Knoxville sits 40 minutes from one of the busiest vacation rental markets in the country, but inside the city itself the rules for investors are tighter. Before you buy a house near Neyland Stadium to rent on game weekends, check the zoning.
In short: LendingStreet finances short-term rentals in the Knoxville region with DSCR loans that, on some programs, qualify on projected nightly revenue instead of a long-term lease. Inside Knoxville city limits, non-owner-occupied STRs are generally limited to certain commercial, office, mixed-use and higher-density districts, with a city permit, so many investors buy in Sevier County, Blount County or on the region's lakes instead. Loans start at $150,000 with no stated maximum, purchases go up to 80% LTV, the minimum credit score is 620 and LLC borrowers are standard.
The City of Knoxville requires a permit for short-term rentals and distinguishes between owner-occupied rentals, where the host lives on the property, and non-owner-occupied rentals. Owner-occupied STRs are allowed in many residential districts. Non-owner-occupied STRs, the kind investors buy, are generally limited to non-residential and some higher-density districts under the city's zoning code, which was overhauled in the Recode Knoxville update.
So a single-family house in Sequoyah Hills, Fourth and Gill or Fountain City is unlikely to qualify as an investor STR. Condos and units in mixed-use buildings downtown, in the Old City and along some commercial corridors are more likely to. Confirm the zoning district and permit eligibility with the city for the exact address. Knox County outside city limits has its own rules.
| Location | Investor STR? | What to check |
|---|---|---|
| Knoxville residential neighborhoods | Generally no | Zoning district |
| Downtown, Old City, mixed-use corridors | Often, with a permit | Zoning; condo rules |
| Unincorporated Knox County | Varies | County zoning |
| Sevier County (Pigeon Forge, Gatlinburg, Sevierville, Wears Valley) | Widely operated | City or county zoning; HOA rules |
| Blount County (Townsend, Walland) | Varies | County and city rules |
| Norris, Douglas and Tellico lakes | Varies by county | Shoreline rules; HOA covenants |
Sevier County, home to Pigeon Forge, Gatlinburg, Sevierville and Wears Valley, is the region's vacation rental center, driven by Great Smoky Mountains National Park, Dollywood and the Parkway attractions. Cabin rentals operate across much of the county, though each city and many subdivisions set their own rules. Townsend, the quieter side of the park in Blount County, has its own following.
Lake homes on Norris Lake, Douglas Lake, Fort Loudoun Lake and Tellico Lake draw summer families and boaters. Each lake sits in different counties with different zoning, and TVA shoreline rules govern docks and shoreline use. Our Tennessee STR page covers statewide considerations.
Short-term stays in Tennessee generally owe state and local sales tax and local hotel occupancy taxes, which vary by city and county. Some platforms collect certain taxes; others leave it to the owner. Register with the Tennessee Department of Revenue and the local jurisdiction as required.
Tennessee has no state income tax on wages. Property taxes are set locally; residential property is assessed at 25% of appraised value, and counties reappraise on multi-year cycles. Knox County completed a reappraisal in 2025, and Sevier County has its own schedule.
On some programs, an STR loan is sized on projected short-term revenue, often a third-party projection for the property, compared with the full monthly payment. Cabin projections in Sevier County vary a lot with views, hot tubs, game rooms, sleeping capacity and road access. Programs differ in how they treat projections. If yours comes in low, see our guide to low revenue projections, and existing operators can refinance on booking history.
This example is illustrative and not a quote. An investor buys a three-bedroom cabin in Wears Valley for $625,000 in a subdivision that allows nightly rentals. A projection shows average gross revenue of $6,000 a month. Sevier County taxes are budgeted at $160 a month, insurance at $260 and road and HOA dues at $75.
At 75% LTV the loan is $468,750 and estimated principal and interest on a 30-year loan is about $3,119. The total payment is about $3,614 and DSCR on projected revenue is about 1.66x. At 25% lower revenue, $4,500, the ratio is about 1.25x. Property taxes in Sevier County are modest compared with many vacation markets, which helps the ratio, but operating costs such as cleaning and management do not show up in DSCR and still need to be covered.
| Item | Projected revenue | Revenue cut 25% |
|---|---|---|
| Loan amount (75% LTV) | $468,750 | $468,750 |
| Estimated principal and interest | $3,119 | $3,119 |
| Property taxes | $160 | $160 |
| Insurance | $260 | $260 |
| Road and HOA dues | $75 | $75 |
| Total monthly payment | $3,614 | $3,614 |
| Monthly revenue used | $6,000 | $4,500 |
| DSCR | About 1.66x | About 1.25x |
Smoky Mountain cabins come with their own checklist. Steep or gravel roads can limit access in winter. Many cabins rely on wells and septic systems, and septic capacity can cap the number of bedrooms you can legally advertise. The 2016 Gatlinburg-area wildfires made fire exposure a factor in insurance pricing for some areas.
Get the septic permit, well report and insurance quote early, and confirm the cabin's legal bedroom count.
The Smokies have a long season: summer vacations, fall leaf season in October, and holiday traffic through December, with January and February the slowest months. Knoxville itself peaks on University of Tennessee home football weekends, when Neyland Stadium's crowds fill every legal room in the city, and during graduation and major events.
Lake homes are mainly a May through September business. Ask for a month-by-month projection and size reserves to the slow months.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, price, zoning or permit details and any projection or booking history. The team will confirm the property can legally operate, then run the ratio. Call (877) 298-1001 or use the form below. If a Knoxville property is in a residential zone, we can review it as a long-term rental instead.
Generally not in residential zones. Knoxville limits non-owner-occupied STRs to certain non-residential and higher-density districts and requires a permit.
Mostly in Sevier County, including Pigeon Forge, Gatlinburg, Sevierville and Wears Valley, in Blount County near Townsend, and on lakes such as Norris and Douglas.
Only if the property's zoning and permit allow it. Many houses near campus are in residential districts where investor STRs are not permitted.
Generally state and local sales tax and local hotel occupancy taxes. Some platforms collect certain taxes; confirm your duties.
It can. Septic permits set the legal bedroom count, which affects both value and the revenue projection.
On some programs, yes, for a property that can legally operate as an STR.
Generally not in the ratio itself, which uses principal, interest, taxes, insurance and dues, but you still need to cover them.
Our investor loans are business-purpose loans on non-owner-occupied property, so it must be run as a rental.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.