Though Nashville recently released a permit limit on Airbnb and short-term vacation rentals, there’s still plenty of opportunity for investors to make money on vacation rentals! After all, many vacationers both save money and get a better local experience when they rent rooms, condos, and homes instead of hotels. Read on to learn more!
What if I told you that I knew someone who rented out their Green Hills condo as a vacation rental… and made more than $40,000 a year just from those rentals?
Nashville is a piping-hot destination for tourists, weddings, and business visitors; several major magazines have rated it THE summer destination in the country. And in part because of that, short-term rentals, vacation rentals (called VRBO in industry lingo) and airbnb opportunities can net thousands of dollars a month, with very little legwork from the property owner. Some have reported getting two or three times the income amount of their mortgage payment.
But what sorts of properties see that amount of business? What are the keys to having an income-producing vacation rental?
The Perfect Vacation Rental
There’s a formula for having the perfect vacation rental! The first key factor is, of course, being able to consistently make more in income than the price of the property! For this reason, I recommend multi-room condos or townhomes, which are often considerably cheaper than comparable homes.
The second key factor? Being in great, walkable neighborhoods with easy transit! Key areas are the Gulch, Midtown, 12 South, Edgehill, Hillsboro Village, Belmont, East Nashville, and West End. The more that a vacationer can do without relying on a car, the more fun they’re likely to have– which translates into higher ratings, and more rentals.
Great decor is the last big item! A picture is worth a thousand words, and every photo you have of your rental will help sell it to potential vacationers! So while you shouldn’t break the bank on decorating (because unfortunately some of your renters could party a little too hard), make sure to furnish and decorate the space just like a home, and give it a lot of true Nashville spirit.
I’m not a lawyer, and I can’t advise you like one! But I can tell you who to call if you have questions. The Metro Finance Department and the Metro Codes Department are the agencies which are designed to help advice you, and should give legally sound advice. You should be aware that Nashville has recently created a special ordinance to regulate vacation rental properties, called Ordinance 2014-951. The most significant item is that it requires that short-term rentals have a city-provided permit.
While that sounds irritating, the profits of this permit is actually used to support Nashville’s affordable housing program. But that’s not the only headache to look forward to! Nashville requires airbnb and vacation rental owners to be registered as a business so that they can collect sales tax… but also to collect the same ‘hotel tax’ which hotels are forced to levvy on visitors, as well.