The Complete 2026 Guide to Short-Term Rental Investing in Nashville
A Data-Driven Review of 2025 Performance and the Strategic Outlook for 2026
By Jack Costigan, Founder of The Costigan Group at Compass Nashville
Introduction: The End of the Easy STR Era — and Why That’s a Good Thing
By the end of 2025, one thing became clear across the short-term rental landscape: the era of easy wins was over.
This is not a collapse. It is a correction — and more importantly, a maturation.
In the years immediately following 2020, short-term rentals benefited from a rare alignment of forces: suppressed traditional travel, explosive domestic tourism, cheap debt, minimal regulatory clarity, and a rush of new investors chasing headline revenue numbers. Many markets expanded rapidly without ever being forced to prove durability.
That changed in 2024 and crystallized in 2025.
National performance data compiled by AirDNA shows that while demand for short-term rentals remained resilient, supply growth slowed materially and revenue growth normalized. Occupancy compressed modestly. Average daily rates flattened. The market stopped rewarding participation and began rewarding precision.
Nashville, however, did not follow the trajectory of weaker, overbuilt markets.
Instead, it entered a phase where well-positioned assets continued to perform, while poorly underwritten deals were quietly exposed. The difference was not the market. It was the asset, the assumptions, and the execution.
As outlined on our Short-Term Rental advisory page, Nashville is no longer a market where “any legal STR works.”
👉 https://www.jackcostiganrealestate.com/short-term-rental
Success now depends on understanding how the data actually behaves at a local level — not how it looks in marketing decks or topline dashboards.
This guide is written to function as a reference document, not a promotional blog. It synthesizes national STR data, Nashville-specific performance trends, and on-the-ground underwriting experience to answer one question:
How should serious investors be thinking about Nashville STRs heading into 2026?
The National Short-Term Rental Market in 2025: Normalization, Not Decline
The dominant narrative around short-term rentals in 2025 was often framed as a slowdown. That framing is misleading.
According to aggregated performance and outlook data published by AirDNA, the U.S. short-term rental market did not contract in 2025 — it normalized. Supply growth slowed to under five percent year-over-year, a meaningful deceleration from the double-digit expansion seen earlier in the cycle. Demand remained stable across most major metros, particularly those driven by events, business travel, and experience-based tourism.
What changed was not demand itself, but the distribution of demand.
AirDNA’s national reporting shows a widening performance gap between professionally operated listings and casual or opportunistic hosts. Listings with strong branding, intentional design, optimized pricing, and active calendar management consistently outperformed market averages. Meanwhile, properties relying on static pricing or optimistic assumptions underperformed even in otherwise healthy markets.
This distinction is critical. In prior years, market tailwinds masked weak execution. In 2025, execution became visible.
Average daily rates nationally flattened rather than retraced. Occupancy compressed modestly but stabilized. Markets with structural demand advantages continued to outperform those that expanded without clear demand drivers.
AirDNA’s broader short-term rental trend analysis repeatedly emphasizes this shift toward professionalization — a theme that becomes even more relevant when examining Nashville specifically.
Why Nashville Behaved Differently Than Many STR Markets
When national STR data is disaggregated at the metro level, Nashville consistently emerges as a market with durable demand characteristics.
Unlike purely seasonal destinations or pandemic-era boomtowns, Nashville’s demand is diversified across:
Year-round leisure tourism
Major concerts and festivals
Sporting events
Conventions and corporate travel
Relocation-driven short stays
This diversity matters in a normalization cycle. AirDNA’s analysis of experience-driven markets shows that destinations anchored to entertainment and events tend to maintain stronger pricing power and faster demand recovery than markets dependent on a single travel segment.
Nashville fits squarely into that category.
While occupancy in Nashville moderated from peak levels in 2025, average daily rates remained comparatively strong. Listings capable of hosting groups — particularly those within close proximity to downtown, entertainment corridors, and event venues — continued to command premium pricing during compression windows.
This dynamic is often misunderstood when investors look only at annual averages. Nashville is not a market where performance is evenly distributed across the calendar. It is a market where outsized revenue is concentrated in specific weeks and weekends.
Understanding that distinction is foundational to underwriting correctly.
Nashville STR Performance in 2025: What the Data Actually Shows
Market-level performance metrics tracked by AirDNA and corroborated by independent STR analytics platforms reveal several consistent patterns in Nashville throughout 2025.
Occupancy: Compression, Not Collapse
Occupancy in Nashville moderated modestly compared to peak years, but remained healthy for well-located, professionally operated properties. Entire-home listings with layouts designed for group travel continued to outperform smaller, efficiency-style units in both occupancy and revenue per available night.
Importantly, Nashville’s occupancy profile is not linear. Peak demand periods produce near-full calendars at premium pricing, while shoulder and winter months experience softer demand. Investors who underwrote to flat annual occupancy without accounting for this volatility experienced revenue shortfalls — not because the market failed, but because assumptions did.
Average Daily Rate: Nashville’s Defining Advantage
Average daily rate remains Nashville’s primary strength.
Even as national ADR growth slowed in 2025, Nashville listings with strong presentation, modern finishes, and guest-oriented layouts preserved pricing power. Event-driven compression continued to support elevated weekend rates, particularly for properties within easy reach of downtown and major venues.
This pricing resilience aligns with AirDNA’s broader findings that experience-centric markets maintain ADR strength longer than generic leisure destinations during normalization phases.
Seasonality: A Feature, Not a Bug
Seasonality in Nashville is pronounced and persistent.
Spring and fall remain the strongest periods, with October consistently ranking among the highest-performing months for revenue. January and February continue to represent the softest window, reinforcing the importance of conservative winter underwriting.
This is why, as emphasized throughout our Nashville Short-Term Rental strategy, annual averages must be treated cautiously.
👉 https://www.jackcostiganrealestate.com/short-term-rental
Proper underwriting in Nashville does not smooth seasonality away — it models it explicitly.
The Hidden Insight in 2025 Nashville Data
One of the most important takeaways from 2025 Nashville STR data is what appears flat at the surface but diverges meaningfully underneath.
At a high level, year-over-year occupancy and revenue growth looked muted. However, a closer reading of AirDNA’s market-level metrics shows increasing revenue concentration in top-performing assets. In other words, strong listings captured a greater share of total demand, while weaker listings lost ground.
This phenomenon is typical of maturing markets. Demand does not disappear — it becomes more selective.
For investors, this reinforces a critical point: the market will not save a mediocre asset.
Why Asset Selection Now Determines Outcomes in Nashville
By 2025, Nashville’s short-term rental market reached a point where asset selection—not market participation—became the dominant driver of performance.
Market-level data from AirDNA’s Nashville dashboard shows a widening dispersion between top-quartile and bottom-quartile listings, even when controlling for bedroom count and location. In practical terms, this means that two properties operating legally within the same submarket can produce materially different outcomes depending on layout, guest profile, and execution.
👉 https://www.airdna.co
This divergence is a hallmark of maturing STR markets. Demand does not disappear; it becomes selective. Capital flows toward listings that satisfy guest expectations efficiently and away from assets that are merely compliant.
Understanding which property types consistently capture demand—and which ones systematically underperform—is essential heading into 2026.
Condos: High ADR Potential, Structural Risk
Condos occupy a paradoxical position in Nashville’s STR ecosystem.
On one hand, AirDNA market data shows that downtown and near-downtown condos often achieve strong average daily rates due to proximity to entertainment, walkability, and skyline views. On paper, this makes them attractive to investors focused on gross revenue.
👉 https://www.airdna.co
On the other hand, condos introduce non-market risk that is not reflected in STR performance data. HOA bylaws, enforcement discretion, building-level STR caps, and amendment risk materially affect long-term viability. Two identical units in adjacent buildings can have completely different risk profiles based solely on governance structure.
From a performance standpoint, condos that succeed in Nashville tend to share several characteristics:
Explicit, written STR permission at the building level
Low guest friction (elevators, parking, check-in)
Strong visual differentiation (views, finishes, balconies)
Condos that underperform often do so not because of demand weakness, but because operational or regulatory friction suppresses bookings or forces conversion to long-term use.
This asymmetry makes condos a precision asset, not a volume strategy.
Townhomes: The Functional Middle Ground
Townhomes have increasingly emerged as a middle-ground STR asset in Nashville.
Performance patterns observed in AirDNA’s Nashville data indicate that townhomes often strike a balance between ADR and occupancy, particularly when they accommodate group travel and offer amenities such as rooftop decks, multiple living areas, or dedicated parking.
👉 https://www.airdna.co
Unlike condos, townhomes typically carry lower governance risk. Unlike large single-family homes, they can be easier to maintain and operate efficiently. This combination has made them attractive to investors prioritizing risk-adjusted returns over peak revenue.
However, not all townhomes perform equally. Layout efficiency, noise mitigation, and neighbor proximity materially affect guest experience and review velocity—factors that compound over time in STR algorithms.
Single-Family Homes: Resilience Through Utility
Single-family homes purpose-built or adapted for STR use remain the most resilient asset class in Nashville.
AirDNA’s broader analysis of STR trends consistently shows that group-oriented travel remains one of the most durable demand segments nationwide, even during normalization periods. Nashville amplifies this effect due to its event-driven tourism profile.
👉 https://www.airdna.co/blog/short-term-rental-trends
High-performing single-family STRs in Nashville typically offer:
Flexible sleep configurations
Multiple communal spaces
Outdoor areas or entertainment features
Parking solutions compatible with group stays
The defining advantage of single-family homes is optionality. They tend to retain long-term rental and owner-occupant appeal, which materially improves exit liquidity relative to more specialized STR assets.
Layout Economics: Why Sleep Count Matters More Than Bedrooms
One of the most consistent performance signals in Nashville STR data is the outsized impact of effective sleep capacity.
Listings that accommodate more guests comfortably—without compromising quality—capture disproportionate revenue during compression periods. This explains why certain three-bedroom properties outperform four-bedroom competitors with inefficient layouts.
AirDNA’s revenue distribution data illustrates this dynamic clearly: revenue concentration increases around listings optimized for group functionality rather than nominal bedroom count.
👉 https://www.airdna.co
This is a core principle emphasized on our Nashville Short-Term Rental strategy page, where layout efficiency is treated as a primary underwriting variable rather than a cosmetic detail.
👉 https://www.jackcostiganrealestate.com/short-term-rental
Performance Dispersion as a Signal, Not Noise
The widening gap between top- and bottom-performing Nashville STRs in 2025 is not statistical noise—it is a signal.
It indicates that:
Guest expectations are rising
Platform algorithms increasingly reward consistency and quality
Poorly executed listings lose visibility faster
For investors, this reinforces a central thesis: the market no longer compensates for mediocre assets.
This sets the stage for a deeper discussion of underwriting discipline and risk management heading into 2026.
Underwriting STRs in 2026: From Upside Modeling to Failure Analysis
By 2026, effective underwriting begins not with upside, but with downside containment.
Forward-looking research and market commentary from AirDNA indicate that while demand is expected to stabilize and supply growth to moderate, performance dispersion will continue to widen.
👉 https://www.airdna.co/outlook-report
In this environment, underwriting must answer a different question than it did in prior years:
What assumptions break first—and how exposed am I when they do?
Revenue Modeling Beyond Gross Projections
AirDNA’s market dashboards provide valuable revenue benchmarks, but gross revenue is an incomplete metric.
A disciplined Nashville STR revenue model should:
Anchor to median or lower-quartile performance
Adjust ADR assumptions for listing maturity
Separate event-driven revenue from baseline demand
Explicitly model downtime and owner usage
This approach avoids the most common underwriting error: extrapolating top-decile performance without replicable conditions.
As outlined on our Short-Term Rental advisory page, conservative revenue modeling is foundational, not optional.
👉 https://www.jackcostiganrealestate.com/short-term-rental
Expense Normalization and the Illusion of Margin
One of the most persistent gaps between projected and realized STR returns lies in expense modeling.
Industry-wide STR analyses show that professional operators routinely allocate 25–40% of gross revenue to operating expenses, depending on management structure and asset type.
👉 https://truvi.com/blog/short-term-rental-trends
These expenses include:
Turnover cleaning
Consumables and restocking
Utilities
Maintenance and repairs
Management fees
Capital reserves
Models that materially understate these costs produce misleading returns and false confidence.
Financing Sensitivity in a Seasonal Market
Nashville’s seasonality amplifies financing risk.
AirDNA’s analysis of seasonal markets shows that aggressive leverage disproportionately impacts cash flow during shoulder periods.
👉 https://www.airdna.co
Proper underwriting in 2026 should include:
Debt service coverage stress tests
Interest rate buffer scenarios
Month-by-month cash flow modeling
This reinforces a principle central to our Nashville STR framework: leverage magnifies outcomes in both directions.
👉 https://www.jackcostiganrealestate.com/short-term-rental
Exit Strategy as a Core Underwriting Variable
Exit strategy is no longer ancillary—it is integral.
Investors should evaluate:
Long-term rental viability
Owner-occupant resale appeal
HOA flexibility
Conventional financing liquidity
Assets that require peak STR performance to function carry asymmetric downside risk. Assets with multiple viable exit paths provide structural protection.
Common Failure Patterns Still Persisting in Nashville
Despite greater transparency, several failure modes remain common:
Overreliance on gross revenue metrics
Inadequate HOA diligence
Over-leveraging during acquisition
Ignoring seasonality in cash flow planning
These risks are rarely visible in market-level data and must be identified through local analysis.
This is why property-level diligence remains a central focus of our Short-Term Rental advisory work.
👉 https://www.jackcostiganrealestate.com/short-term-rental
The Strategic Case for Nashville STRs in 2026
Looking forward, AirDNA’s forward-looking research suggests that 2026 represents a strategic—not speculative—window for disciplined STR investors.
👉 https://www.prnewswire.com/news-releases/2026-will-be-the-best-year-to-invest-in-short-term-rentals-since-2021-new-airdna-report-finds-302643393.html
For Nashville, this environment favors:
Selective acquisitions
High-quality, flexible assets
Conservative underwriting
Professional operations
Opportunity remains significant, but it is increasingly concentrated.
Conclusion: Nashville STRs in 2026 Are No Longer a Trade — They’re a Discipline
By the end of 2025, the Nashville short-term rental market stopped rewarding enthusiasm and started rewarding competence.
That shift is not a headwind. It’s a filter.
Markets that mature without collapsing reveal their true nature. In Nashville, the data shows that demand did not disappear — it concentrated. Pricing power did not vanish — it consolidated. Performance did not flatten — it diverged.
The implication for 2026 is clear:
success is no longer dictated by timing the market, but by selecting the right asset, underwriting it conservatively, and operating it deliberately.
Investors who approach Nashville STRs as a business — modeling downside before upside, respecting seasonality, validating zoning and HOA risk, and prioritizing layout efficiency over headline metrics — remain well positioned. Those who rely on peak-year screenshots, generic revenue assumptions, or purely legal permissibility do not.
In this environment, Nashville continues to stand apart from many short-term rental markets nationwide. Its diversified demand base, event-driven compression, and global entertainment identity provide structural support that weaker markets lack. But that support is not universal. It flows disproportionately to assets that are designed, priced, and managed with intention.
As detailed throughout this guide and further outlined on our Nashville Short-Term Rental advisory page
👉 https://www.jackcostiganrealestate.com/short-term-rental
the opportunity in 2026 is not speculative. It is selective.
For disciplined investors willing to treat short-term rentals as operating assets embedded in real estate — not as trend-driven yield plays — Nashville remains one of the most compelling STR markets in the country.
Frequently Asked Questions: Nashville Short-Term Rentals (2026)
Is short-term rental investing still profitable in Nashville in 2026?
Yes — but only for well-selected, properly underwritten assets. Nashville continues to show durable demand, but performance is increasingly concentrated among high-quality listings. Mediocre assets no longer get saved by the market.
What occupancy rate should I realistically underwrite for a Nashville STR?
Rather than underwriting to a flat annual average, investors should model seasonality explicitly. Peak months often achieve near-full occupancy, while winter months are materially softer. Conservative underwriting typically assumes below-average occupancy outside compression periods.
Are condos still a good STR investment in Nashville?
Condos can perform well, but they carry elevated non-market risk. Building-level STR permissions, HOA enforcement history, and amendment risk are often more important than location or ADR potential.
What matters more in Nashville: bedroom count or layout?
Layout matters more. Properties that accommodate groups efficiently — with flexible sleep arrangements and strong common spaces — consistently outperform listings with higher bedroom counts but poor functionality.
How important are events to Nashville STR performance?
Extremely important. Nashville’s revenue is heavily influenced by concerts, festivals, sporting events, and conventions. These compression windows drive a disproportionate share of annual revenue and must be modeled correctly.
What is the biggest mistake STR investors still make in Nashville?
Over-reliance on gross revenue projections without normalizing expenses, seasonality, and financing risk. Gross revenue alone is not a proxy for profitability.
How should investors think about exit strategy for STRs?
Exit strategy should be part of underwriting, not an afterthought. Properties that also function as long-term rentals or owner-occupant homes provide materially better downside protection.
Is 2026 a good time to buy a Nashville STR?
For disciplined buyers, yes. Slowing supply growth and stabilized demand favor selective acquisitions. 2026 is a strategic window, not a speculative one.
Do professional operators really outperform self-managed listings?
Consistently. Data shows that listings with active pricing, strong branding, and operational discipline outperform market averages, particularly in competitive environments.
What type of investor should avoid Nashville STRs?
Investors seeking passive income without operational involvement, aggressive leverage, or short-term yield optimization are generally not well aligned with how the market now behaves.
