$40,900. That is the average annual gross revenue an active Nashville Airbnb listing produced over the trailing twelve months ending June 2026, according to AirDNA's most recent market data. The Nashville STR market has 13,898 active listings earning an average of $40,900 per year, with 54% average occupancy and a $349 average daily rate. Now run the costs against it. Most investors do not do this math before they make an offer. That is the mistake.
Airbnb break-even occupancy — the number of booked nights per year required to cover every dollar of fixed and variable expense — is the first calculation that should happen on any Nashville STR deal. Not the revenue projection. Not the cap rate. The break-even. Because if the market cannot reliably deliver the nights you need to cover your cost stack, the rest of the underwriting is fantasy.
This post builds that math from the ground up, using current figures for a realistic Nashville acquisition in mid-2026. Every number is sourced and dated. Pull these inputs for your specific property — and adjust where the comps differ.
Build the Cost Stack Before You Project Revenue
Most STR investors open AirDNA, see a headline revenue figure, and work backward. The smarter move is the opposite: build your full annual cost stack first, then determine how many nights at your target ADR you need to cover it. That is your break-even. Anything above it is profit. Anything below is loss.
Here is what the cost stack looks like on a representative Nashville STR acquisition in mid-2026.
Purchase price and financing. With property values in the Nashville Airbnb market averaging $758,548, investors need to underwrite carefully. For this model, use a four-bedroom townhome in the 37207 zip code — North Nashville, close enough to SoBro for group-travel demand — priced at $700,000, which is consistent with permitted STR product in that corridor. A 20 to 30% down payment is the typical range, with 25 to 30% most common in the 2026 rate environment. At 25% down, the loan balance is $525,000.
Debt service. As of May 2026, DSCR loan rates for Nashville investment properties run approximately 7.00 to 8.50% on a 30-year fixed, depending on FICO band, LTV, and DSCR. At 7.5% on $525,000, monthly principal and interest is approximately $3,671 — or $44,052 annually. That is your single largest line item before a guest books one night.
Property taxes. Davidson County assesses property taxes at approximately $3.254 per $100 of assessed value, and Tennessee residential property is assessed at 25% of the total appraised value. On a $700,000 property: assessed value of $175,000 × $3.254 per $100 equals approximately $5,695 per year. Note: Davidson County's budget process in 2026 has included discussion of a significant property tax increase — confirm the current millage with a CPA before finalizing any model.
Insurance. For urban single-family STRs in Nashville, a full program covering general liability, dwelling, loss of rents, and contents typically runs $1,800 to $3,800 per year. Use $2,800 as a midpoint.
Airbnb platform fee. This one catches investors who have not updated their models since late 2025. On October 27, 2025, Airbnb transitioned to a single-fee model where hosts now pay a 15.5% service fee deducted directly from payouts, while guests see the full booking price with no additional charges at checkout. A $350 nightly booking now yields roughly $296 to the host before any other costs. That is not optional and not negotiable — it comes off the top of every transaction.
Property management. Full-service management — covering cleaning, maintenance, and property care — runs 18 to 40%, with the national average for full-service in 2026 approximately 20 to 25%. At 22% of gross revenue on a $60,000 gross year, that is $13,200. This line scales with bookings, not calendar days.
Permit, compliance, and regulatory overhead. Metro Nashville's STR permit fee is $313 annually. Add Metro-required liability insurance at $1 million minimum per occurrence, Davidson County and city business licenses, and Tennessee business tax registration for operators above $10,000 in gross receipts. Budget $1,500 to $2,000 per year in regulatory costs.
Utilities, supplies, maintenance, and CapEx reserve. For a four-bedroom group-rental property running bachelorette and event traffic — which is the dominant Nashville STR demand profile — budget $8,000 to $12,000 annually. Furnishing replacement, cleaning supplies, smart-lock systems, HVAC maintenance, and the occasional appliance replacement add up faster than first-time operators expect.
The Fixed Cost Floor: $62,000 Before a Single Guest
Add the non-variable annual costs — debt service at $44,052, property taxes at $5,695, insurance at $2,800, permit and compliance at $1,750, and a $8,000 maintenance reserve — and you reach approximately $62,300 per year. That is the floor. The property owes you $62,300 before it earns a dollar of net income.
Variable costs — the Airbnb platform fee, management, and cleaning — consume roughly 37% of every gross dollar booked. That means for every dollar of gross booking revenue, approximately $0.63 is available to cover fixed costs and produce cash flow.
To cover $62,300 in fixed costs at $0.63 per gross dollar, you need approximately $98,900 in annual gross booking revenue to break even.
87 Nights at $392, or Never at $259: What the ADR Band Means
Now convert gross revenue into nights. Best-in-class Nashville STRs command $574 or more per night. Strong performers in the top quartile achieve $392 or more. Typical properties at the median charge around $259 per night. Entry-level bottom-quartile properties earn around $176 per night.
Using the $98,900 break-even gross revenue target:
Top-quartile unit at $392/night: 252 nights needed — 69% occupancy on a 365-day calendar.
Market ADR unit at $349/night: 283 nights needed — 78% occupancy.
Median unit at $259/night: 382 nights needed — mathematically impossible.
The median ADR Nashville property, purchased at $700,000 with standard 2026 financing, cannot break even. The math does not close. Not at 259 nights available per year, and not at any achievable occupancy rate. That is not a pessimistic take — it is arithmetic.
From June 2025 to June 2026, Nashville STR revenue is down 6.1%, ADR is down 6.0%, and RevPAR is down 9.8%, per AirDNA. The rate compression trend has now run three consecutive years. Underwriting that uses today's ADR as a planning assumption — let alone 2022 ADRs — is building the model on sand.
The Break-Even Narrows When You Buy the Right Product Type
The math above does not mean Nashville STR investing is broken. It means average Nashville STR investing, at current acquisition prices and financing costs, is unworkable. The deals that work share a specific profile.
The strongest-performing property type has increasingly become the four-bedroom, four-bathroom STR townhome with rooftop deck, reflecting Nashville's group-oriented tourism economy and the demand for accommodations capable of hosting larger visitor groups. A well-configured unit of this type — professional photography, dynamic pricing calibrated to Nashville's event calendar, and guest amenities that justify premium rates — can realistically command $400 to $500 per night during peak periods.
Strong four-bedroom homes near downtown gross $80,000 to $160,000 or more per year, while average listings earn near $40,000. That spread — $40,000 versus $120,000 — reflects the same market, same permit type, and broadly similar purchase prices. The difference is execution. The investor running a premium, professionally managed unit designed for Nashville's group-travel guest is operating a different business than the investor who bought average and operates average.
At $120,000 gross and 37% variable cost load, net revenue available for fixed costs is approximately $75,600 — covering the $62,300 fixed cost floor and producing about $13,300 in annual pre-tax cash flow. That deal works. It requires purchasing the right unit, in the right zone, and operating it at the top of the market — not the middle.
Understanding where those properties exist in Nashville's zoning landscape — which zones still allow non-owner-occupied permits, which corridors produce the demand profile to hit top-quartile ADR — is the work that precedes the offer. Our team at The Costigan Group's Nashville STR practice runs this analysis before any offer is written.
The Permit Cap Creates a Floor, Not a Ceiling
One structural tailwind for existing permit holders: Nashville's non-owner-occupied STR supply is capped by regulation. New non-owner-occupied permits are banned in nearly all residential zones, with buildable supply locked to specific commercial, mixed-use, and downtown zones. That moratorium on new residential-zone permits, in place since 2022, limits competition growth in the most desirable STR corridors.
The practical effect on break-even math: occupancy for well-located, legally permitted units in the capped zones is structurally protected to a degree that does not exist in markets where supply can grow freely. Active supply in Nashville-Davidson contracted 15% year over year, which partially explains why occupancy has been holding even as ADR compresses. Fewer competitors on the same block means more nights for each unit.
This is also why permit verification — confirming that a non-owner-occupied permit is active, current, and legally transferable on the specific address — belongs in the offer, not after closing. We have covered that process in detail in our STR acquisition playbook, and it is non-negotiable for any Nashville investor who wants their underwriting to hold up.
If you are evaluating Nashville against other Sun Belt markets and trying to understand the Davidson County regulatory picture in context, our Nashville relocation and market overview covers the county-level dynamics that inform every STR investment decision.
Related reading
- Nashville STR Underwriting: The Occupancy Assumptions Smart Investors Use
- The Complete Nashville Short-Term Rental Investment Guide for 2026: Permits, Underwriting, Neighborhoods, and Exit
- Nashville STR Case Study: How We Use Verified DOM and Revenue Data to Prove a Premium
- Airbnb Rating Impact on Revenue: What a 4.6 Rating Actually Costs You in Nashville
Frequently Asked Questions
What is a realistic break-even occupancy rate for a Nashville Airbnb in 2026?
For a typical leveraged acquisition in the $600,000 to $800,000 range, break-even occupancy is commonly 60 to 75% depending on ADR, financing terms, and operating costs. The Nashville market average sits at 54% occupancy across all active listings, per AirDNA's June 2026 data, which means average performance does not cover average costs on a fully leveraged, $700,000+ acquisition. Properties in the top ADR quartile — $392 or more per night — have a materially lower night-count threshold and are the more viable investment target.
How much does Airbnb take from hosts in Nashville now?
Since October 27, 2025, Airbnb transitioned to a single-fee model where hosts pay a 15.5% service fee deducted directly from payouts. This replaced the prior structure where guests paid the majority of the fee. The practical effect is that a $350 nightly booking now yields the host approximately $296 before property management fees, taxes, and operating costs. Build this into your ADR when modeling net revenue.
What operating cost percentage should I use when underwriting a Nashville STR?
Underwriting with 25 to 35 percent operating costs — excluding debt service — and accounting for seasonal dips is a reasonable starting range before trusting any revenue projection. When you layer in the 15.5% Airbnb platform fee plus full-service property management at 20 to 25%, variable costs alone can consume 35 to 40% of gross revenue. Add utilities, maintenance reserves, permits, insurance, and taxes, and a well-built model carries total costs (fixed + variable, excluding debt) at roughly 55 to 65% of gross for a professionally managed unit.
Do Nashville STR property taxes change the break-even math significantly?
Yes. Davidson County assesses property taxes at approximately $3.254 per $100 of assessed value, with residential property assessed at 25% of appraised value in Tennessee. On a $700,000 property, that works out to roughly $5,695 per year — a meaningful fixed cost. Mayor O'Connell's proposed 2026–2027 budget has included discussion of a significant property tax increase in Davidson County; confirm the current millage with your CPA or closing attorney before finalizing your model.
Can I still find a Nashville STR deal that breaks even in 2026?
Yes — but the deals that work share specific characteristics. They are typically four-bedroom, group-travel-configured units in zones where non-owner-occupied permits are legally available. Strong four-bedroom homes near downtown can gross $80,000 to $160,000 or more per year, while average listings earn near $40,000, so the spread between an average and an optimized unit is substantial. The break-even math works at the top of that range. It often does not at the median. Pre-purchase underwriting — not post-offer projections — is the discipline that separates viable deals from expensive ones.
What DSCR loan rate should I use when modeling a Nashville STR purchase in 2026?
As of May 2026, DSCR loan rates for Nashville investment properties run approximately 7.00 to 8.50% on a 30-year fixed, depending on FICO band, LTV, and DSCR. Use the higher end of that range — 7.75 to 8.25% — for conservative planning unless you have a specific lender term sheet in hand. At $525,000 borrowed (25% down on a $700,000 property), the difference between 7% and 8.25% is approximately $450 per month in debt service — which alone shifts the break-even by roughly 18 to 20 nights per year.
What is the biggest mistake Nashville STR investors make when calculating break-even?
Using market-average revenue as a planning assumption. Nashville's active listings earn an average of $40,900 per year at 54% occupancy and a $349 ADR, per AirDNA's June 2026 data — but average revenue does not cover average costs on a leveraged acquisition at current property prices and interest rates. The investors who get hurt are those who anchor on the gross revenue headline without building a complete cost stack first. Start with the break-even number, then ask whether the specific property — at its address, its bedroom count, its ADR potential — can realistically exceed it.
About The Costigan Group
Jack Costigan is the founder of The Costigan Group at Compass in Nashville, where his team has closed more than $100 million in real estate across Greater Nashville and Middle Tennessee. Specializing in luxury advisory, investment, and short-term rental real estate, Jack is known for a data-driven approach that helps buyers, sellers, and investors understand the numbers, the neighborhood, and the long-term value before making a decision. Featured in Apple News as one of Nashville's most sought-after short-term rental advisors, Jack pairs deep local expertise with modern marketing and a strategy-first approach to real estate. Learn more at thecostigangroup.com.
