Question 1

Can I buy a Nashville short-term rental and keep the seller's permit?

Accepted Answer

No. A Metro short-term rental permit does not transfer with the property. The governing ordinance says it plainly: a STRP permit shall not be transferred or assigned to another individual, person, entity, or address. Tennessee's own Short-Term Rental Unit Act, at T.C.A. section 13-7-601 and following, points the same direction. It protects an existing short-term rental use from a later local ordinance, but that protection ends when the property is sold or transferred, when the property goes 30 continuous months without short-term rental use, or after three or more separate violations of generally applicable local law. State law and Metro law agree, which is why this is the one Nashville fact we will not hedge. If a deal is priced off the seller's nightly revenue, the buyer is paying for income the buyer will not inherit.

Question 2

Where in Davidson County can a new non-owner-occupied STR permit still be issued?

Accepted Answer

Underwrite to the zoning whitelist, not to a neighborhood. Metro Codes will not issue a new not-owner-occupied short-term rental permit in AR2A, R, RS, or RM zoning, which is the entire conventional residential stack: agricultural-residential, one- and two-family R, single-family RS, and multi-family RM. New NOOSTR permits issue only as a use permitted with conditions in the mixed-use, office, commercial, downtown DTC, and shopping-center districts, including MUN, MUL, MUG, MUI, OG, OR20 through OR40-A, ORI, CN, CL, CS, CA, CF, the DTC districts, and SCN, SCC and SCR. That regime dates to BL2017-608, effective February 2, 2018, which phased out non-owner-occupied permits in residential districts; reporting indicates no new residential-zone NOOSTR permits have issued since January 1, 2022. Pull the parcel's zoning before you write the offer, not after.

Question 3

My LLC will own the property. Does that change anything on the STR side?

Accepted Answer

Yes, and it rules out the other permit type entirely. Metro recognizes exactly two permits: owner-occupied and not owner-occupied. The owner-occupied permit requires a natural person who permanently resides at the property, so an LLC, corporation, trust, partnership or joint venture cannot hold one, and ownership has to match Register of Deeds records. On the investor permit, ownership has to match Davidson County Clerk deed records, you need a responsible party within 25 miles, liability coverage of at least $1,000,000 per occurrence, a floor plan certified by a licensed architect, engineer or home inspector on one- and two-family dwellings, adjacent-owner notification, and the permit number on every listing. The fee is $313 plus card processing, renewed annually. If you are moving an existing permitted property into an entity, confirm the effect with Metro Codes first, because a change in ownership of record is exactly what the non-transfer rule reaches. Nothing here overrides an HOA or condo declaration, which can ban short-term rentals no matter what permit you hold.

Question 4

Rents are falling in Nashville. Does that kill a long-term rental deal?

Accepted Answer

It changes what you can assume, not whether the deal works. As of mid-2026 three independent indices agree on direction: Apartment List has metro rent growth at -3.6% year over year with a median of $1,373, Zumper has the Nashville 1-bedroom median at $1,650, down 5%, and CoStar data via Northmarq has average advertised asking rent down 1.2% to $1,642. Multifamily vacancy sits at 8.5%, a cyclical high. So do not underwrite a Nashville rental to rent growth. The constructive half of the same story is supply: deliveries fall from 12,852 units in 2024 to 9,011 in 2025 to a forecast 6,020 in 2026, units under construction are down about 25%, and annual multifamily permit issuance is down more than 50%, while trailing-12-month absorption held near 8,700 units. Those are apartment figures rather than a single-family read, but they set the tone a tenant negotiates in. Size the loan on today's collected rent and treat a 2027 or 2028 recovery as upside. Run it yourself with the DSCR calculator.

Question 5

How do Davidson County property taxes work in the DSCR math?

Accepted Answer

Tennessee taxes assessed value, not market value, and the assessment ratio is where investors get it wrong. Residential and farm property is assessed at 25% of appraised value; commercial and industrial at 40%. Davidson County's 2025 rates are $2.814 per $100 of assessed value in the Urban Services District and $2.782 in the General Services District. Worked through in the GSD, a $500,000 house is assessed at $125,000, and $125,000 divided by 100 times $2.782 is $3,477.50 a year, roughly 0.70% of market value. The same $500,000 assessed as commercial at 40% is $200,000, or $5,564, about 1.11%. Commercial carry runs roughly 1.6 times residential carry on identical value, so a change of use is a real line item in the ratio, not a rounding error. We escrow to the go-forward bill. Confirm how a specific parcel will be classified with the Davidson County Assessor.

Question 6

Tennessee has no state income tax. What does that actually mean for an out-of-state investor?

Accepted Answer

It means no state tax on wage and salary income. It does not mean an entity that holds your rental owes nothing. The personal side is clean: no tax on wages, and the Hall income tax on interest and dividends was fully repealed for tax years beginning on or after January 1, 2021. The entity side is not. Tennessee's franchise and excise tax applies to LLCs, LPs and corporations doing business in the state, at 6.5% of Tennessee net earnings for excise and 0.25% of net worth for franchise, with a $100 minimum. The family-owned non-corporate entity exemption is real but narrow. It takes at least 95% ownership by family members or qualifying trusts, and at least 66.67% of receipts from passive investment income. Rent counts as passive only where the residential property has four or fewer units at that location, commercial rent does not count at all, and gain on the sale of real estate is not passive, so the year you sell a door is a year the test can break. It is claimed annually on Form FAE183 rather than assumed. Whether your structure clears any of that is a Tennessee CPA's call, not ours. Two more things on the transaction itself. The recording side is real money at closing: Tennessee's realty transfer tax is $0.37 per $100, paid by the buyer, and the indebtedness tax on recorded debt is 11.5 cents per $100 with the first $2,000 exempt. And Tennessee is a non-judicial power-of-sale state, with three newspaper publications and the first at least 20 days before a sale. Take the entity structuring question to a Tennessee CPA and attorney before you close, not after.

Question 7

What is a DSCR loan, and how do I qualify without tax returns?

Accepted Answer

A DSCR (debt service coverage ratio) loan qualifies on the property's rental income instead of your personal income, so there are no W-2s or tax returns required. We compare the rent, from a signed lease or the appraiser's market-rent estimate, against the monthly payment. A DSCR of 1.00 means the rent covers the payment, and we lend with a DSCR as low as 0.75.

Question 8

What rate and terms can I get on a rental loan?

Accepted Answer

Our rental program starts around 5.50% interest-only, with 30-year fixed and 5/7/10-year ARM options, for a single property or a whole portfolio. The lowest pricing goes to strong credit, lower leverage, and a DSCR above 1.20; your quote depends on the file and is subject to underwriting.

Question 9

How much can I borrow, and what is the maximum LTV?

Accepted Answer

We finance up to 80% loan-to-value on a purchase, with rate-and-term and cash-out refinances available, on loan amounts from $100K to $3M. Cash-out leverage is typically a little lower than purchase. The property's cash flow and your credit set your final leverage.

Question 10

What credit score do I need for a DSCR loan?

Accepted Answer

We start at 640, and the best pricing goes to strong credit. Because the loan qualifies on the asset, your score affects your rate and leverage more than whether you are approved.

Question 11

Can I get a DSCR loan on a short-term rental (Airbnb)?

Accepted Answer

Yes, short-term rentals are considered. We can underwrite using market or projected rents, and the property still needs to meet our DSCR. Tell us how the property is operated so we can structure it correctly.

Question 12

Is there a prepayment penalty?

Accepted Answer

Long-term rental loans usually carry a prepayment penalty, commonly a step-down such as 5/4/3/2/1. We offer flexible prepay structures, including buying down to a shorter penalty for a slightly higher rate, and we will lay out the options on your term sheet.

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