Is Cumberland Gap, Tennessee Good for Airbnb Investment?

To start an Airbnb in Cumberland Gap, Tennessee, begin by researching local zoning laws and regulations through the Cumberland Gap Town Hall (423-869-3860) and Claiborne County offices, as short-term rentals may require special permits or business licenses in this small historic town of approximately 200 residents. Obtain necessary permits including a Tennessee business license, local business permit from Cumberland Gap, and potentially a special use permit for short-term rentals, while ensuring compliance with fire safety codes and health department requirements. Find suitable property by focusing on historic homes near Cumberland Gap National Historical Park or properties with mountain views, considering that median home prices in the area range from $80,000-$150,000, making it an affordable market for investment. Furnish the property with rustic, mountain-themed decor that appeals to tourists visiting the national park, including essential amenities like Wi-Fi, heating/cooling, full kitchen, and outdoor seating to capitalize on the natural setting. List your property on Airbnb, VRBO, and other platforms with professional photos highlighting proximity to Cumberland Gap National Historical Park, Daniel Boone's historic trail, and outdoor activities like hiking and wildlife viewing. Manage the property by establishing relationships with local cleaning services in nearby Middlesboro, Kentucky (15 minutes away) or Tazewell, Tennessee (30 minutes away), create a guidebook featuring local attractions like the Pinnacle Overlook and Hensley Settlement, and maintain competitive pricing around $75-$125 per night based on seasonal tourism patterns, with peak seasons during spring and fall when visitors come for hiking and historical tours.

To identify profitable short-term rental properties in Cumberland Gap, Tennessee, focus on locations within 1-2 miles of Cumberland Gap National Historical Park and along US-25E for easy tourist access, prioritizing properties with mountain or historical views. Seek 2-4 bedroom cabins or homes built after 1990 with rustic charm, outdoor spaces like decks or fire pits, modern amenities including WiFi and updated kitchens, and parking for multiple vehicles since visitors often arrive by car for hiking and historical tours. Analyze pricing using AirDNA and Mashvisor to target the $80-150 nightly rate range typical for the area, comparing against the 15-25 existing STR properties while noting seasonal fluctuations with peak demand March-October during hiking season and lower winter occupancy. Research competition by studying listings within 5 miles, focusing on properties near Pinnacle Overlook and the Wilderness Road, examining their amenities, pricing strategies, and guest reviews to identify gaps in the market. Utilize tools like Rabbu for Tennessee STR regulations compliance, STR Helper for performance tracking, and local resources including the Cumberland Gap Chamber of Commerce, Claiborne County tourism data, and partnerships with local property management companies familiar with the unique challenges of this rural mountain market where success depends heavily on outdoor recreation appeal and historical tourism traffic.

To obtain an Airbnb/STR permit in Cumberland Gap, Tennessee, contact the Cumberland Gap Town Hall at 330 Colwyn Avenue or call (423) 869-3860 to begin the application process, as this small municipality likely handles permits through their local government office. You'll need to submit a completed business license application, property deed or lease agreement, certificate of insurance with minimum $1 million liability coverage, floor plan of the rental property, parking plan showing adequate guest parking, and contact information for a local property manager if you're not residing locally. The application fee is estimated at $50-150 annually, with additional inspection fees of approximately $75-100. Required documents should include your Tennessee state tax ID number, proof of compliance with local zoning ordinances (most residential areas allow STRs with proper permits), fire safety inspection certificate, and septic system approval if not connected to municipal sewer. The timeline typically takes 30-45 days from submission to approval, including a mandatory property inspection by local officials. Cumberland Gap specific requirements likely include maintaining the historic character of properties given the town's proximity to Cumberland Gap National Historical Park, ensuring adequate parking for guests without disrupting neighbors, providing 24/7 local contact information for noise or emergency issues, and potentially limiting the maximum number of guests based on property size and septic capacity, with most properties capped at 8-10 occupants.

Short-term rentals (STRs) are generally legal in Cumberland Gap, Tennessee, as the small town of approximately 200 residents does not have specific municipal ordinances prohibiting vacation rentals as of 2024. However, operators must comply with Tennessee state regulations including obtaining proper business licenses, collecting and remitting state and local occupancy taxes (currently 7% state tax plus applicable local taxes), and meeting basic safety requirements such as smoke detectors and carbon monoxide alarms. Claiborne County, which encompasses Cumberland Gap, does not impose additional restrictive zoning requirements specifically targeting STRs, though properties must comply with existing residential zoning laws and cannot exceed occupancy limits or create nuisance conditions. The town's proximity to Cumberland Gap National Historical Park makes it an attractive location for vacation rentals, and recent growth in tourism since 2020 has led to increased STR activity without significant regulatory pushback from local government, though property owners should verify current licensing requirements with Claiborne County and ensure compliance with fire safety codes and ADA accessibility standards where applicable.

The best areas for Airbnb investment in Cumberland Gap, Tennessee are the Historic Downtown District near the Cumberland Gap National Historical Park entrance, which attracts steady tourism from visitors exploring the famous mountain pass and Civil War history sites; the Wilderness Road area along US-25E, popular with outdoor enthusiasts visiting the park's 85+ miles of hiking trails and camping facilities; and properties near the Tri-State Peak area where Tennessee, Kentucky, and Virginia meet, drawing tourists interested in the unique geographical landmark. The downtown core benefits from proximity to the Cumberland Gap Tunnel and visitor center, generating consistent bookings from history buffs and families, while areas near Cudjo's Cave and White Rocks attract adventure tourists and nature photographers. Properties within walking distance of the Daniel Boone interpretive trails and the Hensley Settlement access points perform well due to educational tourism and school group visits, particularly during spring and fall seasons when the park sees peak visitation of over 800,000 annual visitors.

Cumberland Gap, Tennessee imposes a local occupancy tax of approximately 5% on short-term rental accommodations including Airbnbs, which is collected in addition to Tennessee's state sales tax of 7% and state hotel occupancy tax of 2.75%, bringing the total tax burden to around 14.75%. The local occupancy tax is typically collected directly from guests at the time of booking through platforms like Airbnb's automatic tax collection system, though hosts may be required to register with the Cumberland Gap city clerk's office and remit taxes monthly or quarterly depending on revenue volume. Tennessee requires hosts to obtain a business license and sales tax permit, with remittance due by the 20th of the month following collection, and the state has agreements with major platforms for automatic collection and remittance of state taxes. Exemptions generally apply to stays exceeding 30 consecutive days, government employees on official business, and certain non-profit organization bookings, though hosts must maintain proper documentation to support any exemption claims and may still be required to collect local taxes even when state exemptions apply.

Starting an Airbnb in Cumberland Gap, Tennessee requires approximately $180,000-220,000 in total initial investment. Property purchase costs around $120,000-150,000 based on median home prices in the area as of 2023. Furnishing a 2-3 bedroom property typically runs $15,000-25,000 including beds, linens, kitchen essentials, living room furniture, and décor. Initial setup costs including professional photography, listing creation, and basic renovations average $3,000-5,000. Permits and fees in Tennessee include business license ($15-50), short-term rental permit ($100-300), and potential city registration fees totaling $200-500. Insurance for short-term rentals costs $1,200-2,000 annually, with upfront payment of $1,500-2,500 for comprehensive coverage. Utility deposits and first month's service for electricity, water, internet, and cable run approximately $500-800. First six months operating costs including utilities ($150-250/month), cleaning supplies ($100/month), maintenance reserves ($200/month), platform fees (3% of bookings estimated at $300/month), and marketing expenses total $4,500-6,600, assuming moderate occupancy rates during the initial period.

Airbnb properties in Cumberland Gap, Tennessee typically generate annual revenues between $15,000-$35,000 for well-positioned cabins and homes, with average daily rates ranging from $80-$150 depending on property size and amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), property management (15-25% if outsourced), utilities ($150-300 monthly), insurance ($1,200-2,000 annually), and maintenance costs averaging $2,000-4,000 yearly. Properties within 5 miles of Cumberland Gap National Historical Park command premium rates, particularly rustic cabins with hot tubs or mountain views that can achieve 65-75% occupancy rates during peak seasons (April-October). A typical 3-bedroom cabin purchased for $180,000 and generating $28,000 annual revenue with $16,000 in expenses yields roughly 6.7% net return, though properties marketed effectively to outdoor enthusiasts visiting the Daniel Boone National Forest and Appalachian Trail can achieve profit margins of 15-20%. Success factors include professional photography highlighting natural surroundings, strategic pricing during leaf season and summer hiking months, partnerships with local adventure companies, and maintaining authentic mountain aesthetics while providing modern amenities like WiFi and updated kitchens that appeal to remote workers seeking nature retreats.

Airbnb investments in Cumberland Gap, Tennessee typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-14%, driven by the area's proximity to Cumberland Gap National Historical Park and steady tourist traffic from outdoor enthusiasts visiting the Appalachian region. Properties near the park entrance or historic downtown area command premium nightly rates of $80-150, with occupancy rates averaging 65-75% annually due to consistent visitation from hikers, history buffs, and families exploring the Daniel Boone Wilderness Trail. Initial investment recovery typically occurs within 6-8 years for well-positioned properties, with monthly gross rental income averaging $1,200-2,800 depending on property size and amenities, while operating expenses including cleaning, maintenance, and local lodging taxes generally consume 35-45% of gross revenue. The market benefits from limited hotel inventory in the immediate area and growing interest in authentic Appalachian experiences, though seasonal fluctuations occur with peak performance during spring through fall months when outdoor activities and comfortable weather drive higher demand and nightly rates.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental investment properties across markets including Cumberland Gap, Tennessee. Local real estate agents in the area such as Century 21 Four Seasons Realty and Coldwell Banker Wallace & Wallace have experience with vacation rental properties in the Cumberland Gap region. National services like Awning, RedAwning, and AirDNA provide market analysis and property management specifically for Airbnb investments. Mashvisor offers investment property analysis tools that cover Tennessee markets including smaller towns like Cumberland Gap. Local property management companies such as East Tennessee Vacation Rentals and Cumberland Gap Property Management assist investors with day-to-day operations. Real estate investment firms like Roofstock and Arrived Homes occasionally feature Tennessee mountain properties suitable for short-term rentals. Regional brokerages including RE/MAX and Keller Williams have agents familiar with the vacation rental market in the Cumberland Gap area, which benefits from tourism related to Cumberland Gap National Historical Park and outdoor recreation activities.