Rental / DSCR in Nashville

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.

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.

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.

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.

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.

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.

DSCR from 0.75 and credit from 640, with leverage up to 80% LTV. On a $495,000 Nashville purchase that is up to $396,000 from us and $99,000 from you (495,000 x 80% = 396,000). A DSCR below 1.0 means the rent does not fully cover the payment, and the usual answer there is a smaller loan rather than a decline. Because metro rents are down year over year, run the coverage on today's collected rent instead of an asking rent, and let any recovery be upside. Subject to underwriting.

DSCR loans run from $100,000 to $3,000,000. Terms are 30-year fixed or a 5, 7 or 10 year ARM, and prepayment comes in flexible structures rather than one fixed schedule, so tell us at term sheet whether you plan to hold the door or trade it. If a single Nashville property sits under the floor on its own, a portfolio structure across several doors is usually the better fit. Subject to underwriting.