Nashville's short-term rental market continues to attract investors from across the country, drawn by our city's booming tourism industry and strong rental demand. However, navigating the regulatory landscape and finding the right investment property has become increasingly complex. Here's everything you need to know about investing in Nashville STRs in 2025.
Since 2017, Nashville's approach to short-term rentals has fundamentally changed. The Metro Council voted to prohibit new non-owner occupied STR permits in R and RS zoned neighborhoods—which encompasses the majority of Nashville's residential areas. This means you can't simply buy any house or condo and convert it to an Airbnb.
The Two-Permit System:
New Type 2 permits are now only available in commercially zoned areas, creating a significant supply constraint that has reshaped the entire market.
One of the biggest misconceptions among potential investors is that any condo can become a short-term rental. The reality is much more restrictive.
High-Rise Reality Check: No downtown Nashville high-rise condo buildings allow short-term rentals. Buildings like Viridian, ICON, Encore, and others restrict owners to minimum 12-month leases and typically limit rental permits to just ~20% of total units. While you might see some Airbnb listings in downtown high-rises, these are usually master-leased apartment units, not individually owned condos.
HOA Restrictions: By default, most HOA bylaws require any tenants to sign leases for a minimum of six to twelve months. This automatically eliminates short-term rental possibilities unless the HOA specifically allows it.
After the 2017 rule changes, developers responded by creating communities specifically designed for short-term rentals. These developments are:
Purpose-Built STR Communities:
Legacy Condo Buildings (Modified Bylaws):
Note: Availability and pricing vary significantly. Many developments sell out quickly or trade privately. Small one and two-unit new construction projects sometimes arise in commercially zoned areas. Contact us below to be notified of opportunities.
The STR market has evolved significantly over the past several years. Key trends include:
Price Evolution: STR developments now range from luxury properties over $1M to more affordable options, depending on location and amenities.
Location Patterns: Developments cluster near major employment centers, entertainment districts like Music Row and The Nations, and areas with strong tourism appeal.
High Demand: Many purpose-built STR developments experience strong sales, indicating continued investor confidence in the Nashville market.
Despite regulatory complexities, Nashville remains attractive for STR investors because:
Strong Tourism Fundamentals: Nashville's music scene, professional sports teams, and events like CMA Fest drive consistent demand year-round.
Higher Returns Potential: Properly located short-term rentals often generate significantly higher returns than traditional long-term rentals.
Repeat Guest Advantage: Data shows Nashville Airbnb guests are three times more likely to return within 12 months and seven times more likely to refer friends.
Before investing in any Nashville STR property, verify:
The Nashville STR market shows no signs of slowing down, but successful investing requires more sophistication than ever. With limited new supply and strong demand, well-located properties in properly zoned developments continue to perform well.
However, the days of finding bargain properties that can be easily converted are largely over. Today's successful STR investors focus on purpose-built developments or rare resale opportunities in established STR-friendly buildings.
Given the complexity of Nashville's STR regulations and limited inventory, working with agents who specialize in this niche is crucial. The regulatory landscape continues to evolve, and having expert guidance can mean the difference between a profitable investment and a costly mistake.
Whether you're a first-time STR investor or looking to expand your portfolio, understanding these market dynamics is essential for making informed decisions in Nashville's unique short-term rental landscape.
Looking to invest in Nashville short-term rentals? Our team stays current on the latest developments and regulatory changes. Contact us to discuss your investment goals and explore current opportunities in this specialized market.