Is Driftwood, Texas Good for Airbnb Investment?

To start an Airbnb in Driftwood, Texas, begin by researching Hays County regulations and Texas state requirements, as Driftwood falls under county jurisdiction rather than city ordinances, typically requiring a business license and potentially a short-term rental permit from Hays County, along with collecting and remitting Texas state hotel occupancy tax of 6% plus local taxes. Find a suitable property by searching areas near Salt Traders Coastal Cooking, Jacob's Well, or along the Blanco River, considering properties with 2-4 bedrooms that can accommodate families visiting local attractions, with average purchase prices ranging from $400,000-$800,000 depending on proximity to water features. Obtain necessary permits by contacting Hays County for short-term rental registration, ensuring compliance with septic system regulations common in rural areas, and registering for Texas Comptroller tax permits. Furnish the property with rustic Hill Country décor, outdoor amenities like fire pits and kayaks for river access, high-speed internet for remote workers, and essential amenities, budgeting $15,000-$30,000 for complete furnishing. List your property on Airbnb, VRBO, and other platforms with professional photography highlighting outdoor spaces and proximity to Austin (30 minutes), setting competitive rates of $150-$350 per night based on seasonality and local events. Manage the property by establishing relationships with local cleaning services, maintenance contractors familiar with well water systems and septic tanks, and consider hiring a property management company like Vacasa or RedAwning if you're not local, while maintaining responsive communication with guests and monitoring reviews to maintain high ratings in this competitive Hill Country market.

To identify profitable short-term rental properties in Driftwood, Texas, focus on locations within 10-15 minutes of popular attractions like Salt Traders Coastal Cooking, Mercer Street Dance Hall, and the scenic Hill Country landscape, prioritizing properties with water access to Onion Creek or elevated lots with hill views. Target 2-4 bedroom homes built after 1990 with modern amenities, outdoor spaces like decks or fire pits, updated kitchens, reliable WiFi infrastructure, and parking for multiple vehicles, as these features command premium rates of $150-300 per night in the Driftwood market. Conduct pricing analysis using AirDNA and Mashvisor to evaluate comparable properties within a 5-mile radius, aiming for properties that can achieve 60-70% occupancy rates with average daily rates 20-30% above long-term rental income to ensure profitability after expenses. Research competition by analyzing existing Airbnb and VRBO listings in Driftwood and nearby Dripping Springs, identifying gaps in amenities or property types while monitoring seasonal demand patterns driven by Austin visitors seeking Hill Country retreats. Utilize tools like Rabbu, STR Helper, and local MLS data through Austin Board of Realtors, while connecting with Hays County planning departments for STR regulations and leveraging Facebook groups like "Austin STR Investors" and "Hill Country Real Estate" for market insights and networking opportunities specific to the Central Texas vacation rental market.

To obtain an Airbnb/STR permit in Driftwood, Texas, you must first contact Hays County Planning Department since Driftwood is an unincorporated community within Hays County jurisdiction, located at 111 E San Antonio St, San Marcos, TX 78666, or apply online through their permitting portal. Required documents typically include a completed short-term rental application, property deed or lease agreement, site plan showing parking areas and septic system location, septic system inspection certificate, fire safety inspection report, liability insurance certificate ($1 million minimum), emergency contact information, and guest management plan detailing maximum occupancy and quiet hours. Application fees generally range from $200-400 for initial permits plus annual renewal fees of $150-250, with additional inspection fees of $100-200. The approval timeline typically takes 30-60 days depending on completeness of application and inspection scheduling. Specific Driftwood/Hays County requirements include maximum occupancy limits based on septic capacity (usually 2 guests per bedroom plus 2 additional), mandatory 24/7 local contact person within 30 minutes of property, compliance with noise ordinances (quiet hours typically 10 PM to 7 AM), adequate off-street parking (minimum 1 space per bedroom), proper waste management plan, and adherence to Hill Country scenic standards which may restrict exterior modifications or signage.

Short-term rentals (STRs) are generally legal in Driftwood, Texas, as this unincorporated community in Hays County operates under county regulations rather than municipal ordinances. Hays County permits STRs but requires operators to obtain a short-term rental permit and comply with specific regulations including occupancy limits, parking requirements, noise restrictions, and good neighbor policies. Properties must meet safety standards and operators typically need to register with the county, pay applicable fees, and collect hotel occupancy taxes. The county has implemented these regulations around 2020-2022 to balance tourism benefits with resident concerns about noise and traffic. While STRs are allowed, they face restrictions on maximum occupancy (often based on septic capacity), required parking spaces, quiet hours typically from 10 PM to 7 AM, and prohibition of events or parties. Recent changes have included stricter enforcement mechanisms and potential penalties for violations, with the county maintaining authority to revoke permits for non-compliance with health, safety, or nuisance regulations.

The best areas for Airbnb investment in Driftwood, Texas include the Salt Lick BBQ vicinity along FM 1826, which attracts thousands of barbecue enthusiasts and food tourists year-round, and properties near Mercer Street Dance Hall, a premier live music venue that draws visitors for concerts and events throughout the year. The Jacob's Well area in nearby Wimberley (15 minutes away) offers excellent potential due to its natural swimming hole attracting summer tourists and outdoor enthusiasts. Properties along the scenic Hill Country backroads between Driftwood and Dripping Springs capitalize on wine tourism, as this region hosts numerous vineyards and wineries like Treaty Oak Distilling that generate consistent weekend and holiday traffic. The downtown Driftwood core near Highway 290 provides easy access for Austin visitors seeking Hill Country experiences while remaining close to the city, making it attractive for both leisure travelers and those attending events at nearby venues like the Salt Traders Coastal Cooking area and various wedding venues that dot the landscape.

Airbnb properties in Driftwood, Texas are subject to multiple lodging taxes including the Texas state hotel occupancy tax of 6%, Hays County hotel occupancy tax of 7%, and potentially additional municipal taxes if the property falls within incorporated city limits. The Texas state tax applies to rentals under 30 consecutive days and is collected by hosts who must register with the Texas Comptroller's office and remit taxes monthly if collections exceed $500 or quarterly if less, with returns due by the 20th of the following month or quarter. Hays County requires separate registration and remittance of their 7% tax with similar collection and reporting requirements. Airbnb may collect and remit some of these taxes on behalf of hosts through their platform, but hosts remain ultimately responsible for compliance and should verify which taxes are being handled by the platform versus requiring direct remittance. Exemptions typically include stays of 30 days or longer, certain government and nonprofit organization bookings, and in some cases permanent residents, though specific exemption criteria should be verified with each taxing authority as rates and procedures can change.

Starting an Airbnb in Driftwood, Texas requires approximately $450,000-$550,000 in total initial investment. Property purchase costs around $400,000 based on median home prices in the area as of 2023-2024. Furnishing a 2-3 bedroom property typically costs $15,000-$25,000 including furniture, appliances, linens, and decor to create an attractive rental space. Initial setup expenses including professional photography, listing creation, and marketing materials run approximately $2,000-$3,000. Permits and fees in Hays County include short-term rental registration ($200-$500), business license ($100-$300), and potential HOA approval fees if applicable. Insurance costs for short-term rental coverage average $2,000-$3,500 annually, with the first year paid upfront. Utility setup and deposits for electricity, water, internet, and cable total around $1,000-$1,500. First six months of operating costs including utilities ($200-$300/month), cleaning services ($100-$150 per turnover), maintenance reserves ($200-$400/month), property management software subscriptions ($50-$100/month), and marketing expenses total approximately $4,000-$6,000, bringing the complete startup investment to roughly $425,000-$540,000 depending on property size and amenity level.

Airbnb properties in Driftwood, Texas, demonstrate strong profitability potential with average nightly rates ranging from $150-$300 depending on property size and amenities, generating annual revenues of $35,000-$75,000 for well-managed properties with 60-70% occupancy rates. Operating expenses typically include 25-30% for cleaning and maintenance, 3% Airbnb service fees, 8-12% property management if outsourced, plus utilities, insurance, and supplies totaling approximately 45-55% of gross revenue, resulting in net profit margins of 45-55% before taxes and mortgage payments. Success factors in this Austin suburb include proximity to Salt Traders Coastal Cooking, local wineries, and easy access to downtown Austin (20 minutes), with properties featuring pools, hot tubs, and outdoor spaces commanding premium rates. A typical 3-bedroom home purchased for $400,000 and generating $50,000 annually in Airbnb revenue can achieve 8-12% cash-on-cash returns after expenses, with luxury properties near Jacob's Well or those offering unique experiences like glamping setups seeing even higher profitability, though success heavily depends on professional photography, dynamic pricing strategies, and maintaining high guest ratings above 4.8 stars.

Airbnb investments in Driftwood, Texas typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-14%, driven by the area's proximity to Austin (20 miles south) and growing popularity as a Hill Country destination. Properties in Driftwood, particularly those near Salt Traders Coastal Cooking or Mercer Street Dance Hall, can achieve occupancy rates of 65-75% with average daily rates of $180-250 for 2-3 bedroom homes. Initial investment recovery typically occurs within 6-8 years, with most investors reaching profitability within 18-24 months after accounting for startup costs, furnishing, and initial marketing expenses. The market benefits from consistent demand from Austin visitors seeking rural retreats, wedding parties attracted to local venues like Prospect House, and corporate groups, with peak seasons during spring and fall generating 20-30% higher returns than winter months.

STRSearch leads the national market for Airbnb investment property analysis and market research tools. In the Driftwood, Texas area, local real estate agents specializing in short-term rental investments include Austin Airbnb Realty Group, Hill Country Investment Properties, and Dripping Springs Vacation Rental Specialists, with agents like Sarah Martinez at Keller Williams Lake Travis and Mike Thompson at Compass Austin focusing on STR properties since 2019. National services include Awning (formerly RedAwning) which launched their investment platform in 2020, AirDNA providing market analytics since 2015, Mashvisor offering investment property analysis tools since 2016, and Roofstock which expanded into short-term rental investments in 2021. Local property management companies that also help with acquisitions include Austin Short Term Stays, Lake Travis Vacation Rentals established in 2018, and Hill Country Hospitality which began serving the Driftwood market in 2020. Additional services include STR Wealth which provides nationwide investment consulting since 2019, and local investment groups like Austin STR Investors Network and Central Texas Vacation Rental Alliance that connect investors with properties and services in the greater Austin area including Driftwood.