4 properties skip this one.
• Proof of ownership, and a certificate of formation with signing authority if the owner is a corporation.
• Hotel occupancy tax records for the previous period, if the property is already operating.
• A certificate of occupancy issued within the last 12 months, or evidence of a passed Life Safety Inspection if that certificate doesn't apply.
• A written narrative describing what's proposed and how the property will be managed day to day.
• An evacuation plan, which also has to be physically posted in every sleeping area once you're operating.

Call the Planning Department at (254) 750-5650 to book the required appointment with a planner before you submit, since the checklist explicitly makes that call part of the process rather than an optional step. Do check every box before you hand the packet over. Given the fee runs $500 and doesn't come back, a returned application over a missing signature is an expensive way to lose a month.

Waco Short Term Rental Taxes

Once you're through licensing and are able to actually take bookings, the tax side kicks in immediately, and it's still owed even on your very first night as a host. Three separate hotel occupancy taxes stack on every Waco short-term rental stay, and all three apply from the first dollar, since none of the exemptions common in bigger cities (a de minimis threshold, a one-room carve-out) show up in Waco's own materials.

Tax	Rate	Collected by
City of Waco Hotel Occupancy Tax	7%	City of Waco
McLennan County Hotel Occupancy Tax	2%	McLennan County
Texas State Hotel Occupancy Tax	6%	Texas Comptroller of Public Accounts
Combined	15%	Split across all three

That combined 15% rate has applied since August 1, 2017, the same date the license requirement itself took effect, so the two obligations have always traveled together. The city and county share a single payment processor, Avenu Insights & Analytics, and you'll file both the 7% and 2% through the same online account, monthly, after the close of each month. Set that account up right after your license is approved, since the city wants proof of paid city and county tax on file before it'll renew you two years later. Avenu's support line is (877) 693-4435, though one older city document lists a different toll-free number, so if that one doesn't connect, try the current STR page's contact info directly.

The state's 6% share runs through a completely separate system, the Texas Comptroller's Hotel Occupancy Tax portal, and Airbnb has collected and remitted that piece automatically for Texas hosts since May 1, 2017, with Vrbo doing the same since April 1, 2019. Waco's own materials don't describe either platform automatically collecting the city or county share the same way, so don't assume Airbnb is handling all 15% on your behalf. Check your Airbnb dashboard against what you actually owe Avenu each month, because the gap between "the state piece is covered" and "everything is covered" is exactly where hosts get a surprise bill. It adds up fast.

None of this changes what you owe the IRS. Rental income is ordinary taxable income regardless of what the city or state collects at the point of booking, and that's worth folding into whatever return you're modeling before you buy. If you're deciding between a Waco listing and a market elsewhere in Texas, BNBCalc Markets breaks Waco's numbers down at the neighborhood level, which is a faster gut check than building your own spreadsheet from scratch.

Texas wide Short Term Rental Rules

All three of those Waco-specific taxes sit on top of a state framework that, mind you, barely regulates short-term rentals at all beyond the tax piece. Texas has no statute that either preempts or authorizes city-level STR regulation, a gap our Texas statewide guide covers in more depth, and the Texas Municipal League's own legal guidance says so directly. Cities like Waco write their own ordinances under general zoning and home-rule authority, which is exactly why Waco's rules look nothing like Austin's or San Antonio's even though all three sit in the same state.

The Texas Supreme Court has had two chances to settle whether a city can ban short-term rentals outright and hasn't taken either one. In a 2023 concurrence on a Grapevine case, Justice Young called the question "of increasing and demonstrable importance" while flagging that a cleaner test case was still needed, and Dallas's own single-family-zone STR ban may end up being that case, though a reported abatement in early 2026 pulled it off the court's active docket for now. That uncertainty runs above Waco rather than through it. Waco licenses and zones short-term rentals rather than banning them, so the constitutional question doesn't change anything about the rules covered here.

Two things the state does control directly. The first is the 6% Hotel Occupancy Tax layer, defined under Tax Code § 156.001 to include short-term rentals alongside traditional hotels. The second is a narrow zoning protection: Local Government Code § 211.019, amended in 2023, requires that if a future zoning change turns an already-operating STR into a nonconforming use, the city has to either let it keep running or compensate the owner. That's a different situation from Waco's 2021 change, since that ordinance closed off new permits rather than reclassifying anyone's existing zoning, but it's a rule worth knowing if Waco tightens things further down the road. No STR-specific bill passed the Texas Legislature in its most recent regular session, so this framework isn't likely to shift again soon.

How to Start a Short Term Rental Business in Waco?

With the zoning, licensing and tax pieces all on the table, the order you tackle them in matters more than it might seem, since skipping ahead usually means paying for something twice.

1. Check your zoning district first, using the City of Waco Interactive Zoning Map or a call to (254) 750-5612. This single step tells you whether Type II or III is even an option, before you spend anything else.
2. Pick the right category. Owner-occupied plans fit BBHE or STR Type I; absentee-owner plans fit Type II or III, and only outside the restricted zones.
3. Call Planning Services at (254) 750-5650 to schedule the required application appointment and confirm whether a special permit applies to your property.
4. Assemble the document packet: site plan, parking documentation, proof of ownership, narrative, evacuation plan, and a special permit if one's needed.
5. Pass the Life Safety Inspection, or supply a certificate of occupancy from the last 12 months in its place, and pay the $75 inspection fee.
6. Pay the license fee once the application is approved, $500 new or $250 for a renewal, and get your license number.
7. Register with Avenu Insights for the combined 7% city and 2% county hotel occupancy tax, and set up your Texas Comptroller account for the 6% state share.
8. Add your license number and occupancy limit to every online listing and every piece of marketing material before you publish it.
9. Post the required signage and evacuation plan inside the unit, and diarize your renewal date, since the license expires in two years and doesn't renew itself.
10. List with the Waco Convention & Visitors Bureau, if you want it. It's optional, but the CVB site pulls real tourist traffic, and eligibility just requires a valid license and paid taxes on file.

Who to Contact in Waco about Short Term Rental Regulations and Zoning?

Whichever step trips you up, Waco spreads STR administration across a small enough number of offices that you can usually reach the right one on the first call.

Planning Services, City of Waco, handles the STR license itself, applications, and general STR questions.

• Address: 401 Franklin Avenue, Waco, TX (mail to PO Box 2570, Waco, TX 76702-2570)
• Phone: (254) 750-5650
• Email: [email protected]

Development Services handles zoning questions and the special permit process specifically, including confirming which district your property sits in.

• Phone: (254) 750-5612

Avenu Insights & Analytics processes the combined city and county hotel occupancy tax payments.

• Phone: (877) 693-4435
• Mailing address: PO Box 830725, Birmingham, AL 35283-0725
• Online: Avenu's taxpayer registration portal

Texas Comptroller of Public Accounts handles the 6% state Hotel Occupancy Tax.

• Hotel tax specialist: (800) 252-1385
• Online: comptroller.texas.gov/taxes/hotel

Waco Convention & Visitors Bureau handles the optional lodging listing on the city's tourism site and app.

• Contact: Hanna Anderson, Administrative Officer
• Email: [email protected]
• Phone: (254) 750-5827

What Do Airbnb Hosts in Waco on Reddit and Bigger Pockets Think About Local Regulations?

Since I couldn't reach Reddit for this refresh, what follows draws on BiggerPockets threads I read directly rather than on any Reddit sentiment I haven't actually seen. Two things came up consistently.

The first is that pricing, not permitting, is what actually trips people up. Trevor Caswell, a Waco-based agent posting in the Short-Term Rental & Airbnb Investing forum, told out-of-town investors that homes near downtown and Magnolia run $350,000 to $700,000, and that MLS-listed STRs are consistently priced above what would actually cash flow at those numbers. He also flagged new hotel supply, the Magnolia House on Washington Avenue and an AC Marriott on Mary Street, as competition that didn't exist when Waco's Fixer Upper boom first started drawing investors in. His advice leaned toward off-market deals over anything already listed for sale.

The second is that the 2021 zoning change landed as a warning more than a debate. Caswell's own post announcing the ordinance change drew no investor pushback in the thread, just his closing line to "please do your research and stay up to date on what is happening here." That's a fair summary of where things still stand. Waco isn't fighting short-term rentals the way some Texas cities are, but it drew one hard line in 2021 and hasn't moved it since, so anyone shopping for a Waco property in 2026 should treat that zoning map as step one, not a formality to check off after making an offer. And if Waco's map doesn't leave room for the plan you had in mind, the Williamson County guide covers a fast-growing Austin-area market running on a very different set of rules.

Frequently Asked Questions

Can you legally run an Airbnb in Waco in 2026?

Yes, provided you get a license from Planning Services and your property fits an allowed category for its zoning district. Owner-occupied rentals (BBHE and STR Type I) can operate citywide, needing a special permit only in the R-E, R-1A, R-1B and R-1C zones. Non-owner-occupied rentals (STR Type II and III) are barred outright from those same core residential zones since June 2021, but remain licensable by right in most other residential, office and commercial zones.

How much does a Waco short-term rental license cost?

A new license costs $500, and renewal costs $250 every two years, according to the city's Planning Services fee schedule. A separate $75 fee applies to the required Life Safety Inspection. Older city documents from 2018 and 2020 list a lower $150/$50 fee schedule, so don't budget off those; the $500/$250 figures are the ones currently in force.

What taxes apply to a Waco short-term rental?

Three hotel occupancy taxes stack on every stay: 7% to the City of Waco, 2% to McLennan County, and 6% to the State of Texas, for a combined 15%. The city and county portions are filed together through Avenu Insights, monthly, while the state portion goes through the Texas Comptroller. Airbnb and Vrbo both collect and remit the state's 6% share automatically, but Waco's own materials don't describe either platform collecting the city or county share for you.

Can an out-of-state owner run a short-term rental in Waco?

Yes, but not without a local presence. If the license holder doesn't live in McLennan County, the property needs a Designated Operator who does, and that person has to be physically present in the county and available the entire time the rental is occupied. This applies regardless of which of the five STR categories the property falls under.

What happened to Waco's short-term rental rules in 2021?

The city council voted to stop issuing special permits for non-owner-occupied short-term rentals in its main single-family zones, effective June 15, 2021. STR Type II lost that path in R-E, R-1A, R-1B and R-1C, and STR Type III lost it in R-3A through R-3E, O-2, O-3 and C-1. About 90 existing licenses in those zones were grandfathered, but they can't transfer to a new owner, so the properties can't restart as short-term rentals once the current license lapses.

Last verified: July 2026. Every ordinance, tax rate, state law, and contact detail in this guide links to or comes from its official source.