Short-Term vs. Long-Term Leasing: What Texas Landlords Need to Know
- Johnny Scheff
- 17 minutes ago
- 5 min read
Navigating a Shifting Rental Landscape
Texas landlords constantly face a dynamic rental market shaped by economic shifts, regulatory changes, and evolving tenant preferences. The decision between short-term vs long-term leasing is more complex than ever, with each path offering distinct opportunities and challenges. Understanding the latest trends, legal requirements, and market data is essential for making informed choices that maximize returns and minimize risk.
Table of Contents
Understanding the Leasing Options
Short-Term Leasing:
Typically refers to rental agreements lasting less than 30 days, such as vacation rentals, Airbnb's, or corporate housing. These arrangements offer flexibility and the potential for higher income but come with increased turnover, management demands, and regulatory scrutiny [1] [3].
Long-Term Leasing:
Involves leases of six months, a year, or longer. This traditional model provides stability, predictable income, and lower turnover costs, but may limit flexibility and potential for rapid rent adjustments [1] [2] [6].
Key Trends Observed in Texas for 2025
Rising Demand and Modest Rent Growth:
After a period of oversupply, Texas rents are expected to rise modestly as the market absorbs new inventory, especially in major cities like Houston, Dallas Fort-Worth and Bossier City [14]
Increased Regulation:
Cities such as Austin and Houston have adopted new ordinances for short-term rentals, including licensing, tax collection, and operational standards. These changes aim to balance economic benefits with neighborhood concerns and will take effect throughout 2025 and 2026 [10] [12] [13]
Shift Toward Flexibility:
Economic uncertainty and the rise of remote work have driven both residential and commercial tenants to seek more flexible leasing options, fueling growth in short-term and mid-term rentals [4]
Pros and Cons: Short-Term vs. Long-Term Leasing
Short-Term Leasing | Long-Term Leasing | |
Income Potential | Higher nightly rates, but less predictable overall | Steady, predictable monthly income |
Turnover | Frequent, requires more cleaning and management. | Lower, less frequent tenant changes |
Regulation | Increasingly strict, varies by city | Stable, well-established legal framework. |
Flexibility | High, can adjust pricing and availability quickly | Low, locked into lease terms |
Vacancy Risk | Higher, especially off-season | Lower, but risk of non-payment or lease breaks |
Maintenance | More wear and tear, higher upkeep costs | Lower, tenants often treat property as their own |
Use Of Property | Owner can use between bookings | Occupied for duration of lease |
Legal and Regulatory Considerations
Short-Term Rentals
Licensing & Registration:
Many Texas cities now require STR operators to obtain annual licenses and comply with local ordinances. For example, Houston’s new ordinance takes effect January 1, 2026, while Austin’s updated rules began October 1, 2025 [10] [12]
Hotel Occupancy Tax (HOT):
Platforms like Airbnb and VRBO must collect and remit HOT on behalf of hosts in cities such as Austin, effective April 1, 2025 [11] [15]
Operational Restrictions:
Some cities limit the number of STRs per area, require minimum distances between rentals, or restrict corporate ownership. [13] [16]
HOA and Community Rules:
Homeowners associations may impose additional restrictions or outright bans on STRs. [9]
Long-Term Leases
Lease Agreements:
Texas law requires leases longer than one year to be in writing. Standard leases must include clear terms on rent, deposits, maintenance, and notice periods. [6] [19]
Tenant Rights:
Landlords must provide habitable housing, timely repairs, and respect tenant privacy. Security deposits are capped and must be returned within 30 days of lease end. [5] [6] [18]
Eviction and Notice:
New laws in 2025 have extended notice periods and increased mediation requirements before eviction in some jurisdictions, [18]
Market Data: Texas Rental Landscape
Average Rent:
The statewide average rent is $1,905 as of July 2025, with prices expected to rise modestly as supply and demand rebalance. [14]
Vacancy and Supply:
New apartment deliveries peaked in 2024 but are set to drop by half in 2025, tightening the market and supporting rent growth. [17]
Regional Variations:
Major metros like Houston, Dallas Fort-Worth, Beaumont, Bossier City and Wichita Falls remain robust, while suburban and secondary markets like Webster, Port Neches, Luling, Pasadena and Groves offer new opportunities for both leasing models [7] [8] [20]
Factors to Consider For Choosing the Right Strategy:
Location:
Urban and tourist-heavy areas may favor short-term rentals, while suburban and family-oriented neighborhoods often perform better with long-term leases.
Property Type:
Condos and single-family homes are popular for STRs; multifamily and workforce housing typically suit long-term tenants.
Management Capacity:
STRs require more hands-on management or professional services, while long-term rentals are more “set-and-forget”.
Regulatory Environment:
Always check local ordinances and HOA rules before committing to a leasing strategy.
Final Thoughts – Adapting to a New Era of Leasing
The Texas rental market in 2025 was defined by choice and change. By understanding the pros, cons, and legal landscape of short-term and long-term leasing, landlords can make informed decisions in the upcoming year that align with their goals and the needs of their communities. With the right strategy and support, every property can thrive in this evolving market.
Partner with Gemstone for Success
At Gemstone Management, we help property owners navigate the complexities of both short-term and long-term leasing. Our team stays ahead of regulatory changes, market trends, and tenant expectations to maximize returns and minimize risk. Whether you’re considering a shift to short-term rentals or seeking stable, long-term tenants, we offer tailored solutions and expert guidance for every property type.
Get in touch to learn how Gemstone can support your next housing project, apartment hunt or provide insights into sustainable multifamily development.
🔗 Contact Us or email at info@gemstonemgt.com
References
Graystone IG – Long-Term vs. Short-Term Rentals in 2025: Which Strategy Wins?
Chopkins Real Estate – Comparing Short-Term vs. Long-Term Leasing Strategies
Jaxon Texas – What You Should Know About Short-Term vs. Long-Term Rental Management
SPI Advisory – Q2 2025 Texas Multifamily: Rent Growth, Cap Rates & Investment Strategies
Steadily – Midterm Rental Laws and Regulations In Texas - 2025
Steadily – Texas Rental Lease Agreement - 2025 Laws and Regulations
Proper Insure – Current Airbnb & Short-Term Rental Regulations in Texas
City of Houston – Short-Term Rental Ordinance (Adopted 04.16.2025)
Avalara – Short-term rental marketplaces must collect Austin lodging tax
The Host Report – Airbnb Investor Insights: Regulation Updates
Jaxon Texas – 2025 Renting Laws That Every Property Owner Should Understand
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