We’re coming up on high wedding season, which in Nashville means bachelorettes on pedal taverns, and Airbnb rentals spiking through the roof. Nashville has become a mecca for both. What does that mean for our city, or for any of us personally?
From a financial perspective, this is great for our city. More tax dollars and tourism spending are pumped into our local businesses. What about individuals? Say you are buying a property with plans to rent it out as an Airbnb, or are selling a home with a garage apartment that is currently leased as a VRBO – sounds great, right? Not so fast. The spike in the short term rental market in Nashville has led to a lot of confusion over what property owners can, and cannot do. I’m hoping to break it down as succinctly as possible for you.
There are 3 types: 1) Owner occupied, 2) Non-owner occupied, and 3) Non-owner occupied multifamily. The bulk of STRPs in Nashville are type 2, non-owner occupied, mostly single family homes, or condominium flats. NOTE: In any condo, or planned unit development, HOA rules apply and most do not allow them – make sure you check!
Q: What qualifies as a short term rental vs a standard lease?
A: Short Term Rental Property (STRP) is defined as a residential dwelling unit, containing not more than four sleeping rooms, that is used and / or advertised for transient occupancy (less than 30 consecutive days by the same occupant). It requires the property owner to obtain a permit, and to pay hotel occupancy taxes, as well as state, and local taxes. Owners may, or may not be required to have a business license depending on annual gross income. More on that is here. Standard leases typically run for a minimum of 6 months to a year.
Q: How do I get a permit?
A: The first course of action is to see if any permits are available in your zone. For Type 1, there are unlimited permits, but for 2 and 3, there is a limited number. For Metro residents, type your address into the map here to see if permits are available where your property is located. Many zones have already reached their maximum number of permits, and there is a waiting list to receive one. If there are any available, or you want to apply to get onto the waiting list, follow the steps outlined by the codes department here.
Q: I have a permit, so when I sell my property, the next owner can use it, right?
A: I’m afraid not. Permits are not transferrable, and the new owner will have to apply for their own permit.
Q: What if I live in one of Nashville’s satellite cities? (Forest Hills, Oak Hill, Belle Meade and Berry Hill) Can I get a permit?
A: The satellite cities each have their own ordinances about STRPs, and currently STRPs are banned in Forest Hills, Oak Hill, and Belle Meade. Berry Hill has not banned them,(95% of Berry Hill is commercial) but plans to regulate them soon.
Q: Do I have to have a real estate license to operate my own STRP?
A: No. Only if you manage rentals for someone other than yourself will you need a license.
Have you ever stayed in a short term rental? How was your experience? For us, traveling as a family, we rent STRPs over hotels 90% of the time since we can cook meals at home, and have more room to spread out for privacy. We love them!
If you still have questions about STRPs, feel free to give me a shout.