Thinking about running an Airbnb-style rental or locking in a 12-month lease in Green Hills? You are not alone. Investors are drawn to the neighborhood’s high-end housing and steady demand, but Nashville’s rules and real operating costs can swing your returns. In this guide, you’ll learn the permit basics, the financial tradeoffs, and a Green Hills-specific checklist so you can choose the strategy that fits your goals. Let’s dive in.

Green Hills investing snapshot

Green Hills is an established, upscale Nashville neighborhood where purchase prices often sit in the upper six to low seven figures. High acquisition costs and property taxes shape cash flow, so your revenue model needs to be realistic. The area attracts visitors seeking quieter, design-forward homes near the Mall at Green Hills and the Bluebird Cafe, plus proximity to universities and medical centers. That demand is meaningful, but local rules are the first filter for any short-term rental plan.

Nashville STR rules that drive returns

Permits and the four-bedroom cap

Metro Nashville requires a Short-Term Rental Property permit before you list. The code defines two categories: owner-occupied and not owner-occupied. Both are limited to not more than four sleeping rooms per listing, which caps how larger homes can be marketed. Review the definitions in the Metro code for the clearest summary of categories and limits (Metro Code Title 17).

Non-owner-occupied restrictions in residential zones

New not owner-occupied permits are generally restricted to certain commercial or mixed-use zoning districts. Council actions beginning in 2017 tightened eligibility in single-family residential zones, which cover much of Green Hills (Council minutes on STR actions). If your parcel sits in a typical residential zone, a new absentee-investor STR permit is usually not available.

Active enforcement and appeals

Metro maintains a permit database, conducts inspections, and enforces violations with fines and potential permit revocation. If a permit is denied or cited, cases can go before the Short Term Rental Appeals Board. Assume enforcement is active and ongoing (Metro Codes STR guidance and the STR Appeals Board).

What this means in Green Hills

Because Green Hills is largely residential, most parcels will not qualify for a new not owner-occupied permit. Owner-occupied permits may be possible but are still limited to four sleeping rooms. In practice, regulatory eligibility often decides whether an STR model can work at all.

STR vs lease: how the numbers differ

Revenue potential

Short-term rentals can produce higher gross revenue during peak seasons and major events, because nightly rates can flex with demand. Long-term leases usually generate lower gross, but income is steady and predictable. Always model both paths for the specific property, not citywide averages.

Operating costs you must budget

• STR costs are higher and more variable: platform fees, professional cleanings at each turnover, full furnishings and supplies, owner-paid utilities and internet, and STR management that often takes 15 to 30 percent of gross revenue. Expect more frequent maintenance and faster wear and tear (STR vs renting cost structure).
• Long-term leases carry steadier expenses: management is often 8 to 12 percent, turnover is less frequent, and tenants typically cover utilities depending on your lease terms (short-term vs long-term costs).

Many investors find STR operating expenses can consume 30 to 50 percent of gross revenue, while long-term rentals can run lower, depending on the property and management approach (expense ranges and modeling tips).

Taxes, insurance, and compliance

Short-term rentals are treated as taxable lodging in Tennessee. Operators are responsible for registering and remitting state sales tax and any local occupancy or hotel taxes unless a platform collects under an agreement. Plan for permit fees, inspections, and proof of insurance with appropriate liability coverage (Tennessee tax statutes overview and Metro Codes permit guidance).

Financing and underwriting impact

Lenders often underwrite STRs with different standards. DSCR and specialty STR loans may require higher down payments and can carry higher interest rates. Conventional investment loans are usually stricter on income and reserves. The loan choice changes cash flow, so compare terms and how lenders treat projected STR income versus long-term rent (financing primer).

Which strategy fits your Green Hills property?

• Consider an STR if your parcel is eligible for a permit, you will occupy the property if required, and you have the time or a manager to run a hospitality operation. Build your budget with conservative occupancy, and respect the four-bedroom limit.
• Consider a long-term lease if you want stable income, simpler operations, and a strategy less exposed to regulatory shifts. In high purchase price neighborhoods, many investors find long-term leasing produces steadier net yields after all costs.

Green Hills investor checklist

1) Verify eligibility first

• Confirm zoning and STR permit eligibility with Metro Codes before you buy or list. In most residential zones, new not owner-occupied permits are not available. Owner-occupied permits are capped at four sleeping rooms (permit guidance and code definitions).

2) Review HOA or condo rules

• Many associations restrict transient lodging. Obtain and review CC&Rs and bylaws before assuming an STR is allowed.

3) Build two financial models

• STR model: ADR and occupancy comps, management at 15 to 30 percent, cleanings, utilities, supplies, taxes, insurance, and permit fees. Use conservative occupancy and treat event spikes as upside (cost inputs checklist).
• Lease model: market rent comps, 5 to 8 percent vacancy, 8 to 12 percent management, and a repairs reserve.

4) Plan for permitting and taxes

• Gather insurance documents, schedule inspections, and post your permit number on listings. Register and remit required sales and occupancy taxes. Keep detailed booking and tax records in case of audit (Metro Codes and Tennessee tax overview).

5) Compare financing routes

• Price conventional investment loans against DSCR or STR-specific options. Model rate, down payment, and how each lender counts rental income in underwriting (STR financing overview).

6) Design an exit plan

• If STR rules change or a permit is revoked, can the property perform as a long-term rental at your target yield? In a high-cost area like Green Hills, protect your downside with a lease-ready backup plan.

7) Be a good neighbor

• Build noise, parking, and response protocols into your operating plan. Metro enforcement often starts with complaints, and you must provide a local contact who can respond quickly (enforcement and appeals info).

Final take

Regulation is the gating factor in Green Hills. If your property is not eligible for a new not owner-occupied permit, an STR may not be feasible. Even when eligible, STRs demand higher operating budgets, active management, and tax compliance. Long-term leases usually deliver steadier income with less complexity, which can be attractive in a high purchase price neighborhood.

If you want help evaluating a specific address, modeling cash flow, or sourcing a property that fits your strategy, reach out to the local advisors at Corcoran Reverie. We’ll help you align permit eligibility, financials, and design potential so you can invest with confidence.

FAQs

Can I run a non-owner-occupied STR in Green Hills?

• In most residential zones, no. New not owner-occupied permits are generally restricted, and owner-occupied permits are limited to four sleeping rooms under the Metro code.

What is the bedroom limit for Nashville STR permits?

• Both owner-occupied and not owner-occupied STR permits are capped at four sleeping rooms per listing under Metro’s zoning code.

How are STRs taxed compared with long-term leases in Nashville?

• STRs are treated as lodging, so you must register and remit state sales tax and any local occupancy taxes; long-term leases are not subject to those lodging taxes.

What costs make STRs more expensive to operate?

• STRs typically include platform fees, frequent professional cleanings, full furnishings and supplies, owner-paid utilities, and higher management fees, plus permit and tax compliance.

Which financing options work for STR purchases?

• Many investors use DSCR or specialty STR loans that accept projected STR income but often require higher down payments and may carry higher rates than conventional loans.