1st Advantage MortgageNashville stopped issuing new non-owner-occupied short-term rental permits in most residential zones, so most investors there underwrite on long-term rent.
Population: 689,000 (U.S. Census Bureau city and town estimate, July 1, 2024).
Reading the Nashville rental market
Nashville renters work in healthcare, music and entertainment, Vanderbilt, state government and a fast-growing corporate base. Prices are high and the stock includes bungalows, townhomes and infill, with condo and townhome associations common in newer areas. Davidson County is a consolidated metro government, so city rules and county rules are one set.
Nashville areas investors compare
- East Nashville. bungalows and infill townhomes across the river from downtown
- The Nations and Germantown. walkable redevelopment areas west and north of downtown
- 12 South and Berry Hill. higher-priced homes near the university area
- Donelson and Antioch. suburban single-family neighborhoods
- Madison. older homes north of the city with lower prices
Permits and registrations in Nashville
Metro Nashville issues non-owner-occupied short-term rental permits for dwellings with up to four sleeping rooms, but new permits are available only in specified commercial and mixed-use zones and not in the AR2A, R, RS or RM residential zones, and existing permits in those zones can renew but cannot transfer after a sale. Applicants need an ownership match, a floor plan, liability insurance, notice to adjacent owners and a responsible party within 25 miles. Buying a house that a seller used as a permitted nightly rental does not carry the permit forward.
Local rules checked October 2026 against: Nashville STR permit types, Metro code Chapter 6.28. Rules change, so confirm with the city before you rely on them.
Taxes, insurance and risk in Nashville
Tennessee has no state personal income tax, and Davidson County reappraises on a recurring schedule, so a recent purchase can reset the tax line. Flooding along the Cumberland River and its tributaries is a risk in parts of the county, so check flood maps.
Nashville rents, values and tenants
Median gross rent in Nashville: $1,586, well above the Tennessee median of $1,189. Median owner-occupied home value: $413,600, well above the Tennessee median of $286,700. Those are citywide medians, so an individual address can sit well on either side of them. A quick screen: twelve months of Nashville median rent over its median home value equals 4.6%, a lean ratio that leaves little room for taxes, insurance and dues. Use it to compare markets, then replace it with real rent evidence for the address.
| Indicator | Tennessee | Nashville | Difference |
|---|---|---|---|
| Tax as a share of home value | 0.50% | 0.60% | +19% |
| Annual property tax bill, median | $1,442 | $2,472 | +71% |
| Typical owner-occupied value | $286,700 | $413,600 | +44% |
| Typical monthly rent | $1,189 | $1,586 | +33% |
| Persons per household | 2.45 | 2.13 | |
| Share in 2-4 unit buildings | 5.6% | 6.7% | +21% |
| Long commuters, 45 min plus | 15.2% | 11.6% | -24% |
| Degree holders, age 25+ | 31.1% | 48.0% | +55% |
| Workers on their own account | 9.8% | 11.1% | +13% |
| Renters paying 30%+ of income | 48.8% | 53.8% | +10% |
| Units sitting vacant | 10.2% | 9.1% | -11% |
| Typical construction year | 1987 | 1987 | |
| Annual rent divided by value | 5.0% | 4.6% | -8% |
| Households that rent | 33.1% | 47.6% | +44% |
| Residents (Census estimate) | 7,066,383 | 690,130 |
Renters make up 47.6% of households in Nashville (well above the Tennessee median of 33%), so rental demand is real but not overwhelming. Household income runs a median $77,371 (about 11% above the Tennessee median of $69,595), while 54% of renters spend 30 percent or more of income on housing.
The kind of housing in Nashville
Apartments and small buildings carry real weight in Nashville, about 40% of units, with duplexes through fourplexes at 7%. The median structure went up in 1987, so request ages for the roof, HVAC and water heater on any rental you consider.
Nashville reports 9% of units vacant and a rental vacancy rate of 7.3%, a measure of how quickly a listed unit might lease.
Underwriting angles in Nashville
Yields near 4.6% make Nashville a market for careful buyers. The ratio can still work, usually through a lower loan amount, a rent above the median or a property with several units. With a 1987 median build year, the question for each property is when the roof and HVAC were last replaced. With about 48% of households renting, Nashville has enough tenants to support investors without being dominated by them.
What costs can do to a Nashville ratio
The Census reports median real estate taxes paid of $2,472 in Nashville, well above the Tennessee median of $1,442. Against the median value that is an effective rate of roughly 0.60%, compared with 0.50% for Tennessee as a whole. In rent terms, the tax bill equals roughly 13% of twelve months of median rent.
Davidson County carries a relatively high overall rating in FEMA's National Risk Index, where earthquakes (relatively high), riverine flooding (relatively high) and tornadoes (relatively high) rank highest.
| Hazard in Davidson County, FEMA index | Level |
|---|---|
| Strong wind exposure | Relatively High |
| Tornadoes exposure | Relatively High |
| Riverine flooding exposure | Relatively High |
| Earthquakes exposure | Relatively High |
| Social vulnerability score | Relatively Moderate |
| Annualized loss estimate | Relatively High |
| Composite risk | Relatively High |
Insurance belongs in the ratio from day one, so get a landlord quote for the Nashville address and ask about roof age, wind or hail deductibles and flood cover.
Running the numbers in Nashville
The quick test for Nashville: rent of $1,586 divided by a 1.25 ratio allows a total payment of $1,269, and subtracting $206 in monthly taxes leaves $1,063 for the loan, insurance and dues. At 1.00 the allowance is the full $1,380.
Legal checks before a Nashville purchase
Guests who book by the night in Nashville are taxed under state law as follows. Tennessee charges sales tax on short-term rentals and a local occupancy tax on stays of 30 consecutive days or fewer, and platforms such as Airbnb collect both on bookings they process, while owners still handle business tax and direct bookings.
Before you set the Nashville rent, know that Tennessee caps the security deposit this way: No statutory cap (Tenn. Code Ann. § 66-28-301 sets none) (Tenn. Code Ann. § 66-28-301). A landlord who wants a Nashville month-to-month tenant out must give 30 days written notice before the periodic rental date (10 days for week-to-week) of notice. Rent increases in Tennessee: No; local governments may not control rent (Tenn. Code Ann. 66-35-102).
Nashville compared with nearby markets
Smyrna's median home value of $358,300 is the group's floor and Franklin's $705,400 its ceiling, while Nashville is $413,600.
| Market | Renter share | Tax bill | Home value | Residents | Rent |
|---|---|---|---|---|---|
| Murfreesboro | 48% | $2,323 | $402,100 | 161,445 | $1,481 |
| Smyrna | 43% | $1,764 | $358,300 | 56,692 | $1,461 |
| Franklin | 36% | $3,011 | $705,400 | 87,133 | $1,923 |
| Hendersonville | 28% | $2,458 | $430,700 | 63,091 | $1,653 |
| Nashville | 48% | $2,472 | $413,600 | 690,130 | $1,586 |
Employers and institutions near Nashville rentals
About 11.1% of Nashville workers are self-employed, the kind of borrowers whose tax returns understate cash flow and who often prefer a loan sized on rent. Other workforce markers: government workers are about 11% of employment, 48% of adults hold a bachelor's degree or higher and 12% of commuters travel 45 minutes or more.
Nashville's principal employers are given as Vanderbilt University Medical Center, State of Tennessee, U.S. federal government, HCA Healthcare and Metropolitan Nashville Public Schools. Rental demand follows jobs, so a property within an easy commute of one of them has a natural tenant pool. Higher education in and around Nashville includes College football, Vanderbilt University, University School of Nashville and Fisk University, which feeds demand for student, staff and faculty housing near campus. Transportation links include interstate access via I-40, I-24 and I-65 and air service through Nashville International Airport and John C. Tune Airport. Easy highway and air access helps both tenant commutes and remote ownership.
Investor-type guides for Nashville
- Short-Term Rental Investors in Nashville
- Out-of-State Investors in Nashville
- LLC Investors in Nashville
Moving from numbers to a Nashville loan
A good Nashville file has four pieces: rent evidence, a tax estimate, an insurance quote and cash. Preview the ratio in the calculator, then apply or talk to us.
More Tennessee markets
- All Tennessee DSCR loans
- DSCR loans in Hendersonville, TN
- DSCR loans in Franklin, TN
- DSCR loans in Smyrna, TN
- DSCR loans in Murfreesboro, TN
- Every market we cover
Source links
- Census Bureau ACS 5-year 2020 to 2024 tables
- FEMA hazard ratings for Davidson County
- Nashville overview (Wikipedia)
- Nashville landlords: see Tenn. Code Ann. § 66-28-301
- State rule cited for Nashville hosts: Tennessee short-term rental tax manual
- Tennessee local occupancy tax
We took the Nashville data from Census ACS five-year tables for 2020 to 2024, estimates with margins of error. Deposit and notice summaries come from RedFlagLease (CC BY 4.0) and the linked Tennessee sections. Checked October 2026; confirm with Nashville or the county before you rely on any rule.
DSCR loan availability varies by property and lender program and is not an offer to lend. See our disclosures.
Frequently asked questions
Does a Nashville short-term rental permit transfer when I buy?
No. For non-owner-occupied permits in residential zones, existing permits may renew but cannot be transferred after a sale, and new permits are available only in specified commercial and mixed-use zones.
How does a lender pick the rent for a Nashville DSCR file?
Expect to supply a lease, or let the appraiser's rent schedule stand in for one; the Nashville median rent of $1,586 is context and not a substitute.
Does the ratio in Nashville include taxes and dues?
Every piece of PITIA is in the denominator. With $1,586 in rent, a 1.25 lender allows about $1,269, leaving $1,063 after median taxes of $206 a month.
How high are property taxes in Nashville?
Median taxes paid are $2,472 a year, or 0.60% of median value, compared with 0.50% statewide. Ask Davidson County's tax office what the bill becomes after your sale.
Is short-term rental income allowed for a Nashville DSCR loan?
Depending on the lender, yes, if the property may legally be used that way and income is documented. Confirm the local permit, association rules and Tennessee lodging taxes before you underwrite nightly income in Nashville.
When must a Nashville landlord return a deposit?
Under Tenn. Code Ann. § 66-28-301: No statutory cap (Tenn. Code Ann. § 66-28-301 sets none). Check the statute and your lease before collecting.
Should I worry about hazards at a Nashville property?
The National Risk Index gives the county an overall relatively high rating. Use that as a prompt to get quotes, not as a verdict on one Nashville street.
Is an entity required for a TN DSCR loan?
An individual can borrow too. If you prefer an entity for the Nashville purchase, expect to provide formation documents and sign a personal guaranty.