Common Short-Term Rental Investment Mistakes in Hot Springs

1. Buying a house that cannot be licensed

Inside city limits, an STR in a residential zone needs a Special Use Permit and a license under a citywide cap. As of July 1, 2025, the city said no new residential-zone licenses were available.

Ask the city's STR coordinator (501-321-6905) about the specific address and its zoning before you make an offer. A seller's current license does not mean you can count on one.

2. Skipping the HOA, POA and covenants

Subdivision covenants and condo bylaws can limit or ban short-term rentals regardless of what the city allows. In Hot Springs Village, the POA requires every rental to be registered and has its own rules on guests and amenities.

Read the full documents, not a summary, and have an attorney review them if the rental income is why you are buying.

3. Planning for more guests than the rules allow

The city's occupancy limit is two guests per bedroom, plus two. A plan that depends on sleeping 14 in a four-bedroom house will not pass, and the license fee is charged per bed.

4. Leaving costs out of the projection

• Airbnb's single host fee, now 15.5% for most hosts.
• Management, if you hire it, plus cleaning and laundry for every turnover.
• Utilities, internet, supplies and a repair and replacement reserve.
• The annual city license and inspection, and HSV registration if it applies.
• Months with low bookings, which Hot Springs has between its busy seasons.

Run the numbers again with lower occupancy and lower rates than you expect. Our returns guide walks through each line.

5. Carrying the wrong insurance

Many standard homeowners policies exclude or limit coverage when a home is rented to paying guests. Tell your agent exactly how the property will be used and get the short-term rental coverage confirmed in writing, including liability and lost income.

6. Over-improving for the market

A renovation only pays if guests will pay more for it. Look at what comparable listings nearby charge and offer before spending on high-end finishes.

Comfortable beds, reliable Wi-Fi, a clean, well-lit space and good photos usually do more for bookings than a luxury kitchen.

7. Ignoring the calendar

Hot Springs demand moves with the Oaklawn meet (November 27, 2026 to May 1, 2027), summer lake season and events like the October documentary film festival. Budget for the slower weeks in between.