Buying a short-term rental in Hot Springs

Hot Springs draws steady visitors, but the city has capped rental licenses in residential zones. Check the license question before you look at the numbers.

Why people look at Hot Springs

Hot Springs National Park recorded 2,494,611 recreation visits in 2025 and charges no entrance fee.
Oaklawn's live racing season runs most of the cooler months. The 2026-27 season is Nov. 27 to May 1.
Lakes Hamilton and Catherine bring summer lake traffic, and the Ouachita National Forest is close by.
Redfin reported a Hot Springs median sale price of about $219,000 in May 2026. Check the current figure before you rely on it.

The license question comes first

Inside city limits, every rental under 30 days needs an annual city license. The cap for residential zones is 400 licenses, and the city says new residential-zone licenses are not available, with no waitlist (update dated July 1, 2025).

Licenses are still being issued in the non-residential zones C-TR, CN, CMU, CG, CBD, IL, IH and IMU. HPR-zoned properties and condos recorded before January 18, 2022 are exempt from the cap.

Do not buy a house in a residential zone on the assumption that you can rent it short-term, and do not assume a seller's license transfers to you. Get written confirmation from the city's Planning and Development Department (501-321-6905) for the exact property.

Outside city limits, county rules and any HOA or POA covenants apply. Hot Springs Village, for example, requires every rental to be registered with its POA for a $50 fee each year.

State law is not about to override the city. Two 2025 bills that would have limited local short-term rental rules in Arkansas died when the session ended.

Running the numbers

Estimate revenue from real compsUse booked nights from similar listings for each season, or a paid data service, and be conservative about occupancy in your first year.
Subtract platform feesAirbnb charges most hosts a single 15.5% fee. Vrbo moves to a 12% commission on Oct. 29, 2026.
Account for taxesGuests pay 14.5% in state and local taxes on stays inside city limits. Platforms collect most of it, but you still register and file a monthly A&P report.
List operating costsCleaning, supplies, utilities, internet, insurance written for short-term rentals, repairs, software, the city license and management if you hire it.
Work out net operating incomeRevenue minus operating costs, before the mortgage. Divide by the price to get the cap rate, then compare it with the same property as a long-term rental.
Stress-test itRerun the numbers with lower occupancy and rates. If the deal only works in the best case, keep looking.

Financing and taxes

Buyers use conventional second-home or investment loans, DSCR loans underwritten on the property's expected rental income, and portfolio lenders. Ask each lender how they treat short-term rental income.

Rental expenses such as fees, cleaning, repairs, interest and depreciation are generally deductible, and a 1031 like-kind exchange can defer tax on the sale of other investment real estate. Personal use of the property changes how both work, so talk with a CPA who handles short-term rentals.

Common questions

Is Hot Springs a good short-term rental market?

It has year-round reasons to visit, but the full residential cap limits where new in-city rentals can operate. A deal depends on the property's zoning, its comps and your costs, not on the market's reputation.

What returns should I expect?

We do not publish return figures we cannot verify. Build your own projection from comps and real costs, and stress-test it.

Can I manage from out of state?

Yes, but the city requires a local property manager on call who can be on site within 60 minutes.

What does the city license cost?

The city charges per bed, and the A&P Commission's FAQ lists annual fees from $200 for a 0 to 1 bedroom property up to $1,600 for 15 bedrooms. Confirm the current amount with the city.

Talk through a property

Send us the address or area you are looking at and we will point you to the right offices and resources.

Sources

Questions about short-term rentals in Hot Springs?

Call or text 501.365.1001, or send a note and we will get back to you.

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