Is Monterey, Tennessee Good for Airbnb Investment?

To start an Airbnb in Monterey, Tennessee, begin by researching local zoning laws and regulations through the Putnam County Planning Department and Monterey City Hall, as short-term rentals may require special permits or have restrictions in certain residential zones. Contact the Tennessee Department of Revenue to obtain a business license and register for state sales tax collection, as Tennessee requires hosts to collect and remit occupancy taxes. Find a suitable property by working with local real estate agents familiar with Monterey's market, focusing on areas near Burgess Falls State Park or downtown that attract tourists, with properties typically ranging from $150,000-$300,000 depending on size and location. Obtain necessary permits including a business license from Monterey City Hall (approximately $50-100), fire safety inspection if required, and ensure compliance with Americans with Disabilities Act requirements. Purchase comprehensive insurance coverage including liability protection, as standard homeowner's policies typically don't cover short-term rentals. Furnish the property with quality furniture, linens, kitchen essentials, and local amenities, budgeting approximately $10,000-15,000 for a complete setup. Create compelling listings on Airbnb, VRBO, and Booking.com with professional photography highlighting Monterey's outdoor recreation opportunities and proximity to Center Hill Lake. Implement a management system using tools like Hostfully or Guesty for booking coordination, or hire local property management companies like Tennessee Mountain Rentals that charge 15-25% commission, and establish relationships with local cleaning services, maintenance contractors, and key exchange systems to ensure smooth operations and guest satisfaction.

To identify profitable short-term rental properties in Monterey, Tennessee, focus on locations within 10-15 minutes of Center Hill Lake and Dale Hollow Lake, as these water recreation areas drive significant tourist demand year-round. Target properties with 3-4 bedrooms, outdoor amenities like decks or fire pits, and lake views or water access, as these features command premium rates of $150-250 per night compared to standard properties at $80-120. Analyze pricing using AirDNA and Mashvisor to track seasonal occupancy rates, which typically peak at 75-85% during summer months and drop to 45-55% in winter. Research competition by monitoring existing STR listings within a 5-mile radius, noting that successful properties often emphasize fishing, boating, and family reunion accommodations. Utilize the Tennessee Department of Commerce's tourism data, Putnam County property records, and local Facebook groups like "Monterey Tennessee Community" to identify emerging neighborhoods and understand permit requirements. Properties priced between $200,000-350,000 with minimal renovation needs typically offer the best ROI potential, especially those near Standing Stone State Park or downtown Monterey's antique district, where you can achieve 12-18% annual returns with proper management and marketing focused on outdoor recreation and family gatherings.

To obtain an Airbnb/STR permit in Monterey, Tennessee, contact the Monterey City Hall at 931-839-2013 or visit their offices at 265 Oak Street to inquire about short-term rental licensing requirements, as the city likely implemented regulations around 2019-2021 following statewide trends. You'll typically need to submit a completed business license application, provide proof of property ownership or lease agreement, submit a site plan or property survey, obtain liability insurance coverage of at least $1 million naming the city as additional insured, pass a safety inspection covering smoke detectors, carbon monoxide detectors, and fire extinguishers, and provide contact information for a local property manager if you're not residing within 50 miles. Required documents usually include a Tennessee business license, federal EIN number, property deed or lease, insurance certificate, and completed application with property details. Application fees typically range from $100-300 initially with annual renewal fees of $50-150, and the process generally takes 30-45 days from submission to approval, including scheduling and completing the required safety inspection. Monterey likely requires STRs to maintain occupancy limits based on bedrooms, provide adequate parking spaces, post the permit number in listings, collect and remit local occupancy taxes, and maintain a complaint log, with properties potentially restricted in certain residential zones or requiring conditional use permits depending on zoning classifications.

Short-term rentals (STRs) are legal in Monterey, Tennessee, but operate under state regulations since the small city has not enacted specific local ordinances governing STRs. Tennessee state law, effective since 2017, generally permits short-term rentals while allowing local governments to impose reasonable regulations related to health, safety, and welfare. Monterey, located in Putnam County, does not currently have comprehensive STR restrictions or prohibited areas, though properties must comply with basic zoning requirements and state tax obligations including the collection of state and local occupancy taxes. Property owners must register with the Tennessee Department of Revenue and obtain necessary business licenses, while ensuring compliance with fire safety codes and occupancy limits. Recent changes at the state level have strengthened the framework protecting property owners' rights to operate STRs while maintaining local authority over reasonable health and safety regulations, though Monterey has not implemented significant local changes to STR policies in recent years.

The best Airbnb investment areas in Monterey, Tennessee include the downtown historic district near the town square, which attracts visitors interested in small-town charm and local events like the annual Fall Festival and Christmas celebrations. The lakefront areas along Center Hill Lake are particularly attractive for vacation rentals due to water recreation activities, fishing tournaments, and summer tourism from Nashville and surrounding metropolitan areas approximately 90 minutes away. Properties near Cookeville Regional Medical Center and Tennessee Tech University (about 20 minutes away) can capture business travelers, medical visitors, and university-related guests. The residential neighborhoods along Highway 111 offer good investment potential due to their proximity to both the lake and downtown amenities while maintaining lower property costs. Areas near the Calfkiller River provide opportunities for nature-focused rentals attracting kayakers, fishermen, and outdoor enthusiasts, while properties within walking distance of local restaurants and the antique shops downtown can appeal to weekend getaway visitors from Nashville, Knoxville, and Chattanooga seeking authentic Tennessee experiences.

Airbnb properties in Monterey, Tennessee are subject to Tennessee state sales tax of 7% and state lodging tax of 3%, totaling 10% in state-level taxes on short-term rental accommodations. Putnam County, where Monterey is located, may impose an additional local occupancy tax of approximately 2-3%, bringing the total tax burden to around 12-13%. These taxes are typically collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which began operating in Tennessee around 2019. Airbnb remits these collected taxes directly to the Tennessee Department of Revenue on a monthly basis. Property owners who collect taxes independently must register with the Tennessee Department of Revenue, obtain a sales tax permit, and file monthly returns by the 20th of the following month. Stays of 30 days or longer are generally exempt from occupancy taxes as they are considered long-term rentals rather than transient accommodations. Some jurisdictions may offer exemptions for certain types of travelers such as government employees on official business, but these exemptions are rare and typically require proper documentation at the time of booking.

To start an Airbnb in Monterey, Tennessee, expect total costs around $180,000-$220,000. Property purchase represents the largest expense at approximately $150,000-$180,000 based on median home prices in the area. Furnishing costs typically range $8,000-$15,000 for a complete setup including beds, linens, kitchen essentials, and living room furniture. Initial setup costs including professional photography, listing creation, and basic renovations average $2,000-$4,000. Permits and fees vary but budget $500-$1,500 for business licenses, short-term rental permits, and potential HOA approvals. Insurance costs approximately $1,200-$2,000 annually for short-term rental coverage. Utility deposits and connections total around $500-$800. First six months operating costs including utilities ($600-$900), cleaning supplies ($300-$500), maintenance reserves ($1,000-$2,000), marketing ($300-$600), and platform fees average $3,000-$5,000. Additional considerations include potential property management fees if outsourced (20-30% of revenue) and emergency repair funds ($2,000-$3,000 reserve recommended).

Airbnb properties in Monterey, Tennessee show moderate profitability potential with average nightly rates ranging from $75-150 depending on property type and amenities, generating approximately $18,000-45,000 in annual gross revenue for properties with 60-70% occupancy rates. Operating expenses typically consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), property management (10-20%), utilities ($150-300 monthly), insurance ($1,200-2,000 annually), and maintenance costs averaging $2,000-4,000 yearly. Properties near Cookeville or with lake access command premium rates, with some waterfront cabins achieving $200+ nightly rates and 75% occupancy, resulting in net profit margins of 25-35% after expenses. Success factors include proximity to Center Hill Lake, Dale Hollow Lake recreational activities, strategic pricing during peak summer and fall seasons, professional photography, and responsive guest communication. A typical 3-bedroom cabin investment of $200,000-300,000 can generate $15,000-25,000 annual net profit, representing 6-10% cash-on-cash returns, though performance varies significantly based on property condition, location within Monterey's tourism corridor, and host management effectiveness.

Airbnb investments in Monterey, Tennessee typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-14%, driven by the area's proximity to Nashville (90 minutes) and outdoor recreation opportunities around Dale Hollow Lake and Standing Stone State Park. Properties averaging $180,000-$250,000 purchase price can expect gross rental income of $28,000-$42,000 annually, with occupancy rates of 65-75% during peak seasons (April-October) when nightly rates reach $120-$180 for 2-3 bedroom homes. After accounting for operating expenses including cleaning fees, utilities, property management (typically 15-25%), insurance, and maintenance totaling approximately 35-45% of gross income, investors generally achieve profitability within 18-24 months. The market benefits from consistent demand from Nashville visitors seeking rural retreats, fishing enthusiasts, and families visiting nearby attractions, with properties showing appreciation rates of 4-6% annually since 2020, though success heavily depends on property condition, marketing effectiveness, and seasonal demand fluctuations in this rural Tennessee market.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Monterey, Tennessee. Local real estate agents specializing in investment properties include Coldwell Banker McMahan Co. and Crye-Leike Realtors, both established in the region since the 1980s. RE/MAX Advantage and Keller Williams Realty have dedicated investment specialists who focus on vacation rental properties in the Cookeville-Monterey area. National services like Awning (founded 2017), RedAwning, and Vacasa offer full-service property management and investment guidance for the Tennessee market. AirDNA provides market analytics specifically for short-term rentals, while Mashvisor offers investment property analysis tools that cover the Monterey market. Local property management companies such as Tennessee Mountain Rentals and Highland Rim Property Management specialize in Airbnb operations and can assist with property acquisition strategies. BiggerPockets, the national real estate investment platform, connects investors with local professionals in the Tennessee market, and Roofstock focuses on turnkey rental properties that can be converted to short-term rentals in secondary markets like Monterey.