Nashville draws visitors every weekend of the year, but Metro's permit rules decide which addresses can host them. For an investor, the zoning district on the parcel matters more than the neighborhood's name.
In short: LendingStreet finances Nashville short-term rentals with DSCR loans that can qualify on projected short-term revenue on some programs, with no W-2s or tax returns and LLC borrowers allowed. Loans start at $150,000, purchases go up to 80% LTV and the standard minimum DSCR is 1.0x. Metro Nashville requires a short-term rental property permit, and new non-owner-occupied permits are generally limited to certain mixed-use, commercial and downtown zoning districts rather than residential-only zones. Confirm the permit path for the exact parcel with Metro Codes before you buy.
Metro Nashville and Davidson County regulate short-term rentals through the short-term rental property (STRP) permit issued by the Metro Codes department. Permits are split between owner-occupied and non-owner-occupied rentals. Because our investor loans are business-purpose loans on non-owner-occupied property, only the non-owner-occupied path is relevant here.
Over the past several years Metro has narrowed where new non-owner-occupied permits can be issued. In general, they are not available in residential-only districts such as the RS and R zones that cover most single-family streets, and they are available in some mixed-use, office, commercial and downtown districts. Existing permits have their own renewal and transfer rules, so a seller's active permit does not automatically carry over to you.
The rules have changed more than once and are enforced with fines, so get a written answer on the specific parcel before you count on nightly income.
| Zoning situation | Non-owner-occupied STR outlook | What to verify |
|---|---|---|
| RS or R residential zone | New permits generally not available | Plan on long-term or 30+ day rentals instead |
| Mixed-use districts (MUN, MUL, MUG and similar) | Often possible | District rules, unit limits, building HOA |
| Downtown and commercial districts | Often possible | Condo bylaws and building rental policy |
| Specific plan (SP) zoning | Depends on the SP text | Read the SP ordinance for the parcel |
| Existing permitted property for sale | Permit may not transfer | Ask Metro Codes how a sale affects it |
Most non-owner-occupied short-term rentals in Nashville are in buildings or townhome rows on mixed-use or commercial land: downtown and SoBro, The Gulch, Midtown, parts of Germantown and Wedgewood-Houston, and corridors in East Nashville and along Charlotte Avenue. Many are newer townhomes or condos built with short-term rental use in mind.
Condo buildings add their own layer. Even where zoning allows a rental, the HOA may cap or ban stays under 30 days. Read the declaration and bylaws, and ask how many units already rent short-term.
Cities in the surrounding counties, including Franklin and Brentwood in Williamson County, Murfreesboro in Rutherford County, Hendersonville and Gallatin in Sumner County, and Mount Juliet and Lebanon in Wilson County, each write their own short-term rental rules. Some are stricter than Metro and some are more flexible, so check the city and the HOA before you buy.
Many Middle Tennessee investors look farther afield for nightly rentals: lake properties around Percy Priest, Center Hill and Old Hickory lakes, and the Smoky Mountain markets of Sevier County, where cabins and vacation rentals are a large part of the local economy. Our Tennessee STR page covers statewide considerations.
Short-term stays in Nashville are subject to state and local sales tax and Metro's hotel occupancy tax. Booking platforms collect some of these, but owners remain responsible for anything the platform does not remit. Your permit must also be displayed in listings, and Metro checks listings for permit numbers.
Budget for the permit fee, any required inspections, a local contact who can respond to complaints and a property manager if you live out of town. Metro also limits occupancy and sets rules on signage, parking and noise, and repeated violations can cost you the permit. Treat compliance as part of the business plan, since losing the permit would leave you carrying the loan on long-term rent.
Nashville's demand is less seasonal than a beach or mountain market, but it is lumpy. Weekends book far better than weekdays, CMA Fest in June and the July 4th weekend run very high, football weekends in the fall and concerts at Bridgestone Arena and Nissan Stadium fill the calendar, and January and February are usually the softest months.
Group travel, especially bachelor and bachelorette parties, is a big share of demand. Many buildings and HOAs have rules on occupancy and noise that limit how a unit can be marketed, so read them before you build your revenue plan.
This example is illustrative and not a quote. An investor buys a three-bedroom townhome in a mixed-use district where a non-owner-occupied permit is available, for $640,000. A third-party projection estimates $66,000 in annual bookings, or $5,500 a month.
At 75% LTV, the loan is $480,000 and estimated principal and interest is about $3,356. Taxes are budgeted at $385, insurance at $145 and HOA dues at $225, for a total payment of about $4,111.
On the full projection, DSCR is about 1.34x. If the program counts 80% of projected revenue, DSCR is about 1.07x, still above 1.0x.
| Item | Full projection | 80% of projection |
|---|---|---|
| Loan amount (75% LTV) | $480,000 | $480,000 |
| Estimated principal and interest | $3,356 | $3,356 |
| Taxes | $385 | $385 |
| Insurance | $145 | $145 |
| HOA dues | $225 | $225 |
| Total payment | $4,111 | $4,111 |
| Monthly revenue counted | $5,500 | $4,400 |
| DSCR | About 1.34x | About 1.07x |
Tennessee assesses residential property at a 25% assessment ratio, and Davidson County reappraises on a multi-year cycle, so a recently built townhome's bill can change after the next reappraisal. Tennessee also charges a transfer tax on the deed and a separate mortgage recording tax on the loan amount, which belong in your closing cost budget.
On some programs the loan qualifies on a third-party revenue projection rather than a lease. If the projection is lower than you hoped, our low AirDNA projection guide explains the choices. Owners with an operating history can look at an STR DSCR refinance.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, zoning, permit status and revenue projection through the form below or call (877) 298-1001. We will run the ratio at a few loan amounts and tell you what the file needs.
Usually not if the lot is in a residential-only zone. Many East Nashville streets are zoned RS or R. Check the parcel's zoning and confirm with Metro Codes.
Not automatically. Ask Metro Codes how a sale affects the existing permit before relying on it.
On some programs, yes, using a third-party revenue projection instead of a lease.
Sales tax and Metro's hotel occupancy tax. Platforms collect some; owners are responsible for the rest.
Each city sets its own rules, and some are stricter than Metro. Check the city ordinance and HOA for the address.
Run the numbers on a long-term lease too. If the property clears 1.0x on a lease, you have a fallback.
Only if zoning allows it and the building's HOA permits stays under 30 days. Many buildings restrict them.
Our investor loans are business-purpose loans on non-owner-occupied property, so it must operate as a rental, not your residence.
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