“To know how to use knowledge is to have wisdom.”
Many of you have called me lately regarding the STR buzz on the news, so I figured I’d hit the basics and high points.
STR stands for Short Term Rental i.e. AirBnb and VRBO, and you need a permit to operate. The county controls the rules and regulations surrounding what kinds of homes are eligible and the steps involved in obtaining a permit that needs to be renewed every 365 days.
It’s no secret that Nashville has become much more attractive to tourists over the past couple years. I grew up here, so I don’t truly understand it, but it’s been good for our economy. For that, I’m grateful. Nashville now surpasses Las Vegas as the most popular location for bachelor/bachelorette parties. In 2018, we boasted 15.2 million visitors, which is a new record and a 5 percent increase from the previous year. This rapid growth started about 5 years ago, and we didn’t have enough hotel rooms to accommodate the demand, making it extremely expensive to stay downtown or close to it.
Enter AirBnb. Now you can get an entire house for the cost of one room downtown, and the owner of the property has the potential to cash flow if managed properly. You can also rent one room in someone’s house for an even more affordable price. Investors see this opportunity, and they flock. They get someone local to manage the logistics of booking and cleaning, and the business runs on autopilot until the government gets involved.
The city taxes and regulates this type of business, and it seems like the rules are always changing. Here’s what you need to know:
1. Owner-occupied permit will be the safest way to go.
There are three types of permits: non-owner occupied, owner occupied, and multi family. The rule changes proposed in June and discussed at council this month deal mostly with non-owner occupied STR’s – restricting them to certain commercial zones, no longer allowing in residential areas – and multi family – only pre-approved complexes can legally operate. The only difference an owner-occupied STR will see is a yearly fee increase to $313.
2. All changes, if passed, will take effect October 1, 2019.
Already have a non-owner occupied STR permit? You’re safe. Continue business as usual, minus the increase yearly fee.
3. Properties in neighborhoods without an HOA will be your safest bet.
Unless we know for a fact that the HOA of a certain neighborhood enjoys and encourages STR, it’s best to invest in a property without one. You’ll still have to send letters to neighbors and ultimately hope they don’t resist, but you won’t have that extra hoop to jump through.
Before purchasing an STR, please go read about the process here. Everything needs to be turned in and approved by Metro Codes at 800 Second Ave S – downtown. My advice is to get down there between 6:30-7 am; they open at 7:30 am, and the lines are always pretty long by the time they open. Be prepared to block off the morning at the very least for this process, and download the QLess App so you can manage your place in line electronically.
Hope everyone is having a fun and safe summer!