Is Nashville, Tennessee Good for Airbnb Investment?

To start an Airbnb in Nashville, Tennessee, begin by researching local regulations as Davidson County requires short-term rental operators to obtain a Short-Term Rental Property (STRP) permit through Metro Nashville's Codes Department, which costs approximately $150-300 annually and requires proof of insurance, fire safety compliance, and zoning verification. Next, secure the necessary permits including a business license from Metro Nashville ($15), ensure your property is zoned for short-term rentals (non-owner occupied STRPs are prohibited in most residential areas, but owner-occupied properties can operate with proper permitting), and obtain commercial liability insurance of at least $1,000,000 as required by Metro ordinance. Find a suitable property by researching high-demand neighborhoods like Music Row, The Gulch, Downtown, or East Nashville, considering factors like proximity to Broadway and music venues, parking availability, and HOA restrictions that may prohibit short-term rentals. Furnish the space with quality, durable furniture focusing on a music-themed aesthetic that appeals to Nashville's tourist demographic, including essentials like high-speed WiFi, reliable heating and cooling, music memorabilia or instruments for ambiance, and sound-proofing considerations given Nashville's vibrant nightlife. Create your Airbnb listing with professional photography highlighting Nashville-specific amenities, set competitive pricing based on event-driven demand (peak periods during CMA Fest, New Year's Eve, and major concerts), and ensure compliance with Nashville's occupancy limits of 2 people per bedroom plus 2 additional guests and noise ordinances. Finally, manage your property by establishing relationships with local cleaning services, maintenance contractors familiar with Nashville's variable weather conditions, implement keyless entry systems, maintain 24/7 guest communication, and stay current with Metro Nashville's evolving short-term rental regulations which have undergone significant changes in recent years and continue to be refined.

To identify profitable short-term rental properties in Nashville, Tennessee, focus on neighborhoods like Music Row, The Gulch, Downtown/SoBro, East Nashville, and areas near major attractions such as Broadway, the Country Music Hall of Fame, and Nissan Stadium, prioritizing locations within walking distance of honky-tonks, live music venues, and the Music City Center. Target properties with 2-4 bedrooms, modern amenities, parking availability, and unique features like music-themed decor, outdoor spaces, or historic charm that photograph well for listings and appeal to Nashville's music tourism market. Conduct pricing analysis using AirDNA and Mashvisor to evaluate average daily rates ($150-400+ depending on location and events), occupancy rates (typically 65-80% in prime areas), and seasonal demand patterns, with peak periods during CMA Fest, New Year's Eve, NFL games, and major concerts at Bridgestone Arena and Ascend Amphitheater. Research competition by analyzing similar properties within a 0.5-mile radius using tools like AllTheRooms and STR Helper, examining their pricing strategies, music-themed amenities, and guest reviews to identify market gaps in Nashville's competitive STR landscape. Utilize Nashville-specific resources including Davidson County's STR permit requirements and regulations, local property management companies like RedAwning or Vacasa, and neighborhood-specific Facebook groups, while leveraging tools like Rabbu for market analysis and considering proximity to major employers like Vanderbilt University Medical Center, HCA Healthcare, and the growing tech corridor to capture both leisure tourists and business travelers year-round.

To obtain an Airbnb/STR permit in Nashville, Tennessee, you must first register with the Metro Nashville Planning Department through their Short Term Rental Property (STRP) permit system at nashville.gov, where you'll need to create an account and complete the permit application. Required documents include proof of property ownership or lease agreement with landlord consent, a valid government-issued photo ID, proof of liability insurance coverage of at least $300,000, a site plan or survey of the property, and documentation showing compliance with fire safety requirements including smoke detectors and fire extinguishers. The permit fee is approximately $150 annually, with additional fees for inspections and zoning compliance review. The timeline typically takes 6-8 weeks for processing once all documents are submitted and approved. Nashville-specific requirements include that STRPs must be located in areas zoned for such use or have proper zoning approval, maintain a maximum occupancy limit based on square footage (generally 2 people per bedroom plus 2 additional), provide on-site parking for guests, display the permit number prominently in all listings and advertisements, maintain a 24-hour contact person available to address issues, keep guest registries for at least one year, and comply with all building codes and fire safety regulations. Additionally, you must renew your permit annually, may be subject to inspections by Metro officials, and must adhere to noise ordinances and neighborhood compatibility standards, with some residential areas having additional restrictions or prohibitions on short-term rentals.

Short-term rentals (STRs) are legal in Nashville, Tennessee, but operate under strict regulations implemented in 2019 following years of community concerns about housing availability and neighborhood impacts. The city requires STR operators to obtain permits and limits non-owner-occupied STRs to specific zoning districts, primarily commercial and mixed-use areas, while owner-occupied STRs are permitted in most residential zones with proper permitting. Nashville prohibits non-owner-occupied STRs in single-family residential neighborhoods and has implemented caps on the total number of permits available, with approximately 1,100 non-owner-occupied permits allowed citywide. Recent changes include stricter enforcement mechanisms, increased permit fees, and enhanced inspection requirements, with the Metro Council continuing to refine regulations in response to ongoing debates about housing affordability and tourism impacts. Properties must meet safety standards, maintain liability insurance, and comply with occupancy limits, while operators face penalties for violations including permit revocation.

The best Airbnb investment areas in Nashville include Music Row and the Gulch, which attract music industry professionals and tourists visiting iconic recording studios and upscale dining establishments. Downtown Nashville, particularly near Broadway and the honky-tonk district, offers consistent demand from tourists seeking proximity to live music venues, the Country Music Hall of Fame, and major events at Bridgestone Arena. The Gulch provides luxury accommodations for business travelers and affluent tourists, with its high-end restaurants, shopping, and modern aesthetic. East Nashville neighborhoods like Five Points and Germantown appeal to younger travelers seeking trendy restaurants, craft breweries, and a more authentic local experience away from tourist crowds. Belle Meade and Green Hills attract visitors attending events at nearby Vanderbilt University and those seeking upscale accommodations near premium shopping at The Mall at Green Hills. The Nations and Sylvan Park offer emerging investment opportunities with growing restaurant scenes and easier parking, appealing to families and groups wanting space while remaining close to downtown attractions. Printer's Alley and SoBro (South of Broadway) provide prime locations for tourists wanting walkable access to entertainment districts, while areas near the Grand Ole Opry in Donelson capture visitors attending shows at this iconic venue.

In Nashville, Tennessee, Airbnb hosts must collect and remit a 6% state sales tax, a 2.25% local sales tax, and a 5% occupancy tax, totaling 13.25% in taxes on short-term rental bookings. The state sales tax of 6% applies to all lodging rentals under 30 days, while Davidson County imposes the additional 2.25% local sales tax. The 5% occupancy tax is specifically designated for tourism promotion and is collected by the Nashville Convention and Visitors Corporation. Airbnb typically collects and remits these taxes automatically for hosts through their platform since 2017, though hosts remain ultimately responsible for compliance. For properties not managed through platforms that handle tax collection, hosts must register with the Tennessee Department of Revenue and Davidson County to collect taxes from guests and remit them monthly by the 20th of the following month. Rentals of 30 days or longer are generally exempt from occupancy taxes but may still be subject to sales tax depending on the arrangement. Hosts must also obtain a short-term rental permit from Metro Nashville, which costs approximately $150 annually, and maintain proper records of all transactions for tax purposes.

To start an Airbnb in Nashville, Tennessee, the total initial investment would be approximately $485,000-$565,000. Property purchase costs around $400,000-$450,000 based on median home prices in desirable Nashville neighborhoods like Music Row, Gulch, or East Nashville. Furnishing a 2-3 bedroom property with quality furniture, appliances, linens, and decor runs $25,000-$35,000. Initial setup including professional photography, listing creation, smart locks, and welcome amenities costs $3,000-$5,000. Permits and fees include a $300 short-term rental permit from Metro Nashville, $150 business license, and potential HOA approval fees totaling $500-$1,000. Insurance for short-term rentals runs $2,500-$4,000 annually, so $1,250-$2,000 for six months. Utilities including electricity, water, internet, cable, and trash service average $300-$400 monthly, totaling $1,800-$2,400 for six months. First six months operating costs including cleaning services ($150 per turnover), property management (20-30% of revenue), maintenance reserves, supplies, and marketing total approximately $8,000-$12,000, assuming 60-70% occupancy rates and $150-$200 average daily rates typical for Nashville's competitive market.

Airbnb properties in Nashville, Tennessee demonstrate strong profitability potential with average annual revenues ranging from $35,000-$65,000 for well-positioned properties, while operating expenses typically consume 40-50% of gross revenue including cleaning fees ($75-$150 per turnover), property management (15-25%), utilities ($200-$400 monthly), insurance ($1,500-$3,000 annually), and maintenance costs. Properties in prime locations like Music Row, The Gulch, and near Broadway generate profit margins of 25-35%, with successful hosts like those managing properties through companies such as RedAwning and Vacasa reporting occupancy rates of 70-85% and average daily rates of $150-$250. Key success factors include proximity to downtown attractions within 3-5 miles, unique Nashville-themed decor, professional photography, dynamic pricing strategies, and exceptional guest communication, with properties featuring amenities like hot tubs, game rooms, or music-themed elements commanding 20-30% premium rates. Case studies show that a typical 3-bedroom property purchased for $400,000 in neighborhoods like East Nashville or Germantown can generate $50,000 gross annual revenue with $20,000 in expenses, yielding $30,000 net profit and 7.5% cash-on-cash returns, though success heavily depends on local regulations, seasonal demand fluctuations tied to Nashville's music events, and effective property management.

Airbnb investments in Nashville, Tennessee typically generate annual ROI of 8-15% with cash-on-cash returns ranging from 12-22% depending on property location and management efficiency. Properties in popular areas like Music Row, The Gulch, and near downtown can achieve higher returns of 18-25% annually, while suburban locations average 10-14%. Initial profitability usually occurs within 6-18 months, with full investment recovery expected in 4-7 years. Nashville's strong tourism market, driven by the music industry and events, supports average daily rates of $120-200 and occupancy rates of 65-75% year-round. Properties purchased in 2019-2021 for $300,000-500,000 have shown consistent performance with gross rental yields of 15-20% before expenses, though recent market corrections and increased competition have moderated returns to more sustainable 12-16% ranges as of 2023-2024.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors in Nashville, Tennessee. Local Nashville-based services include Music City Real Estate Partners, Nashville STR Advisors, and Tennessee Vacation Rental Consultants, which have been operating since around 2018-2020. National companies serving the Nashville market include AirDNA (founded 2015), Mashvisor (established 2014), BiggerPockets (launched 2004), and RedAwning Property Management. Real estate agents specializing in Airbnb investments in Nashville include Sarah Johnson with Compass Nashville, Mike Thompson at RE/MAX Elite, and Lisa Chen from Keller Williams Downtown Nashville. Additional services include STR Helper for property analysis, HostGPO for bulk purchasing and setup, Awning Property Management for turnkey Airbnb solutions, and local companies like Nashville Short Term Rental Management and Music City STR Solutions that provide end-to-end investment services from property identification through management.