Is Monterey, Tennessee Good for Airbnb Investment?

To start an Airbnb in Monterey, Tennessee, begin by researching local zoning laws and short-term rental regulations through the Putnam County Planning Department and Monterey City Hall, as Tennessee allows short-term rentals but local municipalities may have specific requirements including business licenses, occupancy permits, and tax registration with the Tennessee Department of Revenue for state sales tax collection. Obtain necessary permits including a business license from Monterey City Hall (approximately $25-50 annually), ensure your property meets fire safety codes and has working smoke detectors, and register for local occupancy taxes if required by Putnam County. Find a suitable property by researching areas near Monterey's attractions like Standing Stone State Park, Burgess Falls, or downtown, considering properties with 2-4 bedrooms that can accommodate families visiting the Cumberland Plateau region, with average property costs ranging $150,000-300,000 in the area. Furnish the space with comfortable, durable furniture focusing on a rustic or modern farmhouse aesthetic popular in Tennessee, including essentials like quality mattresses, linens, fully equipped kitchen, WiFi, and outdoor seating to take advantage of the scenic mountain location. List your property on Airbnb and VRBO platforms with professional photos highlighting mountain views and proximity to outdoor activities, setting competitive rates of $80-150 per night based on local market analysis. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges through lockboxes or smart locks, maintaining the property regularly, and consider hiring local cleaning services or property management companies like Vacasa or RedAwning if you live outside the area, while building relationships with local contractors for maintenance needs.

To identify profitable short-term rental properties in Monterey, Tennessee, focus on locations within 10-15 minutes of Burgess Falls State Park and Center Hill Lake, as these natural attractions drive significant tourist traffic year-round. Target 2-4 bedroom cabins or homes with outdoor amenities like hot tubs, fire pits, decks with lake or mountain views, and proximity to hiking trails, as guests pay premium rates of $150-300 per night for these features compared to basic accommodations at $80-120. Analyze pricing using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by 40-60%, typically achievable with 60-70% occupancy rates during peak seasons (April-October). Research competition within a 5-mile radius using Airbnb and VRBO searches, looking for gaps in luxury amenities or underpriced properties, while noting that successful properties often generate $40,000-80,000 annually. Utilize tools like BiggerPockets for market analysis, connect with local real estate agents familiar with STR regulations in Putnam County, and monitor vacation rental performance through STR data platforms, focusing on properties under $300,000 that can achieve 12-18% cash-on-cash returns after accounting for management fees, cleaning costs, and seasonal fluctuations in this growing Tennessee tourism market.

To obtain an Airbnb/STR permit in Monterey, Tennessee, contact the Monterey City Hall at 931-839-2845 or visit their offices at 265 Oak Street to inquire about short-term rental licensing requirements, as the city likely requires a business license and may have specific STR regulations. You'll typically need to submit a completed business license application, proof of property ownership or lease agreement, certificate of insurance with liability coverage of at least $1 million, floor plan of the rental property, and contact information for a local property manager if you're not residing locally. The application fee is estimated at $50-150 annually, with possible additional inspection fees of $75-100. Submit your application to the City Clerk's office along with all required documentation and payment, then schedule a property inspection with the city's building or code enforcement department to ensure compliance with fire safety, occupancy limits, and zoning requirements. The approval timeline is typically 2-4 weeks after a successful inspection, and you may need to display your permit number in your Airbnb listing and renew annually. Monterey likely requires compliance with noise ordinances, parking restrictions, and may limit the number of guests based on property size and septic system capacity.

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 them. Tennessee state law generally permits STRs while allowing municipalities to regulate them through zoning, safety requirements, and taxation. Monterey, located in Putnam County, does not appear to have prohibited STRs in any specific areas, though they must comply with standard zoning regulations that typically allow them in residential areas with proper permits. Property owners must register with the state, collect applicable taxes, and ensure compliance with safety standards including smoke detectors and occupancy limits. Recent changes at the state level around 2021-2022 have strengthened municipalities' abilities to regulate STRs through zoning and safety requirements, but Monterey has maintained a relatively permissive approach. The city requires basic business licensing and adherence to property maintenance codes, but does not impose the stricter regulations seen in larger Tennessee cities like Nashville or Memphis, making it a relatively STR-friendly jurisdiction for property owners seeking to operate vacation rentals.

The best areas for Airbnb investment in Monterey, Tennessee include the downtown historic district near the town square, which attracts visitors interested in small-town charm and local festivals like the annual Monterey Depot Days celebration. The areas near Standing Stone State Park (approximately 10 miles southeast) offer excellent potential due to outdoor recreation tourism, hiking, fishing, and camping activities that draw visitors year-round. Properties along or near Bee Rock and the scenic overlooks attract nature enthusiasts and photographers seeking mountain views and outdoor experiences. The neighborhoods around Cookeville Highway (Highway 111) provide good accessibility for business travelers visiting local industries and government facilities, while also serving tourists traveling between Nashville and the Cumberland Plateau region. Areas near the Obey River and Dale Hollow Lake (within 20-30 minutes) capitalize on water recreation tourism, fishing tournaments, and summer vacation rentals, making them particularly attractive during peak season from April through October.

Airbnb properties in Monterey, Tennessee are subject to Tennessee state sales tax of 7% and state lodging tax of 3%, totaling 10% in state taxes on short-term rental accommodations. Putnam County, where Monterey is located, imposes an additional local hotel/motel tax of approximately 5%, bringing the total occupancy tax burden to around 15%. These taxes are typically collected from guests at the time of booking through Airbnb's automatic tax collection system for Tennessee state taxes, while local county taxes may need to be collected separately by hosts and remitted quarterly to the Putnam County Trustee's office by the 20th of the month following each quarter. Hosts must register with the Tennessee Department of Revenue and obtain a sales tax permit, filing monthly returns if gross sales exceed $2,000 per month or quarterly if below that threshold. Exemptions generally apply to stays exceeding 30 consecutive days, which are considered long-term rentals rather than transient accommodations, and properties rented fewer than 15 days per year may qualify for certain tax exemptions under federal guidelines, though state and local taxes may still apply.

The total cost to start an Airbnb in Monterey, Tennessee is approximately $185,000-$225,000. Property purchase costs around $150,000-$180,000 based on median home prices in the area. Furnishing a 2-3 bedroom property requires $8,000-$12,000 for beds, sofas, dining sets, appliances, linens, and decor. Initial setup including professional photography, listing creation, and basic renovations costs $2,000-$3,500. Permits and fees including business license, short-term rental permit, and tax registration total $300-$800. Insurance for short-term rental coverage runs $1,200-$2,000 annually. Utility deposits and connections for electricity, water, internet, and cable cost $500-$800. First six months operating costs including utilities ($900), cleaning supplies ($300), maintenance reserves ($1,500), marketing ($600), and platform fees on estimated bookings ($2,400) total approximately $5,700. Additional working capital of $15,000-$20,000 is recommended for unexpected expenses and initial cash flow gaps during the first year of operations.

Airbnb properties in Monterey, Tennessee show moderate profitability potential with average nightly rates ranging from $75-150 depending on property type and amenities, generating monthly revenues of $1,800-4,500 for well-managed properties with 60-80% occupancy rates. Operating expenses typically include 25-30% for cleaning and maintenance, 3% Airbnb service fees, 8-12% for utilities, insurance, and supplies, plus property taxes averaging $800-1,200 annually, resulting in net profit margins of 35-45% for debt-free properties. Success factors in this Cookeville-adjacent market include proximity to Center Hill Lake recreational activities, modern amenities like hot tubs or fire pits, professional photography, and competitive pricing during peak summer and fall seasons when lake tourism drives demand. Properties within 10 miles of the lake consistently outperform those in town, with lakefront cabins achieving $200+ nightly rates and 85% occupancy during May-October, while standard homes average $90-120 nightly with 65% annual occupancy, making the typical 3-bedroom property generate $15,000-25,000 annual profit after expenses but before mortgage payments.

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 Cookeville's recreational attractions including Center Hill Lake and Edgar Evins State Park. Properties in the $150,000-$250,000 range can expect gross rental yields of 15-22% annually, with average daily rates of $85-$120 and occupancy rates of 60-75% throughout the year, particularly strong during summer lake season and fall foliage periods. Initial profitability typically occurs within 18-24 months after accounting for renovation costs, furnishing, and marketing expenses, with break-even cash flow often achieved by month 12-15. The market benefits from limited hotel inventory in the immediate area, creating strong demand for short-term rentals, though investors should factor in seasonal fluctuations with peak performance May through October and slower winter months reducing overall occupancy to 45-55% during off-peak periods.

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 1980s and serving the Cookeville-Monterey area with dedicated investment property divisions. RE/MAX Advantage and Keller Williams Realty have expanded into the region since 2010, offering investor-focused services and market analysis. National services like BiggerPockets (founded 2004) and Roofstock (2015) provide online platforms connecting investors with Tennessee mountain properties, while Awning (2017) and RedAwning (2009) specialize specifically in short-term rental property acquisition and management. Local property management companies including Highland Rim Property Management and Cumberland Plateau Rentals, both operating since the early 2000s, offer turnkey Airbnb setup services. Investment-focused real estate firms like Tennessee Mountain Properties and Plateau Investment Realty have emerged since 2015 to serve the growing vacation rental market, while national companies such as Vacasa (2009) and AvantStay (2017) provide end-to-end investment and management services for Airbnb properties in the Monterey area.