Is Knoxville, Tennessee Good for Airbnb Investment?

To start an Airbnb in Knoxville, 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 Metropolitan Planning Commission. Obtain necessary permits including a business license from Knox County ($15-50), a short-term rental permit from the city (approximately $100-200 annually), 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 by analyzing high-demand areas like downtown Knoxville, Old City, or near the University of Tennessee campus, considering proximity to attractions like Market Square and Neyland Stadium, with average nightly rates ranging $80-150 depending on location and size. Furnish the property with essential amenities including WiFi, cable TV, full kitchen appliances, quality bedding, and local guidebooks, budgeting approximately $3,000-8,000 for a complete setup depending on property size. List your property on Airbnb and other platforms like VRBO, creating compelling descriptions highlighting nearby attractions such as Great Smoky Mountains National Park (30 minutes away), Dollywood (45 minutes), and downtown entertainment districts, with professional photography being crucial for bookings. Manage operations by establishing cleaning protocols between guests (budget $30-60 per turnover), implementing keyless entry systems, maintaining responsive communication with guests, tracking income for Tennessee state tax requirements (no state income tax but 9.25% sales tax applies to short-term rentals), and considering property management companies like RedAwning or Vacasa if managing remotely, which typically charge 15-25% of rental income.

To identify profitable short-term rental properties in Knoxville, Tennessee, focus on locations within 10-15 minutes of the University of Tennessee campus, downtown Market Square, and the Old City entertainment district, as these areas consistently drive demand from students, business travelers, and tourists visiting attractions like Neyland Stadium and the Tennessee Theatre. Target properties with 2-4 bedrooms, modern amenities, parking, and outdoor spaces like decks or patios that appeal to groups, while prioritizing homes built after 1990 to minimize maintenance issues. Analyze pricing using AirDNA and Mashvisor to benchmark against comparable properties, aiming for properties that can generate $150-250 per night depending on size and location, with particular attention to football season premiums that can reach $400+ per night. Research competition density using Airdna's market data for Knoxville, avoiding oversaturated areas while identifying underserved neighborhoods like Sequoyah Hills, Bearden, or emerging areas near the Urban Wilderness. Utilize tools like Rabbu, STR Helper, and local MLS data through Zillow and Realtor.com, while connecting with Knoxville-specific Facebook groups and consulting with local property managers who understand Knox County's short-term rental regulations and seasonal demand patterns driven by UT sports, Dollywood proximity, and Great Smoky Mountains tourism.

To obtain an Airbnb/STR permit in Knoxville, Tennessee, you must first apply through the City of Knoxville's Planning Commission by submitting a Short-Term Rental Permit application available on their official website or at City Hall located at 400 Main Street. Required documents include a completed application form, proof of property ownership or lease agreement, a site plan showing the property layout, parking arrangements, and contact information for a local responsible party available 24/7. You'll need to pay an application fee of approximately $150-200 plus an annual renewal fee of around $100-125. The property must comply with zoning regulations (STRs are prohibited in certain residential zones), maintain adequate parking (typically one space per bedroom), and meet all building and fire safety codes. The approval process typically takes 4-6 weeks after submission of a complete application, during which time the Planning Commission reviews the application and may conduct a site inspection. Once approved, you must display the permit number in all online listings and renew annually by December 31st, with renewal requiring proof of continued compliance with all regulations and payment of renewal fees.

Short-term rentals (STRs) are legal in Knoxville, Tennessee, but operate under specific regulations established by the city. As of 2023, Knoxville requires STR operators to obtain a business license and comply with zoning restrictions that generally prohibit STRs in certain residential districts while allowing them in commercial and mixed-use areas. The city has implemented occupancy limits, parking requirements, and noise ordinances specifically for STRs, with properties limited to a maximum of 8 guests and requiring adequate off-street parking. Recent changes include stricter enforcement mechanisms and increased penalties for violations, with the city conducting regular inspections and responding to neighbor complaints. STRs are prohibited in some historic districts and certain residential neighborhoods where they conflict with local zoning ordinances, and operators must maintain liability insurance and provide emergency contact information to the city.

The best Airbnb investment areas in Knoxville, Tennessee include the Old City district, which attracts tourists with its vibrant nightlife, restaurants, and proximity to the University of Tennessee campus, generating consistent demand from football game weekends and university events. Downtown Knoxville offers strong potential due to business travelers visiting corporate headquarters like Pilot Flying J and Tennessee Valley Authority, plus tourists attending events at the Tennessee Theatre and World's Fair Park. The Fort Sanders neighborhood near UT campus provides year-round rental opportunities from visiting parents, prospective students, and game-day visitors, with particularly high demand during football season from August through November. The Sequoyah Hills area appeals to upscale travelers seeking luxury accommodations while visiting for business or leisure, benefiting from its scenic location and proximity to downtown. The Fourth and Gill historic district attracts tourists interested in Victorian architecture and walkable access to downtown attractions, while the Bearden area offers good investment potential due to its family-friendly atmosphere and proximity to popular shopping and dining destinations that draw visitors throughout the year.

In Knoxville, Tennessee, Airbnb hosts are subject to multiple lodging taxes including the Tennessee state sales tax of 7%, Knox County hotel/motel tax of 5%, and the City of Knoxville hotel/motel tax of 5%, totaling approximately 17% in combined taxes on short-term rental stays. The state sales tax is collected through Tennessee's Department of Revenue, while local hotel/motel taxes are administered by Knox County and the City of Knoxville respectively. Airbnb typically collects and remits these taxes automatically for hosts through their platform since around 2017-2018, though individual hosts remain ultimately responsible for compliance and may need to register directly with local tax authorities depending on their rental volume and duration. The taxes apply to stays of less than 30 consecutive days, with limited exemptions for certain government travelers and qualifying non-profit organizations. Hosts operating outside of Airbnb's automatic collection system must register for tax permits, collect taxes from guests, file monthly or quarterly returns, and remit payments to the appropriate state and local tax authorities, with penalties and interest applying to late filings or payments.

The total cost to start an Airbnb in Knoxville, Tennessee is approximately $285,000-$350,000. Property purchase costs average $280,000 based on median home prices in desirable Knoxville neighborhoods like Old City or Fourth & Gill. Furnishing a 2-3 bedroom property runs $15,000-$25,000 including beds, sofas, dining sets, appliances, linens, and decor from retailers like IKEA, Wayfair, and local furniture stores. Initial setup costs total $3,000-$5,000 covering professional photography, listing creation, welcome materials, and basic renovations. Permits and fees include a $150 short-term rental permit from Knox County, $200 business license, and $500 in various inspection fees. Insurance runs $2,000-$3,000 annually for short-term rental coverage through companies like Proper Insurance or CBIZ. Monthly utilities average $200-$300 for electricity, water, internet, and cable. First six months operating costs total $8,000-$12,000 including utilities ($1,800), cleaning services ($2,400), Airbnb fees (3% of bookings), maintenance supplies ($800), marketing ($500), and property management software subscriptions ($300). Additional considerations include potential HOA fees ($100-$300 monthly) and a 6-month cash reserve for vacancies and unexpected repairs.

Airbnb properties in Knoxville, Tennessee typically generate annual revenues between $25,000-$45,000 for well-positioned properties, with average daily rates ranging from $85-$150 depending on location and amenities. Properties near the University of Tennessee campus and downtown areas command premium rates, particularly during football season when ADRs can spike to $300-$500 per night. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($50-$75 per turnover), property management (15-25% of revenue), utilities ($150-$250 monthly), insurance ($1,200-$2,000 annually), and maintenance costs. Successful operators in Knoxville's market typically achieve net profit margins of 15-25% after all expenses, with properties in the Old City and Market Square areas performing strongest due to proximity to attractions like the Tennessee Theatre and World's Fair Park. Key success factors include professional photography, rapid guest communication, strategic pricing during UT game weekends and summer tourist season, and maintaining properties that cater to both business travelers visiting companies like Pilot Flying J and leisure tourists exploring the Great Smoky Mountains gateway location. Properties within 10 minutes of Neyland Stadium consistently outperform the market average by 20-30% in both occupancy rates (typically 65-75% annually) and revenue per available night.

Airbnb investments in Knoxville, 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 near the University of Tennessee campus and downtown areas command higher nightly rates of $80-150, while suburban locations average $60-100 per night. Initial profitability usually occurs within 6-12 months after accounting for startup costs including furnishing, permits, and marketing expenses. The Knoxville market benefits from consistent demand driven by UT sporting events, Great Smoky Mountains tourism, and business travelers, with occupancy rates typically maintaining 65-75% annually. Properties purchased in the $150,000-300,000 range with 20-25% down payments generally achieve break-even within 8-14 months, with full investment recovery expected in 5-7 years based on current market conditions and rental demand patterns in Knox County.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors in Knoxville, Tennessee. Local real estate agents like those at Realty Executives Associates and Keller Williams Realty serve the Knoxville market with expertise in investment properties suitable for Airbnb. National services include Mashvisor, which provides Airbnb analytics and property search tools, and BiggerPockets, which connects investors with local professionals. AirDNA offers market data and revenue projections for Knoxville short-term rentals. Local companies such as Tennessee Investment Properties and Smoky Mountain Property Management provide both acquisition services and ongoing Airbnb management. RedAwning and AvantStay operate nationally and can assist with property identification and management in the Knoxville area. Local agents at RE/MAX and Coldwell Banker have experience with vacation rental investments near the Great Smoky Mountains. Additional services include Rabbu for market analysis, Hostfully for property management, and local property management companies like East Tennessee Vacation Rentals that also help investors identify profitable properties in desirable neighborhoods like downtown Knoxville, Sevierville, and Gatlinburg areas.