Rental / DSCR in San Marcos

Yes: no more than three unrelated adults per dwelling, and you're liable if it's violated. Ordinance 2023-72 raised the cap from two to three unrelated persons on October 17, 2023, and the Development Code makes the property owner and any agent of the owner personally responsible for allowing an over-occupied unit. The city doesn't need to inspect to prove it: over-occupancy is established if three or more vehicles registered to different surnames and addresses are parked overnight on a majority of nights in any 21-day period. A four-bedroom house underwritten at four separate rents does not comply here; model the deal at three tenants' worth of rent, not four. Talk to your attorney about how the ordinance applies to a specific lease structure.

Yes, for both a long-term lease and a short-term rental, and they're two separate filings. Every residential rental leased for more than 30 days has been required to register under City Code section 34-821 since January 1, 2021, with an exemption only for family-member tenants; the Development Code repeats the same duty at section 5.1.4.1(B). A short-term rental instead needs its own annual, non-transferable permit, and that permit issues only after the property passes a Code Compliance safety inspection and must be renewed every year. Sort the filing, and the inspection if you are going short-term, before you place a tenant rather than after. The city has not published the registration fee, renewal cycle or any inspection requirement on the long-term side, so confirm the current details with Code Compliance directly.

Roughly 38% of gross rent on a typical San Marcos rental, before insurance, vacancy or management. At the city's 2.0666 combined rate per $100 of value (Hays County, City of San Marcos and San Marcos CISD, with no ACC line here), tax on a $310,480 mid-tier home runs about $6,417 a year against roughly $16,848 of gross rent at the metro's $1,404 median rent, as of July 2026. Kyle carries a heavier stack at 2.2536 and Wimberley the lightest in the corridor at 1.4098. Check the parcel's own tax stack before you underwrite the ratio on our DSCR calculator, since a MUD or PID assessment can ride on top of these numbers without showing on the county rate sheet. Talk to your CPA about how this lands on your return.

Yes, if it sits in one of the city's public improvement districts, and that number won't be on the appraisal district's rate sheet. San Marcos has at least four active PIDs, Trace, River Bridge Ranch, Whisper and Whisper South, created under Local Government Code chapter 372, and their annual assessments are billed on the same Hays County tax statement as the ad valorem tax but administered separately by P3Works. Pull the assessment amount from the title commitment or P3Works's own per-parcel lookup before you close; the CAD rate alone will understate the carry on a PID lot.

The supply side argues yes: the city permitted zero units in buildings of five or more apartments in 2025, the same year its university posted record enrollment. San Marcos permitted 718 single-family units and no multifamily structures in 2025 (12 of 12 months reported), while Texas State's fall 2025 enrollment reached 44,596, up 9.6% year over year. Most of that growth landed online and at the Round Rock campus rather than in San Marcos itself, so don't convert the enrollment figure into rental demand one for one. Gross yield on the metro's $310,480 mid-tier value and $1,404 median rent runs about 5.43% as of July 2026, below Kyle's 6.28% and Buda's 5.68% but above Wimberley's 3.80%. No primary-source vacancy rate for Hays County was found to confirm the tightness directly, so treat this as a supply signal, not a vacancy claim.

Yes, short-term rentals are permitted citywide with no density cap, but the permit carries real conditions. The ordinance effective April 16, 2024 allows Type 1 and Type 2 short-term rentals with no cap and no ban in single-family zoning, unlike some Texas cities that cap short-term rentals by block face. The city's own Development Code standard limits short-term rental occupancy to no more than two adult guests per bedroom offered, plus two additional adults, and the permit renews annually only after a passed Code Compliance safety inspection. The long-term registration duty under Code section 34-821 is written around leases running more than 30 days, so which filing your property needs follows the length of stay you actually rent; ask the city which applies to your plan. The short-term rental permit fee is not published, so confirm it with the city before you budget it.

A DSCR (debt service coverage ratio) loan qualifies on the property's rental income instead of your personal income, so there are no W-2s or tax returns required. We compare the rent, from a signed lease or the appraiser's market-rent estimate, against the monthly payment. A DSCR of 1.00 means the rent covers the payment, and we lend with a DSCR as low as 0.75.

Our rental program starts around 5.50% interest-only, with 30-year fixed and 5/7/10-year ARM options, for a single property or a whole portfolio. The lowest pricing goes to strong credit, lower leverage, and a DSCR above 1.20; your quote depends on the file and is subject to underwriting.

We finance up to 80% loan-to-value on a purchase, with rate-and-term and cash-out refinances available, on loan amounts from $100K to $3M. Cash-out leverage is typically a little lower than purchase. The property's cash flow and your credit set your final leverage.

We start at 640, and the best pricing goes to strong credit. Because the loan qualifies on the asset, your score affects your rate and leverage more than whether you are approved.

Yes, short-term rentals are considered. We can underwrite using market or projected rents, and the property still needs to meet our DSCR. Tell us how the property is operated so we can structure it correctly.

Long-term rental loans usually carry a prepayment penalty, commonly a step-down such as 5/4/3/2/1. We offer flexible prepay structures, including buying down to a shorter penalty for a slightly higher rate, and we will lay out the options on your term sheet.