Is Chattanooga, Tennessee Good for Airbnb Investment?

To start an Airbnb in Chattanooga, Tennessee, begin by researching local regulations as the city requires short-term rental permits and compliance with zoning laws, particularly in residential areas where STRs may be restricted or require special permits from the Planning Commission. Obtain necessary permits including a business license from the City of Chattanooga ($15-50 annually), a short-term rental permit (approximately $100-200), and ensure compliance with fire safety codes and occupancy limits typically set at 2 people per bedroom plus 2 additional guests. Find a suitable property in permitted zones, focusing on areas like the Southside, North Shore, or downtown districts where short-term rentals are generally allowed, with properties near attractions like the Tennessee Aquarium, Lookout Mountain, or the Riverwalk commanding higher rates of $80-150 per night. Furnish the space with essential amenities including Wi-Fi, cable TV, full kitchen appliances, quality bedding, and local touches highlighting Chattanooga's outdoor recreation scene, budgeting $3,000-8,000 for a one-bedroom unit. List your property on Airbnb and VRBO with professional photos showcasing views of the Tennessee River or nearby mountains, competitive pricing based on seasonal demand (higher during summer and fall), and highlight proximity to Rock City, Ruby Falls, and the Incline Railway. Manage the property by establishing cleaning protocols between guests (budget $30-50 per turnover), responding promptly to inquiries, maintaining 24/7 communication availability, and consider hiring local property management companies like Chattanooga Vacation Rentals or RedAwning if managing remotely, while ensuring compliance with Tennessee's 9.25% state sales tax plus Hamilton County's additional hotel occupancy taxes.

To identify profitable short-term rental properties in Chattanooga, Tennessee, focus on locations within 2-3 miles of major attractions like the Tennessee Aquarium, Lookout Mountain, and the downtown riverfront district, as well as neighborhoods like North Shore, Southside, and St. Elmo which offer walkability to restaurants and entertainment. Target properties with 2-4 bedrooms, unique architectural features like historic charm or mountain views, dedicated parking, and outdoor spaces since Chattanooga attracts adventure tourists visiting Rock City and Ruby Falls. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue (typically $150-300/night for quality properties) exceeds long-term rental income by 40-60%, while factoring in Chattanooga's 13% combined occupancy taxes and cleaning costs of $75-150 per turnover. Research competition by analyzing similar properties within a 1-mile radius on Airbnb and VRBO, noting their occupancy rates, pricing strategies, and guest reviews to identify market gaps. Utilize tools like Rabbu, AllTheRooms, and local MLS data combined with the Hamilton County property records to evaluate purchase prices, property taxes, and zoning compliance, while networking with local STR management companies like Chattanooga Vacation Rentals and consulting the city's short-term rental regulations which require permits and limit rentals in certain residential zones.

To obtain an Airbnb/STR permit in Chattanooga, Tennessee, you must first apply through the City of Chattanooga's Planning Department located at 1000 Lindsay Street or online through their permitting portal. Required documents include a completed short-term rental application, proof of property ownership or lease agreement with landlord consent, floor plan showing maximum occupancy, parking plan demonstrating adequate off-street parking, contact information for a local responsible party within 30 miles, and certificate of insurance with minimum $1 million liability coverage. The application fee is approximately $150 with an annual renewal fee of $100, and inspections may require additional fees of $75-100. Chattanooga requires STRs to maintain maximum occupancy of 2 people per bedroom plus 2 additional guests, provide one off-street parking space per bedroom, display the permit number in all advertisements, maintain a guest registry, and ensure a responsible party is available 24/7 for complaints. Properties in historic districts may require additional Historic Zoning Commission approval, and certain residential zones may have restrictions on STR density. The approval timeline typically takes 4-6 weeks after submitting a complete application, including required inspections for fire safety, building code compliance, and zoning verification, with permits valid for one year requiring annual renewal.

Short-term rentals (STRs) are legal in Chattanooga, Tennessee, but operate under specific regulations established by the city. As of 2023, Chattanooga requires STR operators to obtain a business license and comply with zoning restrictions that limit short-term rentals in certain residential areas, particularly R-1 and R-2 zoned districts where they may be prohibited or require special permits. The city has implemented occupancy limits, parking requirements, and noise ordinances that STR operators must follow. Properties must meet safety standards including smoke detectors and fire extinguishers, and operators are required to provide contact information for a responsible party available 24/7. Recent changes have included stricter enforcement of existing regulations and increased penalties for violations, with the city conducting more frequent inspections of STR properties. Downtown areas and some mixed-use zones generally allow STRs more freely, while purely residential neighborhoods face greater restrictions, and the city continues to balance tourism revenue with neighborhood preservation concerns through ongoing policy adjustments.

The best Airbnb investment areas in Chattanooga, Tennessee include the Southside/Chattanooga Choo Choo district, which attracts tourists visiting the historic train station and benefits from proximity to downtown attractions and the Creative Discovery Museum. The North Shore area offers excellent potential due to its trendy restaurants, breweries like Chattanooga Brewing Company, and walkability to the Tennessee Aquarium and Walnut Street Bridge. Downtown Chattanooga near the riverfront provides strong occupancy from business travelers visiting companies like Volkswagen, BlueCross BlueShield, and Unum, plus tourists accessing the aquarium, IMAX theater, and riverboat cruises. The Bluff View Art District commands premium rates due to its upscale dining, art galleries, and scenic river views, attracting couples and cultural tourists. Lookout Mountain area, including properties near Rock City and Ruby Falls, appeals to families and adventure tourists year-round, though seasonal fluctuations occur. The UTC area captures university-related travel including parents, prospective students, and academic visitors, providing steady mid-week bookings to complement weekend leisure travel throughout these neighborhoods.

In Chattanooga, Tennessee, Airbnb hosts are subject to multiple lodging taxes including the state hotel occupancy tax of 7%, Hamilton County's hotel/motel tax of 5%, and the City of Chattanooga's hotel/motel tax of 5%, totaling approximately 17% in combined lodging taxes. These taxes are typically collected from guests at the time of booking through Airbnb's automatic tax collection system, which remits payments directly to the Tennessee Department of Revenue for state taxes and to local jurisdictions for county and city taxes on a monthly basis. Hosts must register with the Tennessee Department of Revenue and obtain a business license from Hamilton County and the City of Chattanooga, with remittance due by the 20th of each month following the collection period. Properties rented for 30 days or longer are generally exempt from these occupancy taxes, and some jurisdictions may provide exemptions for stays by government employees or certain non-profit organizations, though hosts should verify current exemption criteria as regulations have evolved significantly since platforms like Airbnb began operating around 2015-2018 in the Chattanooga market.

Starting an Airbnb in Chattanooga, Tennessee requires approximately $280,000-$350,000 in total initial investment. Property purchase costs average $275,000 based on median home prices in desirable neighborhoods like North Shore or Southside (2024). Furnishing a 2-3 bedroom property runs $15,000-$25,000 including furniture, appliances, linens, and decor from retailers like IKEA, Wayfair, and local stores. Initial setup costs including professional photography, listing creation, and marketing materials total $2,000-$3,500. Permits and fees include business license ($50), short-term rental permit ($200-$500), and potential HOA approval fees ($100-$300). Insurance premiums for short-term rental coverage through companies like Proper Insurance or CBIZ run $1,200-$2,400 annually. Utility setup and deposits for electricity (EPB), water, gas, internet, and cable total $800-$1,200. First six months operating costs including utilities ($900/month), cleaning services ($100-$150 per turnover), maintenance reserves ($200/month), property management software like Airbnb or VRBO fees (3% of bookings), and marketing expenses total approximately $8,000-$12,000, assuming 60-70% occupancy rates typical for Chattanooga's tourism market.

Airbnb properties in Chattanooga, Tennessee demonstrate strong profitability potential with average annual revenues ranging from $25,000-$45,000 for well-positioned properties, while operating expenses typically run 40-60% of gross revenue including cleaning fees ($75-125 per turnover), property management (15-25%), utilities ($150-300 monthly), insurance ($1,200-2,000 annually), and maintenance costs. Properties near downtown attractions like the Tennessee Aquarium and Lookout Mountain command premium rates of $120-200 per night with 65-75% occupancy rates, generating profit margins of 25-40% for successful hosts. A typical 2-bedroom downtown condo generating $35,000 annually might incur $20,000 in expenses (cleaning $3,600, utilities $2,400, insurance $1,500, management $5,250, maintenance $2,500, supplies $1,200, taxes $3,550), yielding $15,000 net profit or 43% margin. Success factors include proximity to major attractions, professional photography, competitive pricing strategies, excellent guest communication, and maintaining 4.8+ star ratings, with properties within walking distance of the Riverwalk and North Shore districts consistently outperforming suburban locations by 30-50% in both occupancy and nightly rates.

Airbnb investments in Chattanooga, Tennessee typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-15% depending on property location and management efficiency. Properties in downtown areas near the Tennessee Aquarium and Lookout Mountain attractions command higher nightly rates of $120-180, while suburban locations average $80-120 per night. Initial profitability usually occurs within 8-14 months for well-positioned properties, with average occupancy rates of 65-75% throughout the year. The market benefits from steady tourism to Rock City, Ruby Falls, and the revitalized downtown district, with peak seasons during summer months and fall foliage periods driving occupancy above 80%. Investment properties typically require $30,000-50,000 in initial capital including down payment and furnishing costs, with gross rental yields averaging 10-14% annually before expenses, making Chattanooga a moderately attractive market for short-term rental investments compared to other Tennessee markets like Nashville or Gatlinburg.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Chattanooga, Tennessee. Local real estate agents specializing in Airbnb investments include Keller Williams Realty's investment division, Coldwell Banker's commercial team, and RE/MAX agents who focus on multi-family and investment properties in the Chattanooga area. BiggerPockets connects investors with local Chattanooga real estate professionals experienced in short-term rental acquisitions, while Roofstock and Arrived Homes offer turnkey Airbnb investment opportunities in the Tennessee market. Local property management companies like RedAwning, AvantStay, and Vacasa provide full-service Airbnb management for investors purchasing in Chattanooga's popular neighborhoods near Lookout Mountain, downtown, and the Tennessee River. Additional services include AirDNA for market analysis, Mashvisor for investment property search and analysis, and local mortgage brokers like First Horizon Bank and Pinnacle Financial Partners who specialize in investment property financing for short-term rental purchases in the greater Chattanooga metropolitan area.