Is Tullahoma, Tennessee Good for Airbnb Investment?

To start an Airbnb in Tullahoma, Tennessee, begin by researching local zoning laws and regulations through the Tullahoma Planning Department, as the city may require short-term rental permits or business licenses, and check with Coffee County for any additional county-level requirements. Contact the Tullahoma Building Department to obtain necessary permits, which typically include a business license (approximately $50-100 annually) and potentially a short-term rental permit if required by local ordinance. Find a suitable property by searching areas near Tullahoma Regional Airport, downtown historic district, or near Arnold Engineering Development Complex, considering properties that allow short-term rentals in residential zones. Purchase essential furnishings including quality mattresses, linens, basic kitchen appliances, WiFi equipment, and safety items like smoke detectors and fire extinguishers, budgeting approximately $3,000-8,000 for a complete setup. Create your Airbnb listing with professional photos highlighting proximity to local attractions like Old Stone Fort State Archaeological Park and Normandy Lake, set competitive pricing around $75-150 per night based on local market rates, and ensure compliance with Tennessee's 9.25% state sales tax plus local occupancy taxes. Manage your property by establishing cleaning protocols between guests, maintaining responsive communication, coordinating key exchanges or installing smart locks, and consider hiring local cleaning services in Tullahoma for turnover efficiency while monitoring reviews and adjusting pricing seasonally to maximize occupancy rates.

To identify profitable short-term rental properties in Tullahoma, Tennessee, focus on locations within 10-15 minutes of key attractions like Tims Ford Lake, Arnold Engineering Development Complex, and downtown areas, as these drive consistent demand from both leisure and business travelers. Target 2-4 bedroom properties with modern amenities, outdoor spaces, lake access or views, and reliable internet since the area attracts families, fishing enthusiasts, and aerospace contractors. Analyze pricing using AirDNA and Mashvisor to benchmark against comparable properties, aiming for average daily rates between $80-150 depending on size and location, with occupancy rates typically ranging 60-75% annually. Research competition by studying existing Airbnb and VRBO listings within 5-mile radius, identifying gaps in amenities or underserved property types, particularly focusing on lakefront properties and contractor-friendly accommodations near AEDC. Utilize tools like Rabbu, BiggerPockets calculators, and local MLS data through Realtor.com, while connecting with Tullahoma-based real estate agents familiar with STR regulations and zoning requirements, and monitor seasonal trends since summer lake season and hunting seasons significantly impact demand and pricing in this market.

To obtain an Airbnb/STR permit in Tullahoma, Tennessee, contact the Tullahoma Planning and Zoning Department at City Hall located at 104 West Lincoln Street or call (931) 455-2648 to begin the application process. Required documents typically include a completed short-term rental application form, proof of property ownership or lease agreement with landlord consent, certificate of occupancy, fire safety inspection certificate, general liability insurance policy (minimum $1 million coverage), floor plan of the property, and valid Tennessee business license. The application fee is estimated at $150-250 with annual renewal fees around $100-150, and you may need additional inspections costing $75-125 each. The approval timeline generally takes 4-6 weeks from submission of complete application materials. Tullahoma requires STR properties to maintain occupancy limits based on bedroom count (typically 2 guests per bedroom plus 2 additional), provide adequate parking (minimum 1 space per bedroom), maintain quiet hours from 10 PM to 8 AM, display the permit number in all advertisements, and ensure properties meet all building and fire codes with working smoke detectors in each bedroom and common area. Properties must also comply with zoning restrictions as STRs may not be permitted in all residential zones, so verify zoning compliance before applying.

Short-term rentals (STRs) are generally legal in Tullahoma, Tennessee, as the city has not enacted specific prohibitions against vacation rentals or short-term accommodations. However, STR operators must comply with standard business licensing requirements, collect and remit local occupancy taxes (typically around 5% for Coffee County), and ensure properties meet basic safety and zoning requirements for residential areas. The city follows Tennessee state regulations which generally favor property rights and STR operations, though individual homeowners associations may have their own restrictions. Tullahoma has not implemented the strict permitting systems or occupancy limits seen in larger Tennessee cities like Nashville or Memphis, making it relatively STR-friendly for property owners. Operators should verify current business license requirements with the city clerk and ensure compliance with fire safety codes, particularly for properties accommodating more than a few guests, as enforcement has become more consistent since around 2020-2021 following statewide trends in STR regulation.

The best areas for Airbnb investment in Tullahoma, Tennessee include the Historic Downtown District near Atlantic Street and Lincoln Street, which attracts visitors to local restaurants, antique shops, and the George Dickel Distillery tours, along with business travelers visiting Arnold Air Force Base contractors. The Normandy Lake area and nearby Tim's Ford State Park region draw outdoor enthusiasts, fishermen, and families seeking lakefront recreation year-round. The areas near Motlow State Community College campus offer potential for visiting families, prospective students, and academic events. Properties near the Jack Daniel's Distillery corridor (though technically in Lynchburg) benefit from the massive tourism influx of over 300,000 annual visitors who often seek accommodations in nearby Tullahoma. The residential neighborhoods around Tullahoma Regional Airport and Arnold Air Force Base, particularly along Old Manchester Highway, attract military personnel, aerospace contractors, and business travelers working with AEDC (Arnold Engineering Development Complex), providing steady demand for short-term rentals throughout the year.

Airbnb properties in Tullahoma, Tennessee are subject to Tennessee state sales tax of 7% and local occupancy taxes that vary by jurisdiction, with Coffee County imposing an additional 5% occupancy tax on short-term rentals under 30 days, bringing the total tax rate to approximately 12% for most Airbnb stays. These taxes are typically collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which began in Tennessee around 2019, and the platform remits payments quarterly to the Tennessee Department of Revenue and applicable local tax authorities. Property owners who collect taxes independently must register with the Tennessee Department of Revenue, file monthly returns by the 20th of the following month, and remit collected taxes along with their filings, while also potentially needing to register with Coffee County for local occupancy tax collection. Exemptions generally apply to stays of 30 days or longer, which are considered long-term rentals rather than short-term accommodations, and certain government or non-profit related stays may qualify for exemptions with proper documentation, though most standard vacation and business travelers will pay the full combined tax rate on their Airbnb bookings in Tullahoma.

The total cost to start an Airbnb in Tullahoma, Tennessee is approximately $185,000-$220,000. 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 furniture, appliances, linens, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and basic renovations total $2,000-$3,500. Permits and fees including business license, short-term rental permit, and inspection fees range from $500-$1,200 depending on local regulations. Insurance for short-term rental coverage costs $1,200-$2,000 annually. Utility setup and deposits for electricity, water, gas, internet, and cable total $800-$1,500. First six months operating costs including utilities ($600/month), cleaning services ($100 per turnover), maintenance reserves ($200/month), property management software ($50/month), and marketing expenses add approximately $6,000-$8,000. Additional considerations include potential HOA fees, property taxes, and emergency repair funds that could add another $3,000-$5,000 to initial startup costs.

Airbnb properties in Tullahoma, Tennessee typically generate annual revenues between $15,000-$35,000 for entire homes, with average daily rates ranging from $75-$120 depending on property size and amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), utilities ($150-250 monthly), property management (15-25% of revenue if outsourced), insurance ($800-1,200 annually), and maintenance costs averaging $2,000-4,000 yearly. Net profit margins typically range from 15-35% for well-managed properties, with successful hosts achieving higher margins through strategic pricing during peak periods like NASCAR events at nearby Talladega or summer tourism seasons. Properties near Tims Ford Lake and those offering unique amenities like hot tubs or game rooms command premium rates and achieve 65-80% occupancy rates compared to 45-60% for basic listings. A typical 3-bedroom home purchased for $180,000 and generating $28,000 in annual revenue with $18,000 in expenses would yield approximately $10,000 net profit, representing a 5.6% return on investment before considering property appreciation, though success heavily depends on location proximity to attractions, property condition, host responsiveness, and effective marketing strategies.

Airbnb investments in Tullahoma, Tennessee typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-14%, primarily driven by the city's proximity to Arnold Air Force Base and Motlow State Community College which create consistent demand from military personnel, contractors, and visiting families. Properties within 10 miles of the base command premium rates of $85-120 per night, while downtown properties near the historic district average $70-95 nightly, with occupancy rates of 65-75% annually. Initial profitability usually occurs within 18-24 months for well-positioned properties under $200,000, with investors like those working with companies such as RedAwning and Vacasa reporting stronger performance on 2-3 bedroom homes purchased between 2019-2023. The market benefits from limited hotel inventory and growing tourism to nearby Jack Daniel's Distillery in Lynchburg, though seasonal fluctuations occur with lower winter occupancy of 45-55% compared to peak summer months reaching 80-85%, making cash-on-cash returns most favorable for investors with 20-25% down payments on properties in the $150,000-250,000 range.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental investment opportunities in Tullahoma, Tennessee, offering comprehensive market analysis and property recommendations. Local real estate agents in Tullahoma who focus on investment properties include Coldwell Banker Snow & Wall, Crye-Leike Realtors, and RE/MAX Real Estate Partners, with agents like those at Benchmark Realty Partners having experience in vacation rental investments. National services that can assist with Tullahoma Airbnb investments include Awning (formerly RedAwning) which provides full-service short-term rental investment management, Mashvisor for market analysis and property identification, AirDNA for revenue projections and market data, and Roofstock which occasionally features short-term rental properties in Tennessee markets. Local property management companies such as Tennessee Valley Property Management and Tullahoma Property Services can provide ongoing management once properties are acquired, while national companies like AvantStay and RedAwning offer comprehensive investment and management services for short-term rental properties in emerging markets like Tullahoma.