The ABCs of Airbnbs

Photo by Milly Eaton

The story made national headlines this past June.  A 29-year-old woman visiting Nashville for a bachelorette party went on a rampage trashing the Airbnb where she was staying with friends.  She told police she “went psycho” after downing two bottles of wine and causing nearly $2,000 in damage. It’s a story that’s been cited by those seeking a crackdown on Airbnbs in Nashville and other cities. 

Worldwide, the market for Airbnbs and STRs (short term rentals) has exploded from $46 billion in sales in 2012 to $83 billion in 2017. After the Great Recession in 2008, many smart folks bought investment properties to rent out as Airbnbs as way to augment their incomes. Nashville, cited as one of Travel and Leisure’s top 15 cities to visit in the US, has seen a steep demand for Airbnbs near downtown that continues to grow.   

Many Nashville residents have understandably sought to cash in on the market demand for STRs but they’ve been met with sharp resistance from neighborhood groups citing loud and disruptive parties held at Airbnb “party houses.”  These critics also say STRs are eroding neighborhoods and exacerbating Nashville’s affordable housing crisis by driving up housing costs.

It’s a battle that’s happening in major cities nationwide, not just in the bachelorette capital of the world. 

So, if you’re thinking about buying an investment property to turn into an Airbnb money maker, here’s the Airbnb situation in Nashville in a nutshell:  in residential areas, owner-occupied Airbnbs are and will continue to be permitted.  No one’s trying to infringe on your rights to use your dwelling as you wish. As long as you’re living there, you can rent out your guest bedrooms. However, the city has instituted a ban on investor or non owner-occupied homes in residential areas that will go into full effect in 2020. My neighbor across the street has an apartment over his garage which he rents out as an Airbnb.  That’s allowed.  What he cannot do is buy another house down the street and rent it out solely as a STR. The city does allow STR complexes in non-residential areas to accommodate visitors and tourists so if you really really want to buy an investment property in Nashville, that’s probably the best way to go about it.  There are many of these complexes sprouting up in non-residential areas across the city.

What’s happening here in Nashville is happening in cities across the country but there are a some cities where the Airbnb business is booming and regulations are much less strict than here, like Dallas, Phoenix, Indianapolis, Cleveland and Louisville and Fort Lauderdale.

Illegal Airbnbs are another problem city officials and law enforcement are not tolerating. So, whether you want to Airbnb your basement or buy an investment condo, make sure you get the proper permits. Your property must be properly zoned and you need a short term rental property permit from the city.