Rental arbitrage in Nashville means leasing apartments or houses on long-term leases, then listing them as short-term rentals on Airbnb, VRBO, and direct booking sites. You pocket the difference between your monthly rent and your STR revenue. Nashville is one of the strongest arbitrage markets in the Southeast — the city pulled in over 15 million visitors in 2024, bachelorette parties flood Broadway every weekend, and average nightly rates for a well-positioned 2-bedroom sit between $175 and $265 depending on the season. That’s the kind of spread that makes the math work.
But Nashville also has some of the most specific STR permit regulations in the country. Get those wrong, and you’re shut down before your first guest checks in. This guide breaks down everything: the numbers, the neighborhoods, the permits, the landlord conversations, and the startup costs — so you can launch a Nashville arbitrage operation that actually cash flows.
What Is Rental Arbitrage in Nashville?
Rental arbitrage is the business model where you lease a property from a landlord, furnish it, and rent it out nightly or weekly on platforms like Airbnb. You don’t own the property. You don’t need a mortgage. You need a willing landlord, a permit from Metro Nashville, and enough capital to furnish and launch the unit.
Why Nashville specifically? Three reasons.
First, the demand floor is absurdly high. Nashville isn’t seasonal the way beach towns or ski resorts are. Between live music, NFL Sundays, SEC football weekends, CMA Fest, bachelorette parties (Nashville hosts an estimated 17 million bachelorette trips annually according to Nashville Convention & Visitors Corp data), and a booming corporate relocation scene — there’s year-round booking pressure.
Second, the rent-to-revenue ratio still works. Average monthly rent for a 2-bedroom in desirable neighborhoods runs $1,800 to $2,400. A well-optimized STR in the same unit can gross $3,200 to $5,500 per month. That’s real margin.
Third, Nashville’s tourism infrastructure keeps expanding. The new Metro Nashville convention center expansion, Oracle’s massive campus, and continued population growth (Nashville added 100+ people per day for the last decade) all feed the machine.
I’ve seen arbitrage operators in Nashville clear $1,500 to $3,000 per door in profit. Not revenue — profit. That said, the operators who fail almost always fail on permits or landlord relationships. We’ll cover both.
Nashville STR Market Overview (2026)
Here’s what the Nashville short-term rental market looks like right now, based on AirDNA market data and Metro Nashville permit records:
| Metric | Nashville Average (2026) |
|---|---|
| Average Daily Rate (ADR) | $189 |
| Occupancy Rate | 68% |
| Average Monthly Revenue (2BR) | $3,847 |
| Active STR Listings | ~6,200 |
| Median Monthly Rent (2BR) | $2,100 |
| Revenue-to-Rent Ratio | 1.83x |
That 1.83x ratio is what makes Nashville viable. Anything above 1.5x means the arbitrage math can work after expenses. Below 1.5x and you’re grinding for pennies.
For context, here’s how Nashville stacks up against other popular arbitrage cities:
| City | ADR | Occupancy | 2BR Monthly Rev | Rev-to-Rent Ratio |
|---|---|---|---|---|
| Nashville | $189 | 68% | $3,847 | 1.83x |
| Austin | $201 | 62% | $3,739 | 1.56x |
| Savannah | $172 | 71% | $3,664 | 2.14x |
| Charleston | $195 | 69% | $4,037 | 1.79x |
| Denver | $178 | 64% | $3,418 | 1.42x |
Nashville sits in a sweet spot: high enough ADR to generate real revenue, strong enough occupancy to keep cash flowing, and rents that haven’t ballooned to the point where the spread disappears.
What’s Driving Nashville’s STR Demand?
Nashville isn’t a one-trick pony. The demand drivers are diverse, which protects you from any single source drying up:
- Tourism — 15.2 million visitors in 2024, spending $8.1 billion (per Nashville Convention & Visitors Corp)
- Bachelorette/bachelor parties — Nashville is the #1 bachelorette destination in the U.S., driving weekend bookings year-round
- Live music & events — CMA Fest, Bonnaroo (nearby), NFL games, SEC football, concerts at Bridgestone Arena and Ryman Auditorium
- Corporate travel — Oracle, Amazon, AllianceBernstein, and healthcare companies (HCA, Community Health Systems) bring steady midweek bookings
- Relocation scouting — Nashville has been a top-5 relocation destination for six consecutive years. People visit before they move
This diversity of demand is why Nashville occupancy stays above 65% even in the “slow” months of January and February. Compare that to a beach market that drops to 35% in winter.
Arbitrage Viability Score: The Nashville Math
Before you sign a lease, you need to run the numbers. Here’s how I evaluate Nashville arbitrage deals — and how our 10XBNB students are taught to analyze markets.
The Core Formula
Monthly Profit = Gross STR Revenue − (Rent + Utilities + Cleaning + Supplies + Platform Fees + Insurance + Permit Costs)
Let’s run a real Nashville scenario:
| Line Item | Monthly Amount |
|---|---|
| Gross STR Revenue (68% occ × $189 ADR × 30 days) | $3,856 |
| Platform Fees (3% host-only) | −$116 |
| Net Revenue | $3,740 |
| Monthly Rent | −$2,100 |
| Utilities (electric, water, internet, streaming) | −$285 |
| Cleaning (avg 8 turnovers × $95) | −$760 |
| Supplies & Consumables | −$120 |
| Insurance (STR liability) | −$85 |
| Permit Costs (annualized) | −$42 |
| Monthly Profit | $348 |
$348 per month on a conservative estimate. That’s the floor with average numbers. Here’s where it gets interesting.
Top-performing Nashville arbitrage operators don’t earn average numbers. They earn above-average numbers by optimizing three levers:
- Dynamic pricing — Using tools like PriceLabs or Beyond Pricing to capture $350-500/night during CMA Fest, NFL weekends, and New Year’s Eve. One CMA Fest weekend can add $1,200+ to your monthly revenue
- Direct bookings — Cutting platform fees from 3% to 0% on repeat guests. Even 20% direct bookings saves $90/month
- Cleaning efficiency — Negotiating volume rates with cleaning crews. At 12+ turnovers/month, $95 drops to $75
With those optimizations, realistic monthly profit per unit jumps to $800-$1,800. I’ve talked to Nashville operators running 5-8 doors clearing $6,000-$12,000/month total. That’s not a side hustle anymore.
Top 5 Nashville Neighborhoods for Rental Arbitrage
Location selection in Nashville will make or break your arbitrage business. Not every neighborhood allows non-owner-occupied STR permits, and not every area with permits has strong enough demand. Here are the five neighborhoods where the math, the permits, and the demand all align.
1. East Nashville
East Nashville is the sweet spot for arbitrage. It’s close to downtown (10-minute drive, rideshare-friendly), has a thriving local scene that guests love, and rents are still reasonable compared to the urban core.
- Average 2BR Rent: $1,850-$2,200
- STR Revenue Potential: $3,400-$4,800/month
- Walkability: High — Five Points, Lockeland Springs, restaurants, bars, coffee shops all walkable
- Tourist Appeal: Strong. Guests love the “local Nashville” vibe vs. staying right on Broadway
- Permit Availability: Limited — check Metro Nashville’s active permit map before signing any lease
East Nashville works especially well for the “Instagram-worthy” listing aesthetic. Think exposed brick, mid-century furniture, record players. That vibe books at a premium here.
2. The Gulch
The Gulch is Nashville’s upscale urban neighborhood. It’s walkable to Broadway, loaded with high-end restaurants, and attracts a guest profile that books longer stays and leaves better reviews.
- Average 2BR Rent: $2,400-$3,100
- STR Revenue Potential: $4,200-$5,800/month
- Walkability: Excellent — one of the most walkable neighborhoods in Nashville
- Tourist Appeal: Very high. Walking distance to honky-tonks, restaurants, Bridgestone Arena
- Permit Availability: Extremely limited in residential zones. Most Gulch STR permits are in condo buildings with HOA approval
The higher rent in The Gulch means tighter margins on paper, but the ADR here runs $220-$280/night. If you can lock down a unit with a willing landlord and building management, this is a premium play.
3. 12 South
12 South is Nashville’s trendy boutique neighborhood. Draper James, Barista Parlor, and some of the most photographed murals in the city live here. Guests who want a curated experience (and are willing to pay for it) gravitate to 12 South.
- Average 2BR Rent: $2,000-$2,600
- STR Revenue Potential: $3,600-$5,200/month
- Walkability: Moderate-high along the 12 South corridor
- Tourist Appeal: Strong — particularly for couples and smaller groups
- Permit Availability: Limited. Many residential streets have hit permit caps
12 South tends to attract a slightly different guest than Broadway-area listings. These guests spend more per night, treat the property better, and leave 5-star reviews more consistently. Lower damage, lower stress.
4. Germantown
Germantown is Nashville’s oldest neighborhood, sitting just north of downtown. It’s a mix of historic homes, new construction, and a restaurant scene that rivals anywhere in the city.
- Average 2BR Rent: $1,900-$2,500
- STR Revenue Potential: $3,500-$5,000/month
- Walkability: High — walkable to Nashville Farmers’ Market, Bicentennial Capitol Mall, and downtown
- Tourist Appeal: Strong. Close to downtown without being in the chaos of Broadway
- Permit Availability: Moderate. Some blocks have availability, others are capped
Germantown is great for guests attending Titans games (short walk to Nissan Stadium) and corporate travelers who want a neighborhood feel close to the office towers.
5. Midtown / West End
Midtown sits between Vanderbilt University and downtown. It’s central, it’s got Centennial Park (with the full-scale Parthenon replica), and it draws a mix of tourists, visiting parents, and music industry professionals.
- Average 2BR Rent: $1,800-$2,300
- STR Revenue Potential: $3,200-$4,600/month
- Walkability: Moderate — depends on the specific block
- Tourist Appeal: Good. Centennial Park is a draw, and you’re 10 minutes from everything
- Permit Availability: Varies by zone. Research specific addresses before committing
Midtown’s advantage is pricing. Rents run lower than The Gulch or 12 South, but you still capture strong booking volume. Margins can be wider here even if top-line revenue is slightly lower.
Nashville STR Regulations & Permits
This is where Nashville gets serious. Metro Nashville has one of the most structured STR permitting systems in the country, and it’s been evolving since the city first started regulating short-term rentals in 2015. Get this wrong and you’re operating illegally — which means fines, permit revocation, and potential lease termination.
Here’s the current regulatory framework as of 2026. Always verify with Metro Nashville Codes Department before making any decisions.
Permit Types
Nashville uses a tiered permit system:
- Type 1 (Owner-Occupied) — The homeowner lives on the property and rents a portion (spare bedroom, accessory dwelling unit). Easier to obtain, fewer restrictions. Not relevant for most arbitrage operators unless you’re house hacking
- Type 2 (Whole-Home, Not Owner-Occupied) — This is the permit type arbitrage operators need. You’re renting the entire property to guests while the owner (landlord) doesn’t live there. These are the permits Nashville has restricted most aggressively
- Type 3 (Non-Owner-Occupied, Multi-Unit) — For properties with 3+ units. Similar to Type 2 but for larger buildings. Requires landlord cooperation and building-level compliance
The Non-Owner-Occupied Permit Moratorium
Nashville has placed moratoriums on new non-owner-occupied STR permits (Type 2) in many residential neighborhoods. This means certain areas are completely closed to new arbitrage operators.
Before you even start looking at apartments, check Metro Nashville’s interactive STR permit map to see which zones still accept applications. If a zone shows “at capacity” or “moratorium,” don’t waste your time.
This moratorium actually creates an advantage for operators who already hold permits or who find properties in zones that are still open. Reduced supply means less competition and stronger pricing power.
Permit Requirements
To obtain a Nashville STR permit, you’ll need:
- Written landlord consent — Your landlord must provide a signed letter authorizing STR use
- Property safety inspection — Fire extinguishers, smoke detectors, carbon monoxide detectors, proper egress
- Liability insurance — Minimum $1 million commercial general liability
- Permit fee — $313 initial application plus annual renewal
- Tax registration — Davidson County hotel/motel tax registration (6% occupancy tax collected from guests)
- 24/7 contact person — Someone who can respond within 60 minutes to any neighbor complaints
Enforcement
Nashville takes enforcement seriously. The city has a dedicated STR enforcement team that:
- Monitors Airbnb, VRBO, and Booking.com for unpermitted listings
- Responds to neighbor complaints
- Issues fines of $50/day for operating without a permit
- Can revoke permits for repeated violations (noise, parking, capacity limits)
Operating without a permit isn’t a gray area in Nashville. It’s a risk that isn’t worth taking. The fine structure escalates, and your listing platforms will eventually delist you. For a full state-by-state breakdown of STR laws, see our Airbnb regulations guide.
Landlord Culture & Negotiation Tips
Nashville landlords fall into three categories when it comes to arbitrage. Understanding which type you’re dealing with saves massive time.
The Three Types of Nashville Landlords
- Already STR-aware (15-20%) — They know what arbitrage is. Some already have tenants doing it. These landlords want higher rent (10-20% premium) and proof of insurance. Straightforward negotiation
- Open but cautious (40-50%) — They’ve heard of Airbnb but haven’t considered allowing it. They’re worried about property damage, noise complaints, and neighbor issues. Your job is to address those concerns with specifics
- Hard no (30-40%) — Corporate property management companies, risk-averse individual landlords, or properties in HOA-restricted buildings. Don’t waste energy here. Move on
The Landlord Pitch Script
When you find a property you want, here’s how to approach the landlord conversation. This script has been refined by dozens of 10XBNB students operating in Nashville:
“Hi [Landlord Name], I’m interested in leasing your property at [address]. I run a professional short-term rental business — I furnish properties to a high standard, maintain them better than typical long-term tenants, and keep them occupied through platforms like Airbnb and VRBO.
Here’s what I can offer you:
- I’ll pay 10-15% above market rent
- I carry $1 million in commercial liability insurance naming you as additionally insured
- I handle all maintenance, cleaning, and guest management — your phone never rings
- I’m happy to sign a 12-18 month lease with the option to renew
- I have an STR permit application ready to file with Metro Nashville
I’d love to set up a time to walk through the property and show you examples of how I’ve set up other units. Would [day/time] work?”
Two things that help close Nashville landlords specifically: showing them your listing photos from other properties (proof you maintain units well), and offering to name them as additional insured on your liability policy. That second one removes their biggest objection.
Startup Costs for Nashville Arbitrage
Here’s what it actually costs to launch a Nashville arbitrage unit. These numbers come from real operator data, not theoretical estimates. For a deeper breakdown, check our Airbnb startup costs guide.
| Expense Category | Budget Range | Notes |
|---|---|---|
| First Month’s Rent | $1,800-$2,400 | Due at lease signing |
| Security Deposit | $1,800-$2,400 | Usually equal to one month’s rent |
| Last Month’s Rent | $0-$2,400 | Some landlords require, many don’t |
| Furnishing (2BR) | $4,500-$7,500 | Beds, linens, kitchen, living room, decor |
| Professional Photography | $150-$350 | Non-negotiable. Bad photos = bad bookings |
| STR Permit Application | $313 | Metro Nashville fee |
| Commercial Liability Insurance | $800-$1,200/year | $1M minimum coverage |
| Smart Lock + Tech Setup | $250-$400 | Keyless entry, noise monitor, WiFi upgrade |
| Initial Supplies | $300-$500 | Toiletries, cleaning supplies, welcome basket |
| Business Setup (LLC) | $300-$600 | Tennessee LLC filing + operating agreement |
| Total Startup Cost | $10,211-$18,063 | Average: ~$13,500 |
That $13,500 average is realistic for a well-furnished 2-bedroom in Nashville. You can go cheaper by sourcing furniture from Facebook Marketplace and estate sales (Nashville has incredible estate sales), but don’t cut corners on the mattress, linens, or photography. Those three things drive reviews, and reviews drive bookings.
Most Nashville arbitrage operators break even on startup costs within 3-4 months and start profiting from month 5 forward. If your numbers don’t show breakeven by month 6, the deal probably isn’t strong enough. Should you set up an LLC for your Airbnb business? Almost always yes — especially when you’re signing commercial leases.
Seasonal Demand Patterns
Nashville’s demand curve is more stable than most STR markets, but there are clear peaks and valleys. Smart operators use dynamic pricing strategies to capture maximum revenue during peak periods and maintain occupancy during slower months.
Month-by-Month Breakdown
| Month | Demand Level | Avg Occupancy | Key Events/Drivers |
|---|---|---|---|
| January | Low | 52% | Post-holiday lull, cold weather |
| February | Low-Medium | 56% | Valentine’s weekend spike, Nashville Predators hockey |
| March | Medium-High | 67% | Spring break, SEC Tournament, warming weather |
| April | High | 74% | Nashville Cherry Blossom Festival, Nashville Film Festival, patio season starts |
| May | High | 76% | Kentucky Derby overflow, Mother’s Day weekends, graduations |
| June | Peak | 82% | CMA Fest ($350-500/night), summer tourism surge |
| July | High | 78% | 4th of July events, continued summer demand |
| August | Medium-High | 71% | Back-to-school slowdown, Vanderbilt move-in |
| September | High | 75% | NFL season starts (Titans), Americana Music Festival |
| October | High | 77% | Fall foliage, football season, perfect weather |
| November | Medium | 64% | CMA Awards, Thanksgiving travel, football |
| December | Medium | 61% | Holiday travel, NYE spike ($300-450/night on 12/31) |
Strategic Pricing Insights
The operators I know who crush it in Nashville all do the same thing during low season: they don’t panic-discount. Instead, they:
- Offer midweek discounts (15-20%) — Captures corporate travelers and digital nomads who are flexible
- Open up 7-night minimums at a 25-30% discount — Fills dead gaps with one booking instead of chasing nightly guests. Consider mid-term rental strategies for extended stays
- Cross-list on Furnished Finder and Zillow — Captures travel nurses and relocating professionals who book 30-90 day stays during slow months
The key insight? Nashville’s “low season” (January-February) still runs 52-56% occupancy. That’s higher than many markets’ peak season. You’re not surviving winter in Nashville — you’re just earning a bit less.
How 10XBNB Students Succeed in Nashville
Nashville is one of the most popular markets among 10XBNB students, and for good reason. The combination of strong demand, reasonable rents, and year-round booking pressure makes it an ideal market for both first-time and experienced arbitrage operators.
What separates 10XBNB students from hobbyist hosts?
Market selection methodology. Shaun Ghavami teaches a data-driven approach to market analysis that goes beyond “Nashville seems popular.” Students learn to evaluate revenue-to-rent ratios, regulatory risk, demand diversification, and competitive saturation — all before signing a lease. That analytical foundation is why our students consistently outperform market averages.
Operational systems from day one. The difference between a $348/month unit and a $1,800/month unit isn’t luck. It’s systems: automated messaging, dynamic pricing configuration, cleaning crew management, strategic pricing for events, and guest experience optimization. 10XBNB students implement these systems before their first guest arrives.
The landlord approach. We covered the pitch script above, but 10XBNB goes deeper. Students learn how to build landlord relationships that lead to second and third properties — because a landlord who trusts you with one unit will hand you their entire portfolio if you perform.
Nashville is a market where preparation directly correlates with profitability. The operators who do the work upfront — permits, pricing strategy, furnishing quality, listing optimization — consistently outperform those who wing it.
Ready to learn the complete system? Explore the 10XBNB program and see how students are building portfolios of 5, 10, even 20+ doors using rental arbitrage.
Frequently Asked Questions
Is rental arbitrage legal in Nashville?
Yes, rental arbitrage is legal in Nashville — but it requires a Metro Nashville STR permit. You need either a Type 1 (owner-occupied), Type 2 (non-owner-occupied), or Type 3 (multi-unit) permit depending on your setup. The city has placed moratoriums on new non-owner-occupied permits in certain residential zones, so you must verify permit availability for your specific address before signing a lease. Operating without a permit carries fines of $50/day and potential listing removal. Check current availability at Nashville.gov’s STR page.
How much can you make with rental arbitrage in Nashville?
A well-optimized 2-bedroom Nashville arbitrage unit grosses $3,200-$5,500 per month in STR revenue. After all expenses (rent, cleaning, utilities, insurance, supplies, platform fees), monthly profit typically ranges from $350 on the conservative end to $1,800+ for optimized operators. Key variables: neighborhood, dynamic pricing, occupancy management, and event-based rate adjustments. Top operators running 5+ units clear $6,000-$12,000/month in total profit.
What neighborhoods in Nashville are best for rental arbitrage?
The top five neighborhoods for Nashville arbitrage are East Nashville, The Gulch, 12 South, Germantown, and Midtown/West End. Each offers a different risk-reward profile — The Gulch has the highest ADR but highest rent, while East Nashville and Midtown offer wider margins. The critical factor is permit availability, which varies block by block. Always check Metro Nashville’s interactive permit map before selecting a neighborhood.
How much does it cost to start rental arbitrage in Nashville?
Total startup costs for a 2-bedroom Nashville arbitrage unit range from $10,200 to $18,000, with an average around $13,500. This includes first month’s rent, security deposit, furnishing ($4,500-$7,500), STR permit ($313), commercial insurance (~$800-$1,200/year), professional photography ($150-$350), smart lock setup ($250-$400), and initial supplies. Most operators reach breakeven within 3-4 months. Read our full startup costs breakdown for detailed budgets.
Do Nashville landlords allow rental arbitrage?
Roughly 15-20% of Nashville landlords are already familiar with arbitrage and will negotiate terms (usually 10-15% above market rent). Another 40-50% are open but need education and reassurance — particularly around insurance, property care, and noise management. The remaining 30-40% are firm no’s (mostly corporate property managers and HOA-restricted buildings). Success in getting landlord approval comes down to your pitch: offer above-market rent, name them as additional insured on your $1M liability policy, and show photos of how you’ve maintained other units. Our full landlord approval guide walks through the entire conversation.
What permits do I need for an Airbnb in Nashville?
You need a Metro Nashville Short-Term Rental Property permit. For rental arbitrage (where you don’t own the property), you’ll need a Type 2 (non-owner-occupied) or Type 3 (multi-unit) permit. Requirements include: written landlord consent, property safety inspection, $1 million commercial liability insurance, $313 application fee, Davidson County occupancy tax registration, and a designated 24/7 contact person. Permit processing takes 4-8 weeks. Some residential zones have moratoriums on new Type 2 permits.
Is Nashville a good market for Airbnb in 2026?
Nashville remains one of the strongest STR markets in the Southeast for 2026. The city draws 15+ million visitors annually, has diverse demand drivers (tourism, music events, NFL, corporate travel, bachelorette parties), and maintains year-round occupancy above 60% even in the slowest months. The revenue-to-rent ratio of 1.83x makes the arbitrage math viable. The main challenge is permit availability — Nashville’s regulatory environment limits supply, which actually benefits permitted operators by reducing competition and supporting pricing power. See our 2026 best Airbnb markets analysis for how Nashville compares to other top cities.
Nashville rewards operators who do their homework. The permit process is real, the landlord negotiations take effort, and the furnishing budget isn’t trivial. But the numbers work. A city that attracts 15 million visitors a year, hosts world-class events nearly every month, and has a rent-to-revenue ratio above 1.8x is a market worth building in. Do the work. Run the numbers. And if the math checks out — sign the lease.
For more on getting started with rental arbitrage, read our complete rental arbitrage guide or explore the pros and cons before committing. If you’re evaluating Nashville against other Tennessee markets, our Tennessee Airbnb guide covers the full state.
