Are short-term rentals still profitable in Nashville?

Yes, when deals are underwritten conservatively, legally compliant, and structured for long-term durability rather than short-term hype.

Why do so many STR deals fail after purchase?

Most failures come from unrealistic revenue assumptions, regulatory exposure, or poor asset selection — not management alone.

Is AirDNA reliable for underwriting?

AirDNA is a starting point, but experienced STR underwriting requires conservative assumptions, local context, and downside modeling.

What zoning matters most for Nashville STRs?

Clear non-owner-occupied eligibility and enforceable zoning language are critical to long-term STR success in Nashville.

Should STR investors prioritize appreciation or cash flow?

Operational cash flow and deal durability should come first. Appreciation is a bonus, not a strategy.

The Nashville STR Deals I’m Saying No To — and Why That Matters More Than the Ones I Say Yes To

Dec 30

Written By Jack Costigan

Why Killing Bad Deals Is the Most Important Part of My Job

Most people assume my value as a short-term rental–focused Realtor® in Nashville comes from finding great STR deals.

That’s only partially true.

The real value I provide — especially in today’s market — is killing bad deals before they ever make it to the closing table.

In the post-2020 rush, short-term rental investing rewarded enthusiasm. Deals worked even when underwriting was sloppy, assumptions were aggressive, and long-term risks were ignored. That era is over.

In 2026, saying yes is easy.
Saying no is the skill.

I reject far more Nashville STR opportunities than I approve. That discipline isn’t hesitation — it’s experience. And for investors considering short-term rentals in Nashville, that filter matters more than deal volume ever could.

For a full breakdown of how STR zoning, underwriting, and deal selection work in this market, our complete Nashville Short-Term Rental Guide lives here:
👉 https://www.jackcostiganrealestate.com/short-term-rental

The Difference Between “Looks Good” and “Actually Works”

Nearly every STR deal I review looks good at first glance.

Optimistic AirDNA projections
Strong peak-season revenue comps
Attractive photos and marketing
A sense of urgency baked into the pitch

But STR success is not driven by marketing. It’s driven by math, structure, regulation, and survivability.

The question I ask on every deal is simple:

Does this property still work when something goes wrong?

If the answer is no, the deal stops there.

1. Deals That Only Work in a Best-Case Scenario

This is the most common reason I say no.

If a Nashville STR only pencils when:

ADRs outperform historical averages
Occupancy stays elevated year-round
Expenses remain flat
Competition doesn’t increase
Regulations stay static
Management execution is flawless

…it isn’t an investment. It’s a fragile model.

Professional underwriting assumes friction:

Softer shoulder seasons
Rising operating costs
Increased local competition
At least one underperforming year

If a deal breaks under conservative assumptions, it doesn’t move forward. Upside is optional. Downside protection is not.

2. “NOO” in Name, but Risky in Reality

Not all non-owner-occupied (NOO) STRs carry the same risk profile.

I routinely reject deals involving:

Weak or ambiguous HOA language
Buildings where enforcement depends on the current board
Developments marketed as “STR-friendly” without airtight documentation
Condo regimes where investors lack voting control

If STR legality depends on interpretation, sentiment, or lack of enforcement — I’m out.

This is why zoning clarity and enforceable eligibility are foundational to any Nashville STR investment strategy. We break this down in detail inside the Short-Term Rental Guide here:
👉 https://www.jackcostiganrealestate.com/short-term-rental

The best STR assets are boring from a legal standpoint — and that clarity compounds returns.

3. Deals That Rely on Appreciation Instead of Performance

Any time a deal is pitched like this:

“Even if it breaks even, appreciation will make it worth it…”

…it’s a red flag.

That’s not an STR strategy — it’s speculation wearing an Airbnb costume.

The deals I approve are structured to:

Stand on operational performance
Absorb soft years without stress
Improve through optimization
Function independently of appreciation

If appreciation happens, great.
If it doesn’t, the deal still works.

4. Instagram-Optimized Properties That Underperform in Reality

Design matters — but not the way most investors think.

I say no to properties that are:

Over-designed but under-functional
Fragile under real guest use
Difficult or expensive to clean
Built for photos instead of stays

The highest-performing STRs in Nashville balance:

Durable finishes
Smart layouts
Efficient turnover
Broad guest appeal

Instagram doesn’t pay the mortgage. Guests do.

5. Micro-Markets That Have Already Been Over-Extracted

Not every STR-legal area is still a good investment area.

Some Nashville pockets expanded too quickly. Supply grew faster than demand. Differentiation disappeared. Pricing pressure followed.

I actively avoid markets where:

New STR inventory continues to flood in
ADRs are compressing year over year
Listings are largely interchangeable
Long-term defensibility is weakening

Location selection today is about future survivability, not current hype.

6. Deals I Wouldn’t Personally Own

This is my final filter — and the most important one.

If I wouldn’t feel comfortable:

Holding the property through a down year
Owning it without perfect management
Defending the purchase five years from now

…I won’t recommend it to a client.

My reputation compounds slower than commissions — and I protect it accordingly.

Why Most STR Buyers Never Get This Filter

Most investors never see how many deals should be rejected — because most advisors aren’t incentivized to say no.

Saying no:

Takes more time
Requires conviction
Reduces short-term volume
Demands experience

Anyone can find deals.
Very few are willing to kill them.

Who This Matters Most For

This approach is especially important if you are:

A first-time STR buyer in Nashville
A high-income professional investing passively
An investor prioritizing durability over hype
Someone who cares more about outcomes than ownership

If that’s you, the filter matters more than the funnel.

Final Thought

The short-term rental market didn’t disappear.
It matured.

And in mature markets, judgment beats enthusiasm every time.

If you’re actively evaluating STR opportunities, start with our full Nashville Short-Term Rental Guide for zoning, underwriting, and deal strategy:
👉 https://www.jackcostiganrealestate.com/short-term-rental

Jack Costigan is a top-producing Realtor® and founder of The Costigan Group at Compass Nashville, specializing in short-term rental, investment, luxury, relocation, and residential real estate across Greater Nashville and Middle Tennessee. Known for his data-driven strategy, modern marketing approach, and high-touch client experience, Jack advises homeowners, professionals, and investors on identifying and executing high-performing real estate opportunities.