"Who knew we were going to become the bridesmaid capitol of the world!"
...said Burkley Allen, Council Member At-Large for Metro Nashville. (https://www.burkley.org/)
Nashville has become among Five of the Best U.S. Destinations to Visit in 2021 for vacationers. The great aspect of vacation rentals is simply this: Nashville developers, quite simply, cannot build enough hotels to handle all of our visitors. That said, short-term rentals serve a vital need in the hospitality picture in this much- sought-after town of ours.
Historic numbers of STRs in Metro Nashville should give you some idea of their growth in popularity with investors and even home-owners who decide that their home is worth more to outsiders than to their family on any given weekend.
Prior to 2012: 200 permits issued / 2012: Grew to 1,000 permits / 2021: 5,400 permits issued, roughly 5,000 active.
As a side note (that's why I put it on the side) while short-term rentals have developed a sour taste in some resident's mouths, there have been some very positive benefits that have evolved for users as well as home-owners. During COVID, STRs provided a place for a family to go while a single family member with COVID was quarantining. Another positive outgrowth, is that, at time when property values are sky-rocketing, STR options allowed for elderly residents to age-in-place, permitted to rent their home as a owner/resident.
Here are some other statistics to illustrate why this trend will continue to grow in the years to come:
- 16.1 million visitors in 2019 (+6% over 2018)
- 5-7% of overnight visitors are international
- Number of hotel rooms
- Nashville MSA: 51,300 (2019 occ: 73.5%)
- Davidson County: 35,950 (2019 occ: 75.3%)
- Over 50 restaurants/bars/cafes opened to date in 2021.
"In 2012, metro officials studied the city of Austin, as it was on the same track as Nashville in many ways, and then listened to residents and investors to work at developing policy and zoning to try to strike a balance as we've struggled to learn how to incorporate short-term rentals into our housing and hospitality picture," said Allen.
"How popular have short-term rentals have become in Nashville?"
According to Joey Hargis, Metro Nashville Zoning Administrator, (firstname.lastname@example.org / 615-862-6183) stated on January 13, 2022, "We have had 250 new permit applications come on-line in the last 30 days!
"How are they regulated in Nashville?"
"In the beginning," said Burkley Allen, "The state jumped in and threatened
to pass state-wide legislation [to regulate short-term rentals]...the
needs of Sevierville, Memphis, Chattanooga, Clarksville, would be
totally different from every other city and totally different from what
Nashville needed." So, at this time, each city has their own planning
code and requirements for short-term rentals.
it may be very difficult to navigate, if you want to have a short-term
rental property in several cities in Tennessee, there really is not
one-size-fits-all set a rules that should regulate a military
community's needs (Clarksville), a tourist community (Nashville,
Chatanooga and Memphis), a college town vibe (such as Knoxville), etc.
Because Nashville has, in my opinion, done a great job at riding that
balance between home-owners and investors, "We currently have 95% to
98% compliance among current permit owners," said Joey Hargis.
"Now that I know the need is there, how do I get in on the action in Nashville?"
It's as simple as one, two...
1. First of all, it's extremely helpful to have an agent who understands the ins-and-outs of STRs. It's not as simple as buying a property and then listing on your favorite vacation rental site. Ask your real estate agent if they are familiar with the area, if they work in the STR space, and if they are comfortable and have knowledge of helping you through and to the appropriate sources in the city to get the information you'll need in order to make an informed decision.
2. Know the nuts and bolts of the city's permit and building codes for short-term rentals. For starters, here are a few highlights as of the date when this blog was written:
NOTE: For the most up-to-date info from Metro Nashville Planning/Codes as it applies to STRs or to apply for a permit:
SHORT-TERM RENTAL PROPERTY CODES
APPLY FOR SHORT TERM RENTAL PROPERTY PERMIT
- As of January, 2022, there are 10 sets of regulations that may impact STR owners, depending on when the owner applied and was approved for their permit
- Permits are annual renewable. So, if there are more than three violations of codes rules, a permit may not be renewed
- Currently, as of January, 2022, vacation rentals must have a maximum of four bedrooms with a maximum sleeping capacity of twelve
- There are two types of permits, owner-occupied (within your permanent residence, or domicile) and non-owner occupied
- As of the end of December, 2021, the opportunity to own a non-resident in a residential district (R=Residential or RM=Residential Multi-family zoning code) in Davidson County (Metro Nashville) went away. It is much more attainable to obtain a permit in zoning codes that start with C, M or O.
- When you are wanting to make an offer on a property, with intent of making it an investment property, it's often difficult to get a quick answer from planning/codes as to whether a permit may be possible. So, the best way to look at a purchase is to run your numbers based on a long-term rental. If your pro-forma works, then buy it. If the short-term permit doesn't come through, then the long-term lease plan will likely work very well for you, especially as prices have historically accelerated at rapid rate.
- Legislation is being presented, specifically for some districts where parking is an issue, as of January, 2022, to enforce more strict parking rules for vacation rentals. It suggests that for each living space, i.e. bedroom and/or room that has a sleep option, one parking space is necessary for each. In other words, a two bedroom home where a living space has also been included in the living room would require three parking spaces. So, you would be well to understand the zoning regulations to the city, but also the area where you are wanting to invest, for district 19, for example.
- If you are an owner-occupied vacation rental, you can rent your entire house and leave for the duration of the rental, but you may only rent to one entity. Code does not allow you to rent different rooms to more than one party.
- While some incorporated cities fall within Davidson County, they each have their own zoning rules are vacation rentals are regulated by those incorporated codes; cities such as Berry Hill, Oak Hill, Forest Hills, Belle Meade, etc.
- VERY IMPORTANT: When a property, that has a permit for the operation of an STR, sells to a new owner, THE PERMIT DOES NOT CONVEY TO THE NEW OWNER. In that case, the new owner must apply for a permit to operate and STR and the application for permit would be subject to the new, or current, codes for that property. Grandfathering of permits expires with the transfer of property.
Let me know if I may help you navigate the purchase of an STR.
By the way, all of the photography that you see in this blog is my own.
While I don't shoot photography professionally, I have been interested
in photography since a teen. Just thought you might want to know that
this blog and the visuals are my creative hand. Feel free to follow one
of my Instagram accounts dedicated just to my photography,
Meritant Real Estate serves all of Middle Tennessee but our forte
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John Magyar, Principal Broker, REALTOR®, RENE, SRS, MRP, SRES
Meritant Real Estate
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Brentwood, TN 37027
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