4,897 versus 2,042. As of July 3, 2026, Metro Nashville had 6,939 active short-term rental permits in Davidson County — 4,897 non-owner-occupied (NOOSTR) and 2,042 owner-occupied (OOSTR). Those two numbers describe the same regulatory framework producing two entirely different investments. The permit class you hold — or fail to hold — determines your revenue ceiling, your financing path, your exit strategy, and whether your investment thesis survives the first sale.
Most buyers show up to this decision without understanding the split. They hear "Nashville has STR permits" and assume the question is just paperwork. It is not. The owner-occupied permit and the non-owner-occupied permit are not two flavors of the same thing. They are two different businesses with different zoning eligibility, different operational constraints, different capital structures, and a different answer to the most important question in real estate: what happens when you sell?
The Two Nashville STR Permit Types, Defined
Nashville short-term rentals are governed by Metro Code §6.28 and enforced by the Department of Codes and Building Safety. Every Nashville STR permit falls into one of two buckets: NOOSTR for non-owner-occupied properties and OOSTR for owner-occupied properties. The nomenclature matters because the Metro Codes Department uses these labels in all application materials, enforcement notices, and ordinance language — and if you list before you have a permit in hand, you become ineligible to apply for one for a full year.
Owner-Occupied STR (OOSTR) allows a property owner to rent out their primary residence on a short-term basis when they are present, or rent the entire residence for limited periods when traveling. Non-Owner-Occupied STR (NOOSTR) allows full-time short-term rental operation without the owner residing at the property. NOOSTR permits are the primary target for Nashville Airbnb investors because they enable continuous rental income, professional property management, and portfolio-scale operations.
Same city. Same permit window. Completely different investment.
Who Qualifies — and Who Does Not
The qualification rules are where the comparison gets sharp, and where buyers make expensive assumptions.
For OOSTR, the owner of the property must permanently reside at the property and be a natural person or persons. The owner must be a natural person. LLCs, corporations, trusts, partnerships, and joint ventures are ineligible for owner-occupied permits. That entity restriction matters for anyone who planned to purchase under an LLC for liability purposes — the owner-occupied permit requires you to own the property in your name and live in it. You can only hold one. You may hold multiple non-owner-occupied permits if your properties are in eligible zones, but you may hold only one owner-occupied permit because it is tied to your primary residence.
For NOOSTR, entity ownership is permitted. A non-owner-occupied STR is generally an investment property. The owner does not live there; the property exists solely or primarily as a rental. The owner must designate a local responsible party available within a 25-mile radius of the property. That local contact requirement is enforced — it is not a formality.
Both permit types share some universal rules. There is a hard cap of four sleeping rooms per permit. A home with five or more bedrooms cannot be permitted as an STR. Max occupancy is twice the permitted sleeping rooms plus four, never more than 12. Plan accordingly before you underwrite a five-bedroom property as a six-guest STR.
Where Each Permit Is Actually Allowed
This is the section that determines whether your deal works at all.
OOSTR operates under a broader geographic footprint. Owner-occupied permits are for properties where you live as your primary residence and are allowed in any residential zone. That reach into standard residential neighborhoods — the RS zones, the two-family lots, the older bungalow blocks in East Nashville — is the OOSTR's structural advantage. If you own a home in 12 South or Germantown and want to rent out a detached carriage house or your home while you travel, the zoning path is generally accessible. The operator lives there. The city's concern about neighborhood character is reduced.
NOOSTR is the opposite. New non-owner-occupied permits will only be issued as a use permitted with conditions in MUN and MUN-A, MUL and MUL-A, MUG and MUG-A, MUI and MUI-A, OG, OR20 through OR40-A, ORI and ORI-A, CN and CN-A, CL and CL-A, CS and CS-A, CA, CF, DTC North, DTC South, DTC-West, DTC Central, SCN, SCC, and SCR zoning districts. That list looks long until you map it — it describes the commercial core, downtown Nashville, and mixed-use corridors. The residential streets where most Nashville housing stock sits are excluded.
New non-owner-occupied permits are not permitted in AR2A, R, RS, or RM zoned properties. Existing permit holders in these zoned districts may be eligible to apply for renewals, but those permits are not transferable if the property is sold or transferred. Read that second sentence slowly. An existing NOOSTR in a residential zone can renew — but only while the same owner holds it. The moment the property sells, the permit evaporates.
The Transferability Divide: Where Most Buyers Get Burned
Transferability is the single largest source of mispriced Nashville STR deals.
Permits are annual and non-transferable. They end on sale or any change of ownership entity. This applies to both permit classes. When a Nashville STR sells, the buyer cannot assume the seller's permit — they must apply for a new one. The difference is that a buyer purchasing a property in a NOOSTR-eligible zone (one of the 29 commercial and mixed-use districts listed above) can apply for a new permit. A buyer purchasing a residential-zone property with a grandfathered NOOSTR cannot.
This creates two dramatically different asset types masquerading as one product category. The premium varies by zoning certainty: a property in the 29 NOOSTR-eligible districts commands a different premium than a grandfathered residential-zone NOOSTR with a non-transferable permit. The cap rate Nashville STR buyers apply varies by permit transferability and zoning certainty. Properties with permit-eligible zoning get tighter cap rates and therefore higher valuations than legacy residential-zone NOOSTRs whose permits die at sale.
Buyers who do not understand this distinction overpay for residential-zone grandfathered permits and underpay for commercially zoned properties where new permits remain fully available. Both mistakes are common. Both are expensive. Before you offer on any Nashville STR, pull the parcel's zoning code from Metro's GIS system and confirm permit eligibility directly with Metro Codes. That step takes 20 minutes. Skipping it can cost you the entire investment thesis.
Our team runs STR-specific permit and zoning verification before every offer — it is the first line on our pre-offer checklist, not an afterthought.
OOSTR as an Investment Strategy: The Honest Version of the Math
Owner-occupied permits are not investor permits. That needs to be said plainly. Income from OOSTR is generally lower than NOOSTR because the operator lives at the property and the rental window is constrained. You are renting rooms while present, or renting the whole property during trips. You cannot operate year-round as a pure rental business under an owner-occupied permit because you are required to actually live there.
Where OOSTR makes sense: house-hackers who genuinely occupy the property and want to offset carrying costs; primary homeowners near CMA Fest, NFL Draft, or Tennessee Titans game weekends who can generate meaningful revenue during peak events while treating the property as their actual home; and buyers moving to Nashville who want to explore the market before committing to a full NOOSTR investment.
The appeal for those users is real. Owner-occupied rentals are primary residences. The owner lives there. They can rent out rooms or occasionally the entire home. These are still allowed in most residential areas with a few designated no-STR districts. That residential access is genuinely valuable — you can operate in neighborhoods that are completely closed to NOOSTR, including parts of Green Hills, Belle Meade adjacent streets, and older residential blocks across Davidson County.
If you are relocating to Nashville and considering this strategy, our Nashville relocation team often helps buyers layer an OOSTR play into a primary residence purchase — provided the numbers hold up and the property qualifies in zoning.
NOOSTR as an Investment: Supply-Constrained and Priced Accordingly
NOOSTR is what most investors mean when they say they want a Nashville Airbnb. The 2026 Nashville market is mature with constrained supply because non-owner-occupied permits are frozen in most residential zones. Demand remains strong due to events like CMA Fest and NFL games, but occupancy rates have softened to around 58%.
That supply constraint is the investment case. NOOSTR permits are restricted to specific zoning districts and have not been issued in newly upzoned residential areas since the 2018 split codified by BL2017-608. You cannot build new NOOSTR inventory in most of Nashville. What exists in eligible zones is the pool. New supply in those districts comes from new construction in MUL, MUG, and DTC zones — developments like the townhome projects along the East Bank and River District — and from operators who fail to renew and let their permits lapse.
Of 11,157 NOOSTR permits Metro Nashville has ever issued, 4,897 remain active today. That gap represents operators who exited, sold, let permits expire, or were denied renewal. It also represents the number of residential-zone grandfathered NOOSTRs that burned off at sale over the years. The active pool is not growing materially in residential zones. That is the moat.
Underwriting discipline still matters. Underwriting must be conservative by using a $225 ADR and 55% occupancy base case instead of relying on older peak figures from the 2021–2022 boom. Build your model on those floors, stress-test it against current financing costs, and confirm the zoning before you move toward an offer. The 2026 Costigan Group STR Playbook and Nashville STR Underwriting Calculator walk through exactly this framework.
The Permit Application: What Each Class Requires
Both classes run through the Metro Codes Department at 800 President Ronald Reagan Way. The new online short-term rental permit application process became effective March 11, 2026. The permit is valid for 12 months from the time of approval and may be renewed on an annual basis. The permit fee is $313.00 due at the time your application is approved.
For OOSTR applicants, four documents giving proof of owner-occupation shall be provided. Such documentation of primary residence address must match the deed as recorded with the Register of Deeds office. Adjacent property owners must be notified in writing before the application is filed, and proof of that notification is required.
For NOOSTR applicants, required documentation includes proof of property ownership, proof that the property is not the owner's primary residence, site plans showing the structure and any guest parking, and certification that the property has passed code-compliance inspection. The application typically takes 30 to 60 days from submission to issuance, assuming the inspection passes and the zoning is confirmed eligible. The 100-foot proximity rule also applies to new NOOSTR applications: no new NOO permit within 100 feet of a religious institution, a school or its playground, a park, or a licensed daycare or its playground.
A permit may be renewed each year by submitting a $313.00 permit fee, proof of current property insurance, and proof of Hotel Occupancy Tax payment. That tax obligation applies to both classes. Metro Nashville passed BL2022-1529 to increase the rate of the Hotel Occupancy Tax by an additional 1%. The new levy for the local occupancy tax is 7%, and the nightly fee is $2.50. Add Tennessee's state sales tax and local sales tax on top of that, and the total tax drag on gross revenue is material — model it before you build a cash flow projection.
One rule both classes share that buyers often miss: HOA rules can be more restrictive than Metro regulations. A Metro permit does not override an HOA prohibition. If the property sits inside an association, the master deed and covenants must be reviewed before the permit application is filed. Getting a Metro permit on a condo whose HOA bans STR use is not a win.
The Decision Framework
Here is how we frame the choice for clients evaluating Nashville STR permits:
- You want a pure investment, you will not live there, and you want full rental income year-round: You need NOOSTR. Verify the parcel's zoning against the 29 eligible districts before you offer. If it is not in a qualifying zone, the deal is not an investment — it is a residential purchase with a revenue story attached to it.
- You are buying a primary residence and want to offset costs: OOSTR is designed for you. Understand that you are constrained to living at the property, that your rental window is limited, and that the permit cannot be used by the next buyer when you sell.
- You are evaluating a residential-zone property marketed as an existing Airbnb: Determine immediately whether the current permit is a grandfathered residential-zone NOOSTR. If so, the permit dies at closing. Price the property accordingly — as a residential purchase, not a performing STR business.
- You are buying in a commercially zoned NOOSTR-eligible district: The permit is a renewable asset. The buyer you eventually sell to can apply for a new one. This is the profile where STR income legitimately supports a premium purchase price.
The neighborhood you choose is inseparable from this analysis. Downtown, SoBro, and the East Bank's mixed-use corridors sit in NOOSTR-eligible zones. Most of the residential streets in Germantown, East Nashville, and 12 South do not. The map is the strategy.
Related reading
- Nashville Short-Term Rental Investment
- Nashville STR Permit Guide: What Buyers Must Verify Before Going Under Contract
- STR Permit Transferability Tennessee: What Happens to Your Nashville Permit When Ownership Changes
Frequently Asked Questions
Can I convert an owner-occupied STR permit to a non-owner-occupied permit if I move out?
No. If you move out of a property with an OOSTR permit, you no longer qualify for the owner-occupied classification. You would need to apply for a new NOOSTR permit — and that is only possible if the property's zoning is in one of the 29 NOOSTR-eligible districts. Most residential zones do not qualify for new NOOSTR issuance, so in most cases, moving out ends your ability to operate the property as a short-term rental at all.
Does a Nashville STR permit transfer when the property is sold?
Permits are annual and non-transferable. They end on sale or any change of ownership entity. The buyer must apply for a new permit in their own name. For properties in NOOSTR-eligible commercial and mixed-use zones, the buyer can apply for a new permit after closing. For residential-zone grandfathered NOOSTRs, the permit is gone permanently at sale and cannot be reissued in that zone.
What happens if I list on Airbnb before my Nashville STR permit is approved?
If you list before you have a permit in hand, you become ineligible to apply for one for a full year. Airbnb and Vrbo verify permits before listings can publish , but enforcement also comes from Metro Codes. Operating without a permit triggers fines starting at $50 per day and may disqualify the property from re-applying. The financial penalty is one issue. The one-year application bar is the larger problem.
Can an LLC hold a Nashville owner-occupied STR permit?
The owner must be a natural person. LLCs, corporations, trusts, partnerships, and joint ventures are ineligible for owner-occupied permits. This is not a workaround situation. If the property is owned by an entity, it cannot hold an OOSTR permit regardless of who manages it. NOOSTR permits, by contrast, may be held by entities — which is part of why investors typically use LLCs on NOOSTR properties and hold OOSTR properties in their personal names.
How many sleeping rooms can a Nashville STR permit cover?
There is a maximum of four sleeping rooms per short-term rental property permit. A home with five or more bedrooms cannot be permitted as an STR. The occupancy limit ties directly to this: max occupancy is twice the permitted sleeping rooms plus four, never more than 12. A four-bedroom NOOSTR can host up to 12 guests; a two-bedroom can host up to 8.
Is the $313 permit fee the only annual cost for a Nashville STR permit?
No. The permit fee is the floor. On top of that, operators owe Metro Nashville's hotel occupancy privilege tax — currently set at 7% plus a $2.50 nightly fee effective July 1, 2023 — plus Tennessee state sales tax. Operating costs beyond the permit also include state sales tax registration, business license fees, and any HOA-imposed STR fees if the property sits inside an association. Insurance for short-term rental use is also separately required and is typically priced above standard homeowner coverage.
What if the property I want to buy is in a Specific Plan or PUD zoning district?
Permits for Specific Plan (SP) zoned properties or properties within a Planned Unit Development (PUD) will be issued only if allowed by the SP or PUD. The SP conditions, not the underlying base zoning, govern STR eligibility. This catches buyers in newer mixed-use developments who assume that because the area looks commercial, the STR permit is automatically available. It is not. Confirm the specific SP conditions with the Metro Planning Commission at 615-862-7190 before any offer.
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.
