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Nashville real estate
Apr 17, 2021 03:39PM

https://www.granthammond.com

2020-12-14T17:06:59Z

Airbnb Stock IPO and Nashville

Nashville airbnb stock ipoIn the weeks leading up to the Airbnb stock IPO, bookings in Nashville were recovering from a disappointing Spring and Summer season due to the Covid-19 pandemic. And yet, Nashville Airbnb owners were excited about the initial public stock offering and were debating about how much to participate. An optimistic discussion followed, speculating on where the stock price would settle after the first full day of Nasdaq trading. Most guessed that the stock price would settle in the $80-$90 range with a few pushing triple digit predictions. What happened next was nothing short of unbelievable.

Airbnb shares opened on the Nasdaq Thursday at $146 apiece, more than double its $68 IPO price and valuing the company at more than $100 billion. The stock closed at nearly $145, which means Airbnb is now worth more than Marriott, Hilton and Hyatt combined. Let that settle in.

Why Nashville was Bullish on Airbnb Stock IPO

2020 hasn?t been the best year in history to own and operate a Nashville Airbnb, but it was by no means the worst city for short term rental owners. According to AllTheRooms Analytics, Nashville bookings have been down 27% year to date, but have been steadily recovering since April. Also recovering since April are nightly room rates. Rates dipped to a historical low $126.71 per night in April, but quickly recovered to pre-pandemic numbers by July when nightly rates average $201.22. By October nightly Airbnb rates climbed to $217.48, a rate higher than the same period in 2019. All of this added up to the optimism that Airbnb?s stock IPO would not only be successful, but very successful. Nashville had seen the turnaround and had become a believer.

What this Means for the Future

Validation. Over the last 24 hours it has become clear that Wall Street shares Nashville?s belief that the entire travel and hospitality sector is in the midst of a fundamental shift in how people travel. Not just the bridesmaids and bro trips, but for family vacations and for business travelers. As we analyze Nashville short term rental histories, we have seen an 11% rise in business and convention related bookings over the last 24 months. This includes the Covid-19 period of March-present. Nashville has been on the leading edge of that shift and will continue to do so as companies seek to provide experiential and immersive travel for their conferences.

At the time of publishing, there are 5,247 short term rental permits active in Nashville. This is down from 5,955 permits just 10 months ago as many causal hosts shifted focus to long term rentals or simply sold their properties. Why sell your property? The Nashville real estate market has been white hot blasting up 12% year over year. Primary residence buyers have driven this market just as they have in other markets. But, do you know which property segment has seen the least amount of growth? New construction short term rentals. March through September were virtually flat until a modest 1.4% gain in October followed by a 2.7% gain in November. If you have been waiting for the bottom of the market to buy an investment property, it appears you missed it as September was the last month of flat price growth. However, there is still time to grab a deal before they are gone. Remember, Nashville Airbnb prices follow bookings. Not just the number of bookings, but the gross dollar amount so be sure to follow the nightly rental rate metrics. This leads industry professionals to predict a rather significant value increase for Airbnb properties in the not too distant future.

Where to Buy a Nashville Airbnb

downtown nashville investment propertiesIt?s no secret that the closer to Broadway, the better. If you cannot be walkable to Broadway, then you need to be within a $10 Uber radius and if you can get a skyline roof top view, your bank account will thank you. At the moment, only Muse Nashville is selling units that are walkable to Broadway and we don?t see another significant development on the horizon until 2023 that would offer similar walkability. Muse only has a handful of units remaining to sell with an October 2021 completion date.

Your Nashville Backup Plan

When downtown isn?t an option, you need to buy within a $10 Uber radius of Broadway and you need to buy a purpose-built, well zoned property to avoid any issues with neighbors and permitting. Never compromise on the quality of the property and only buy a property that you would book in another city. Don?t get pioneering and never buy in an area that ?might be up and coming if X, Y or Z happens?. There are several developers in town who have taken this advice to heart and have designed and built amazing income properties. Lyric at Cleveland Park, Brio West End, Catalyst Vanderbilt are just a few that come to the top of mind.

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Be sure to see all of our Nashville Airbnb short rental properties and new construction developments. We update this list weekly to help you find non-owner occupied eligible Airbnb investment properties in Nashville.

Grant Hammond

Broker, ABR, SFR ePRO

Call/Text:
(615) 945-7123

Contact Grant Hammond
First
Last
Nashville airbnb stock ipo
Airbnb Stock IPO and Nashville
In the weeks leading up to the Airbnb stock IPO, bookings in Nashville were recovering from a disappointing Spring and Summer season due to the...
Continue Reading
mortgage deferment versus forbearance
Loan Forbearance, Deferment or Modification
Melinda Bailey, a career commercial banker, spent 45 minutes in studio answering questions about the appropriate uses for loan forbearance, loan deferment and loan modification...
Continue Reading
short term rental acronyms
Short Term Rental Acronyms
As the market for Nashville short term rental properties grows so do the short term rental acronyms we use to describe those properties. It?s not...
Continue Reading

2020-04-23T23:11:53Z

Loan Forbearance, Deferment or Modification

mortgage deferment versus forbearanceMelinda Bailey, a career commercial banker, spent 45 minutes in studio answering questions about the appropriate uses for loan forbearance, loan deferment and loan modification in Nashville. Melinda explained the advantages and consequences of each and gave her professional advice on how to work with your bank. This Real Estate Experts Podcast was recorded on Wednesday April 8th, 2020 at 8am. You can listen to this episode on iTunes, on Spotify and everywhere you find your podcasts.

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Grant: Today, Melinda Bailey joins the show. Melinda is a 30-year veteran of the banking industry and is the senior vice-president for commercial lending at a large regional bank. Melinda, thank you for joining us.

Melinda: Grant, thank you for having me this morning.

Grant: There’s something particularly important I want to talk to you about. Lately on social media, there is a meme that says “forbearance is not forgiveness” that is spreading like wildfire. Let’s talk about the difference between forbearance, deferment and modification. What is forbearance?

Melinda: Forbearance is a way to extend a loan when you are truly in a position that you cannot make your payment. It is typically for a span of six months. It’s considered a downgrade in credit when a borrower sees that there’s no way that they’re going to be in better shape within six months. So, the banker has to downgrade the credit risk that’s tied to the credit and do a little bit more documentation than you do on a 90 day deferment. It’s more of a credit rating and reporting than what?s required for a deferment or a modification.

Grant: Forbearance is not a strategic way to not pay your mortgage at the moment. This is a close to last ditch effort to save your property?

Melinda: Exactly. This is forbearance and then it goes into troubled debt restructuring. That is first before we go into a TDR or we go into the foreclosure process. So, again, even in the current conditions, it’s just a mechanism that we have to rate the credit based on the current borrower’s financial situation and guarantors. Right now, what we are dealing with is deferment. Deferment is a 90-day situation because of the pandemic. We feel like a lot of the borrowers are guarantors will hopefully be in an upward swing after this 90-day cleanse and our country will be back into a healthier situation.

Grant: A deferment is likely the correct instrument or the correct method for delaying current payments. What happens to those payments? Do they get paid in a lump sum after 90 days or does it get added to the end of the loan?

Melinda: Typically, deferred payments are added to the end of the loan. Each commercial note has a balloon mechanism. Now, this is not mortgages, these are commercial notes that have usually 5-year maturities or 10-year maturities. And those payments are added at the end. It would be added at your balloon payment. And that’s what the document will say when we send out the deferment modification document for you to sign.

Grant: A lot of people think that deferment is the same thing as modification, where payments are just added to the end of the loan. What is the difference between deferment and modification?

Melinda: A modification is extending the maturity date and we are not doing that. Modification means if you were to mature on April 4th, 2020, then we change the maturity to be July 4th, 2020. We’re not doing that. We’re simply going to add the principal balance and the interest that we’re deferring for those three months into that lump sum due at the original maturity date.

Grant: Let’s talk about the paperwork that’s required for a deferment versus a modification. How do you go about qualifying for or papering a deferment versus a modification?

Melinda: A deferment is based on the current COVID-19 virus. It is where you call me and say, hey, due to this virus and losing tenants or the business because of it, you are impacted and not able to make your payments. You will send me an email and we will then go in and do either an interest only deferment or a principal and interest deferment for 90 days. A modification must go through the underwriter and it’s typically based on – – for example, you’re doing a new construction project and workers are deemed nonessential and you can’t continue to work on that project. That is going to, of course, extend out that project time. At that point, we would do a different type of loan. We would not do a deferment, per say, but we would go in and modify the maturity date because you can’t get framers there to frame the project. It is going to push building out three more months. I had a client who recently got hit by the tornado. They were building a six-story building in Germantown and the tornado destroyed the fifth floor. And so, after the adjuster and engineers went out there, they said, yes, you’re going to have to rebuild the entire fifth floor. They wrote a letter saying that they needed six additional months extending their loan because it would take about three to six months to rebuild the fifth floor and delay the original construction timeline. That makes sense. So, at that point we went in and modified the note and extended out the maturity date for six more months.

Grant: That makes sense. And that takes quite a bit of time to go through that underwriting process to do the modification. How long does it take from the time that you request a deferment to the time that you are granted a deferment?

Melinda: For us, it’s instantaneously right now. You send me an email; I have to add a memo. I send it to my assistant who puts it into our lending platform system, it’s automatically flipped over and goes to approval, which is automatically done. We are doing those quickly and then it’s into document prep and it’s a one-page e-sign document within three to five business days after I get your initial email. I am trying to work on those as quickly as possible.

Grant: On deferment, you said that it can be either an interest deferment or a principal and interest deferment. How do you determine that?

Melinda: Great question. I really try to be proactive in speaking with my clients and see what is really deemed necessary at this time. We realize, as a bank, that this is going to be a year long problem. We realize that it could take months before you start to see cash flow and that you probably have to step back because if you’re a restauranteur, you’re going to have some cash outlay incurred before you can even see people coming back in to have dinner. And so, we look at that on a case-by-case basis and see if you could do interest-only for a few months. If this doesn’t get better, then come back. Let’s talk again and we’ll go into the P&I deferment. We rely on that interest income to survive ourselves. It’s a balancing act. I know a lot of folks have the misconception that “run and get it now” or the banks are not going to give it to you. And that’s just not the case. The bank is here as a partner for you, but we must also make sure because borrowers and guarantors are our tenants. We have to make sure that we position ourselves to be here for you throughout the rest of the year as well. It’s a discussion. Let’s walk through this process. Again, we recognize in 90 days this is not all going to disappear, and we are all making money again. It’s going to be a cycle and we want to be here for through entire the cycle for the remainder of the year.

Grant: There’s a lot of misinformation out there as well. And there are also a lot of people who theorize that if you take a deferment or a modification, that you will not be able to get a mortgage or a new loan for the next five years. How do you guys really treat it if someone needs to take a deferment or get a modification?

Melinda: I think that is a misconception. I do think that if you ask for a deferment and then you come back three months later with a fantastic opportunity and you want financing; I do think that that will be a little bit of a cloud. I think we must go way and above to explain why you took the deferment and why now you have the capability to buy something new. Because we do not get paid the principal or the interest. Let’s say you take the P&I deferment, we, the bank, end up eating the loss because we don’t see it until your maturity date, which could be two years, five years, seven years down the road. It could be very tricky if you are wanting to come back later on and ask for a loan.

Grant: So, you get an asterix put next to your name?

Melinda: Not so much an asterix, but it will be asked did this client take a deferment in 2020. I know there’s situations that you have to, I get it. And you may come out of this and at the end of the year, you find something that you can afford, and you’ve got the cash – – it’s going to take a lot more documentation. If you can avoid it and you can make it through this period or you can wait until June or July and it just isn’t better – – but you put in some of your own cash first to try to make it. It looks a little bit more favorable. But it is what it is. We understand it’s a pandemic issue. It is a worldwide issue. And we are here to be partners because we are. It’s just kept in mind that if you think you might want an extension of credit in the commercial world, it will be asked if you took a deferment.

Grant: The media likes to vilify banks and especially lenders and paints you guys as a villain. Why do you think that is?

Melinda: Have you watched dirty money? They don’t do the banks any favors, that’s for sure.

Grant: I know you guys are truly partners in the community, though. There are restaurateurs, there are little hardware shops, there are mom and pop shops all over Nashville that would not be able to exist without regional banks. For whatever reason that does not get out there into the world.

Melinda: Honestly, our politicians do not help us any at all either, especially with the Frank-Dodd Act and some of the things that happened in ’09 and ’10. The banks were the bad people. There are different levels of banking and it’s just truly understanding those different levels. But we have learned a lot. We have come a long way. It is a relationship. I feel I have great relationships with all my guarantors and borrowers and I have really tried over the last 30 years to make it a win-win situation for both the bank and the borrower.

Grant: What do you feel is going to happen in the credit markets later this year? For us, we are predicting a little bit of a summer bump where we’re having an amazing summer, but also then falling off, not a cliff, but falling off slowly but surely as fall and winter set in. Do you guys see the same thing happening with the availability of credit in the commercial world?

Melinda: Yeah, I think commercial will get very tight this year. I think it will be hard to lend, especially on larger credits. I feel the banks will ask for more cash in the deals, as we did in ?08, ?09 and ?10 when we were coming out of the great recession. I do think that we will see a lot of tightening up through the end of this year and probably the first and second quarters of next year until we see how we come out of this. As you mentioned with restaurant owners operating businesses that are taking a hit this time along with the real estate owners – – it will be interesting. I think a lot of folks want to get out their house and are already planning their next trip. But then I think there are a lot of consumers that will not have the funds to do that. And, you know, I don’t know if businesses are going to bounce back as quickly as some people think they might.

Grant: I have learned a few new things about myself and one of those is that I really enjoy sitting in a loud restaurant with food in front of me, having a tasty beverage, I?ve really missed that experience.

Melinda: Yes, I agree, I do too. I miss the social part. I think we’ve realized we’re even more social than what psychologists have deemed us to be. However, I do think the middle class has taken a huge hit with this pandemic and that has probably taught them to save even more and to go back to basic values of eating at home and enjoying the simple things in life. And so, I don’t know if there will be a lot of consumer spending in the next 12 months.

Grant: Do you think that banks will start to acquire each other as a result of a little bit of a downturn in commercial lending? Is this an opportunity to consolidate or do you think new banks will form?

Melinda: I think that could happen. What we have struggled with here in Middle Tennessee with smaller banks is the deposits. Deposits fund loans and they tie relationships even tighter to the bank and to the relationship manager. And in ’09 and ’10, when we were coming out of the great recession and Nashville was really booming these last five years, banks were just like, go put the loans on the book, go put the loans on the book. And then as the markets trended up and we went into an inverted yield curve last year, deposits became very, very important. And we still had a huge loan demand. It put some banks into having a very large issue. And those banks are more vulnerable to have to merge to keep the doors open. For example, Reliant buying First Advantage, which was a smaller bank in Clarksville. The sweet spot is to try to get over 15 billion and then you can get away with some regulations through the Frank-Dodd Act. So, yes, I do think we will see a few of those mergers continue to happen as regulations will probably tighten even more after this.

Grant: So, it’s a race to 15 billion in deposits?

Melinda: Total assets.

Grant: I would say that’s a lot of billions.

Melinda: Yeah, it is. That is where banks get a little relief in the reporting and the regulations and in the way that they must reserve capital.

Grant: Is the PPP loan through the CARES Act a better alternative to forbearance, modification, or deferment?

Melinda: It can be. Deferment is for real estate investors or operating businesses to defer their loan. The PPP is specifically for payroll to keep people employed, interest expenses and other business related expenses to help the business owner stay alive so that when we get through this, they can reopen their doors and not file bankruptcy. It is a great program that President Trump has put together to help small business owners.

Grant: Have you guys done a bunch of those yet?

Melinda: We have. We have a great team of folks that worked many, many hours ever since they announced this to put together a solid platform to help our clients. And we rolled that out Monday. I have been super impressed, and it has gone very well so far.

Grant: How quickly do you think those PPP loans will get funded?

Melinda: Once they get approved, they will have funding within two to three days. It’s super quick. And I am again, extremely impressed with the third-party company that we went through to help us with our SBA loan requests for these PPP loans.

Grant: So, if you are a restaurateur or you own a small brick and mortar retail, the PPP loan is what you want to get first?

Melinda: Yes. And you need to go to the bank that you have your operating account through. That is very, very important.

Grant: Call your banker immediately and find out what your options are?

Melinda: Yes, exactly.

Grant: Times are different, and unemployment has spiked. The market has lost a lot of value. People are certialy not showing you the best parts of their personality. How are you guys handling that?

Melinda: We’re trying to be as empathetic as possible, transparent in telling the borrower that we are trying to do our best to help them and just having a good civic and moral backbone to get through it. It’s all that we can do at this point.

Grant: Lots of patience.

Melinda: It does take patience. I believe that the folks I have worked with have the wherewithal, the work ethic, and the morality to get through this. And I just try to reiterate that through the conversations I have with them.

Grant: This highlights the reason why you want to have a banking relationship. Having an actual banker for times like this becomes a saving grace.

Melinda: Absolutely.

Grant: Alright Melinda, this has been highly informative and a little bit intense. Let’s end on something fun. Tell us something we do not know about you. Like, are you a famous artist in your free time??

Melinda: No, I have no other great qualities – – I love to bowl. I have a decent bowling average.

Grant: Nice. You are a bowler?! I didn’t know that!

Melinda: Yeah, I once had a 192 bowling average.

Grant: Whoa. Average?

Melinda: Yes.

Grant: Oh, my gosh! I don’t know that I’ve ever had a 192 game! Oh, my gosh. You know I lived in the north for a while, so we were in Michigan, we lived in New York, I was born in Pittsburgh. And bowling is a thing in the north. I don’t think people realize that indoor sports reign king up there. I got decent at bowling, but 192, that’s amazing!

Melinda: When my kids were little, my husband and I needed something to do on a Saturday night and the bowling alley was great. My parents bowled in a league with us and the kids would either – – they had a little playroom, or they would hang out with us. And we did that for many, many years and I still keep it up and I enjoy it. It’s so competitive and it’s fun and great people too. And so, yeah, I enjoy it.

Grant: Wow, so not only are you my number one pick in my commercial lending draft, you are now my number one pick in my fantasy bowling draft!

Melinda: Ha ha ha, funny!

Grant: Melinda, thank you so much for coming by the studio today. Do you think you can come back in a couple of months and give us a quick update?

Melinda: I would love to. I hope that this helps somebody.

Grant: It absolutely is going to help clear up forbearance versus deferment versus modification. Let’s talk soon.

Melinda: Thanks Grant.

Listen to the Entire Podcast

Grant Hammond

Broker, ABR, SFR ePRO

Call/Text:
(615) 945-7123

Contact Grant Hammond
First
Last
Nashville airbnb stock ipo
Airbnb Stock IPO and Nashville
In the weeks leading up to the Airbnb stock IPO, bookings in Nashville were recovering from a disappointing Spring and Summer season due to the...
Continue Reading
mortgage deferment versus forbearance
Loan Forbearance, Deferment or Modification
Melinda Bailey, a career commercial banker, spent 45 minutes in studio answering questions about the appropriate uses for loan forbearance, loan deferment and loan modification...
Continue Reading
short term rental acronyms
Short Term Rental Acronyms
As the market for Nashville short term rental properties grows so do the short term rental acronyms we use to describe those properties. It?s not...
Continue Reading

2020-01-12T18:42:00Z

Short Term Rental Acronyms

short term rental acronymsAs the market for Nashville short term rental properties grows so do the short term rental acronyms we use to describe those properties. It?s not uncommon for me to send the following text message to a fellow agent: ?Do you have a NOO STR coming in GT with a possible DADU for a 1031 client coming next month? This means that I?m looking for a non-owner occupied eligible short term rental in Germantown with a possible detached accessory dwelling unit for a client who has a 1031 tax exchange they?d like to use to purchase the property. It good to keep up with these acronyms and I?ll add to this list as more acronyms become part of our everyday lexicon.

Commonly Used Short Term Rental Acronyms

STR: Short term rental
STRP: Short term rental permit
STR PM: Short term rental property manager (management)
NOO: Non-owner occupied also not-owner occupied
OO: Owner occupied
PUD: Planned unit development
HPR: Horizontal Property Regime
DADU: Detached accessory dwelling unit
Z: Zoning of the property
1031: 1031 tax exchange
DD: Due diligence
EM: Earnest money aka Trust money

I maintain a comprehensive list of short term rentals for sale, most of which, are NOO STRs for investors.

Grant Hammond

Broker, ABR, SFR ePRO

Call/Text:
(615) 945-7123

Contact Grant Hammond
First
Last
Nashville airbnb stock ipo
Airbnb Stock IPO and Nashville
In the weeks leading up to the Airbnb stock IPO, bookings in Nashville were recovering from a disappointing Spring and Summer season due to the...
Continue Reading
mortgage deferment versus forbearance
Loan Forbearance, Deferment or Modification
Melinda Bailey, a career commercial banker, spent 45 minutes in studio answering questions about the appropriate uses for loan forbearance, loan deferment and loan modification...
Continue Reading
short term rental acronyms
Short Term Rental Acronyms
As the market for Nashville short term rental properties grows so do the short term rental acronyms we use to describe those properties. It?s not...
Continue Reading

2019-12-31T21:37:06Z

Summary of Short Term Rental Laws

new short term rental laws2019 was the busiest on record in Middle Tennessee for the creation and passage of short term rental laws in Nashville.

The Nashville Metro Council led that push with 7 Bills introduced, 4 of which are still pending and will be voted on in 2020. The city of Franklin, with a push from their Downtown Neighborhood Association, also updated their zoning code. As more and more municipalities begin to update their zoning code, it?s important to stay connected with industry leaders who closely follow these changes.

Newly Passed Short Term Rental Laws in Nashville

Earlier this year, the previous Council tackled BL2019-1633, the so-called ?RM Ban Bill?. This was a hotly contested Bill introduced by CM Allen and subsequently amended by CMs Henderson, Hagar and Johnson. It was a piggyback Bill to the original legislation passed 2 years earlier in BL2017-608 that effectively banned non-owner occupied STRs in residential zoning in Nashville.

On October 1st, 2019 the new Metro Council was seated and they immediately made their intention to focus on short term rentals in Nashville clear by filing 2 Bills. This was followed by 2 more Bills at the 4th meeting and a more significant Bill proposed at the 6th meeting on December 17, 2019.

Substitute BL2019-6: If a person is found to be operating a short term rental without a permit, there shall be a minimum of 1 year before you can apply for a new STR permit. If a person is found to be operating a short term rental with an expired permit, there shall be a minimum of 6 months before you can reapply for a STR permit. This is a large departure from the previous law where you had the ability to appeal to the Board of Zoning Appeals and they, at their sole discretion, could penalize you for a much shorter period. Many times owners forget to renew their permits and would appear before the BZA to plead their case. This Bill effectively ends that leniency. So, make sure you renew your STR permit on time and NEVER operate your rental without a permit. For those who do, we have consistently seen 3 year bans. The substitute Bill introduced by CM Henderson passed with 26 votes.

Pending Short Term Rental Laws 2020

BL2019-7: this is a clean up Bill that helps clarify which units in two-family zoning districts (most commonly called HPRs or duplexes) are eligible for STR permits. This typically occurs in R6, R8, R10 and R20 zonings. If two-family dwelling units are owned by different persons, and each unit is the primary residence of the corresponding owner, then each owner may be issued a separate owner-occupied STR permit. No more than 2 permits may be issued per lot for these two-family dwelling units, and only 1 permit may be issued per dwelling unit. If both units are owned by 1 person, you are still allowed to obtain 1 owner-occupied STR permit. There are no non-owner occupied permits available. This Bill was introduced by CM O?Connell and we deem it to be fair based of the reinterpretation of BL2017-608. However, CM O?Connell has deferred it to the March, 2020 meeting. According to CM O?Connell?s own newsletter, ?I’ll be deferring my bill allowing owner-occupied STRPs in duplexes for a few months to allow me time to meet with the Coalition for Nashville Neighborhoods and to get an important update on data from Host Compliance from Codes.? What?s troubling is the Coalition for Nashville Neighborhoods is an anti-STR lobbying group. John Summers, who leads the group, is a controversial ex-Council member who still holds influence over certain current members.

BL2019-78: proposes to add a minimum distance requirement for any new non-owner occupied STR permit. This requirement is nearly identical to the same restriction on retailers who sell alcohol and tobacco products. The Bill states, ?No new STRP permit shall be issued to an applicant whose location is less than 100 feet from a religious institution, a school or its playground, a park, or a licensed day care center or its playground. The Bill goes on to say that STRs may be exempt from the minimum distances if an owner applies for an exemption and metro Council votes in the affirmative with 21 or more votes (out of a possible 40). This Bill was proposed by CM Sledge who appears to be attempting to make it more difficult to obtain new permits in certain South Gulch developments. The Bill was differed to the February 4, 2020 meeting.

Commentary and opinion: this proposal states that it?s in reaction to the ?the negative secondary effect associated with the sale and consumption of beer near churches, schools, daycares, and parks.? However, upon reviewing all of the complaints in Host Compliance, I cannot find a single complaint filed by a church, school, daycare or park. Further, there are no sales of alcohol permitted in short term rentals. Granted, people are free to consume alcohol in STRs, but now the city is attempting to legislate tourist behavior while they visit Nashville. This is a very slippery slope. I would hope that CM Sledge reconsiders this Bill prior to February. If this Bill makes it to the public hearing, I suspect there to be a large opposition present.

BL2019-79: addresses only owner-occupied short term rentals and would require owners to reside onsite at all times the property is being used as an STR. The owner is also not be permitted to be temporarily absent from the dwelling unit for longer than 15 consecutive hours within any 24 hour period while the property is being used as an owner-occupied STR. Additionally, other than for two-family residences under common ownership, owners will not be allowed to advertise the availability of all bedrooms within the property. In other words, owner-occupied rentals can no longer be whole home rentals. This Bill was proposed by CM O?Connell who has long been active in supporting additional STR legislation. The Bill, was also deferred to the March 3, 2020 meeting.

Commentary and opinion: I cannot see any way on God?s green earth to enforce this proposed legislation. It would take hundreds of enforcement officers making visits to all owner-occupied short term rentals every 15 hours to ensure the owner of the property was present. While we understand and support the intent of the Bill (to guarantee owner-occupied STRs are truly owner-occupied), we disagree this the path to successful enforcement. This appears as yet another stab in the dark at ways to regulate short term rentals while ignoring the enforcement proposals real estate professionals collectively made to Council during the BL2019-1633 process earlier this year.

BL2019-111: this Bill affects both owner-occupied and non-owner occupied properties by proposing more than 40 new zoning districts which prohibit all short term rentals. This Bill proposes to take all current zonings (except for R, RS and DTC) and create a new suffix of ?NS? which means No Short term rentals. The Bill was proposed by CMs Parker, Toombs and Sledge and was deferred to the February 4, 2020 meeting.

Commentary and opinion: this Bill is scary. If passed as written, this Bill would give CMs a laser scalpel tool to be able to deny the short term rental use from nearly every zoning at their whim. I see this as a major infringement upon property owner rights and a massive departure from the rules as originally written in BL2017-608. The result is likely that no new short term rentals will be built if a parcel requires a rezoning. It will also artificially inflate the value of currently operating STRs in zoning that does not have the new ?NS? suffix (Note: this will not affect existing properties or currently operating STRs and Council cannot rezone a property without the owner?s written consent). Additionally, this is the 2nd STR Bill proposed by freshmen CM Parker who is a self-acclaimed Democratic Socialist. Having researched this party and Sean Parker, I find them and him to be quite dangerous to those who believe in our free market economy. Having read the posts on their Facebook page, they and he appear to be a half step short of Communism by openly advocating for a systematic transformation of the economy from capitalism to socialism. I don?t think we want Putin making the rules for the city of Nashville. Giving someone like Mr. Parker a laser scalpel tool will be very dangerous and will likely damage Nashville?s economy. I suspect there will be a sizable opposition group present at the February 4 meeting should this Bill hit the floor as proposed.

How To Get Involved in the STR Legislation Process

It’s crucial that you make your voice heard. All too often the vocal minority is the loudest voice. CMs (Council members) typically cast their votes based on who has their ear.

Email all Metro Council members (using the email address CouncilMembers@nashville.gov). Ask them to vote NO on these bills.

Email, call, and set up meetings with your individual council member. Get personal: share how these bills will impact you and ask them to vote NO.

Unsure of who is your district?s council member: Look up your council member (click on their name for full contact info)

Join NASTRA, the Nashville area short term rental association.

Finally, attend the public hearing. This is crucial. All Bills have a public comment period during the 2nd reading.

Safe Bets on Nashville Short Term Rentals

Nashville short term rentalsThere are several STR developments under construction that will not be subject to many of the newly proposed laws. If you are risk adverse, you may want to consider one of the following:

Lyric at Cleveland Park
Muse Downtown Nashville
The Nations, furnished townhomes
Hendrix Nashville

Grant Hammond

Broker, ABR, SFR ePRO

Call/Text:
(615) 945-7123

Contact Grant Hammond
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2020-01-02T21:24:06Z

Short Term Rental Laws in Middle Tennessee

middle tennessee short term rental lawsThe short term rental laws in Middle Tennessee are changing, and fast. As you likely know, many cities and municipalities around the country have and are currently updating their short term rental laws. Middle Tennessee is no exception as city leaders attempt to forge a delicate balance between property rights and regulation. If you are considering a short term rental property investment, it?s important to keep up with the laws and trends in not just your target city, but also the surrounding areas. It?s also important to make a distinction between laws for owner-occupied versus non-owner occupied short term rentals.

Davidson County Short Term Rental Laws

Belle Meade: banned all short term rentals in all zonings in September 2018. This ban is heavily enforced and owners found in violation are fined $50/day plus court costs per State Law. Belle Meade defines a short term rental as any period less than 30 days.

Berry Hill: updated their rules to allow owner and non-owner occupied rentals in January 2018. To be considered an owner-occupant, you must reside in the property for 243 or more days per calendar year. Allows non-owner occupied STRs in all districts except for the Woodland Memorial and Rosedale districts. Limits the maximum occupancy for any rental to the lesser of these 3 conditions: 1) 2x the number of bedrooms plus two; 2) 2x the number of on-site parking spaces plus two; 3) 8 occupants. In no case can more than 8 people occupy any one rental. Berry Hill defines a short term rental as any period less than 30 days.

Forest Hills: banned all short term rentals in all zonings in 2016. This ban is strictly enforced and owners found in violation are fined $50/day plus court costs per State Law. Forest Hills defines a short term rental as any period less than 1 month.

Goodlettsville: banned all short term rentals in all residential zoning in December 2018. This ban is heavily enforced and owners found in violation are fined $50/day plus court costs per State Law. Goodlettsville defines a short term rental as any period less than 1 month.

Nashville: there are simply too many laws and proposed laws to cover in just a few sentence. Follow our summary of Nashville STR Laws for complete information.

Oak Hill: banned all short term rentals in all zonings in 2017. This ban is enforced and owners found in violation are fined $50/day plus court costs per State Law. Oak Hill defines a short term rental as any period less than 20 days.

Williamson County Short Term Rental Laws

Brentwood: banned all short term rentals in residential zoning more than 10 years ago. This ban is heavily enforced and owners found in violation are fined $50/day plus court costs per State Law. Brentwood defines a short term rental as any period less than 90 days.

Franklin: banned all non-owner occupied short term rentals in all zonings in December 2019. This ban is heavily enforced and owners found in violation are fined $50/day plus court costs per State Law. Franklin defines a short term rental as any period less than 21 days.

Sumner County Short Term Rental Rules

Hendersonville: banned all short term rentals in residential zoning in October 2016. This ban is widely enforced and owners found in violation are fined $50/day plus court costs per State Law. Hendersonville defines a short term rental as any period less than 1 month.

Rutherford County Short Term Rental Rules

Smyrna: banned all non-owner occupied only short term rentals in residential zoning in 2015. This ban is enforced and owners found in violation are fined $50/day plus court costs per State Law. Smyrna defines a short term rental as any period less than 3 months.

Muse Nashville downtown Airbnb for SaleSearch our complete list of purpose-built short term rental properties in Nashville. As you have read above, it’s very easy to make a mistake if you don’t know or understand all of the laws and regulations. We have a wide variety and price range of non-owner occupied investments that deliver in 2020. Avoid the headaches, contact Grant and let his team help you make the right choice.

Grant Hammond

Broker, ABR, SFR ePRO

Call/Text:
(615) 945-7123

Contact Grant Hammond
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2019-11-14T02:32:08Z

2 Huge Nashville Airbnb Development Pre-Sales

With a complete lack of new construction short term rental product on the market, we are excited to announce the pre-MLS sales for Muse Nashville and Lyric Cleveland Park. These 2 luxury Nashville Airbnb developments will fill a rather large hole in the Nashville market and will give investors an opportunity to capitalize on our lucrative nightly rental market. Both sales will be handled by Grant Hammond and Brian Merrill of Metropolitan Brokers.

Muse Nashville: Downtown, Condominiums

Update: presale from 1pm ? 3pm CST on Wednesday 11/13 sold 46 of the 55 units

Muse Nashville downtown Airbnb for SaleMuse Nashville is a 55 unit “Airbnb Hotel” in the Rutledge Hill Neighborhood of downtown Nashville. Located at 65 Lindsley Avenue, Muse will have studios, 1, 2 and 3 bedroom condos available. Pricing will range between $269,900 and $689,900. Muse is purpose-built to maximize income and security. This Nashville Airbnb development has a roof top community terrace, a rooftop club house, a game room, fitness facility, gated parking and check in/check out lobby with bag drop. Muse will feature ground floor retail spaces where we have targeted a Bodega, blow out bar and nail bar making Muse a one stop shop for Nashville fun.

Lyric Cleveland Park: East Nashville, Townhomes

— Presale from 1pm ? 3pm CST on Thursday 11/14 —

Nashville short term rentalsLyric at Cleveland Park is a 50 unit townhome development located at 818 Cherokee Avenue that features purpose-built short-term rentals with 3, 4 and 4+ bedroom townhomes. Approximately 22 of the 50 will have roof top decks with downtown skyline views. Expected delivery for the 1st phase is July 2020. Pricing will range between $379,900 and $549,000. This development is developed and built by Avenue Construction. We will send out the floor plans, interior finishes and prices early next week. Do not miss your chance to secure a townhome at ground floor pricing!

Right Time to Buy into a Nashville Airbnb Development?

It?s no secret that the Nashville short term rental market has been heating up over the past few years. In fact, since 2017, nightly short term rental rates have skyrocketed a staggering 147.81%. So what?s driving Nashville Airbnb development prices and where will they be in the future? Surprisingly, there?s a pretty simple answer to this complicated question: it?s a combination of continued record tourism rates, a lack of nightly rental product (both traditional hotel and Airbnb), an entire generation changing their travel preferences, a development community that has been slow to fill excess demand and a City Council that has sought to make it more difficult to obtain short term rental permits. It looks strange in print, but there are only 6,839 legally operating Airbnbs in all of Davidson County at the time of publishing this article. That?s for the entire city and surrounding suburbs. In our next series, we will break down each of the 5 major factors and show how future nightly rental rates will be influenced even higher.

It has always been important to be plugged into the whims of the City Council, but never has it been as important as it is now. The latest edition of Council is full of self-described ?neighborhood first? members who lean very far left of center. Many of these members ran on anti-Airbnb platforms and vowed to rid their neighborhoods of the scourge of short term rentals. Several consider themselves Pied Pipers who will march down the legislative halls playing their magical anti-Airbnb flutes. Ironically, their hyper focus on traditionally residential neighborhoods has led Council to approve Airbnb rentals in 16 non-residential zonings, giving developers a clear vision on where to develop short term rental product.

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Grant Hammond

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Call/Text:
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2019-09-06T01:36:28Z

Update: Nashville Short Term Rental Permit | VRBO

nashville short term rental permits vrboAs of July 1st, 2019, with the passage of Nashville Council Bill BL2019-1627, the cost to obtain a short term rental permit (STRP) is now $313. The STRP permit fee was $50, which we can all agree was laughable. This change comes as a result of a 9 month fee study that sought to determine the true cost to obtain a short term rental permit from Metro Nashville.

As of January 1st, 2022, with the passage of Nashville Council Bill BL2019-1633, Nashville will no longer issue non-owner occupied short term rental permits (NOO STRPs) in RM zoning. However, anyone that has a NOO STRP prior to January 1st, 2022 will be grandfathered forever making that permit quite valuable. Owner occupied STR permits will continue to be issued. For additional info read my write up on BL2019-1633.

Short Term Rental Permit – New Construction

vanderbilt short term rental vrboBy the end of this month Catalyst Vanderbilt, a 16 unit NOO STR development for VRBO, will be closed out. This development sold out during a one day pre-sale event earlier this year with prices in the low to mid $700,000. Catalyst Vanderbilt was developed, designed and built by the Urban Development Group.

By the middle of October, Vibe East Nashville, a 38 unit NOO STR development, will be closed out. This development consists of 5 phases, all of which sold out during their pre-sale events. Prices ranged from the mid to high $300,000?s for the 3 bedroom homes and in the lower $500,000?s for the 4 bedroom homes.

NOO STRS for VRBO Coming Soon

muse nashville downtown airbnbWe have quite a few new construction developments that will pre-sell in Fall 2019. In fact, we have 6 different developments with more than 175 opportunities to purchase a NOO STR and 1 development with 18 opportunities to purchase an owner occupied STR within 4 miles of downtown Nashville. Prices will start at $250,000 and go well over $1,000,000 for a downtown penthouse in a new development called Muse Nashville (pictured). Be sure to get one my pre-sale list by emailing me at grant@granthammond.com or by using the form below. We do keep this page up to date with off market Nashville VRBOs for sale.

Grant Hammond

Broker, ABR, SFR ePRO

Call/Text:
(615) 945-7123

Contact Grant Hammond
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2019-09-03T15:35:09Z

BL2019-1633 Short Term Rentals in RM Zoning

nashville short term rental airbnb lawsAs the Nashville short term market continues to grow, the Metro Council continues to grapple with how to properly regulate short term rental permits. With BL2019-1633 filed by Council Member Burkley Allen, the Council sought to do a couple of things: bring Nashville?s short term rental rules into compliance with current State laws and to eliminate non-owner occupied short term rental permits. It?s the second part of this Bill that a core group of individuals set out to influence in a meaningful way. Below is the recap of the last 90 days of our activities:

Key take-aways from the newly passed BL2019-1633

  • It?s business as usual for all RM zoned properties until Jan 1, 2022. You can obtain new permits, transfer permits, etc.
  • The original start date of October 31, 2019 no longer exists
  • You no longer have to file an intent to lease with Metro by Jan 1, 2020
  • You no longer have to obtain a building permit by July 2020
  • You no longer have to worry about the ?death penalty?
  • There is a very important item engineered into this legislation that we can talk about privately

Timeline of Events for BL2019-1633 and Our Actions

On May 20th Council Member Burkley Allen filed BL2019-1633 just hours before the filing deadline and with no public vetting or input. In the original version of the Bill, she eliminated all new RM permits effective October 31st, 2019. The original version had no provision for transfers and included a ?death penalty? after 3 substantiated complaints that was not aligned with current rules. This filing came as a shock to all of us in the industry and caused a mild panic. Immediately, a core group of attorneys, owners, builders, developers, appraisers and Realtors formed to analyze the proposed legislation and to give the greater real estate industry a central place to game plan and influence potential outcomes. This group is comprised of the best and brightest in their respective fields.

One of our early tasks was to coalesce support by engaging and educating the affected local industry associations and their membership. This included but was not limited to GNR, WCAR, HBAMT, NASTRA, and AI. This is likely when you first heard about the Bill and its negative effects on our industry. We used feedback from these meetings and conversations to engage Council Member Allen in multiple small meetings on May 24th, June 4th and June 17th. It was during these small meetings that we confirmed her strategy, cemented her talking points and learned how to influence future versions of the Bill.

The next step was to engage Council Member Allen in an open forum with a list of carefully prepared questions. This occurs on June 27th with just over 250 members of the community participating. This forum lasted over 2 hours and created a public record from which to work (Watch Full Video of Meeting). It was during this period that Council Member Allen introduced a substitute Bill that among other things included a deferred start date and gave all existing RM NOO STR permit holders the right to transfer permits in perpetuity. As predicted, this set up a shockwave throughout Council and especially agitated the original BL2017-608 authors. While not a perfect substitute Bill, we began to significantly alter the 2 cornerstones of Council Member Allen?s original Bill.

The next more public step was to get members of the community to attend the July 2nd Nashville Metro Council meeting and to speak out against the Bill during the public hearing. We initially thought it might be difficult to convince the community to attend and speak, but more than 50 individuals from all walks of life spoke passionately against the Bill. There were several goals for this evening, but a major one was to attempt to stall the Council vote. It was during this Council meeting that Council Member Allen?s substitute Bill was adopted with a majority of members supporting. Immediately following the substitute Bill vote, and as predicted by our legal team, the Council voted to defer the vote on the newly substituted Bill. Start watching Council meeting video at 1:01:23

Using this newly minted public platform, the group increased its meetings with other Council Members. I don?t want to reveal the specific content of those meetings, but our goal was to influence certain members into taking predictable actions prior to the next Council meeting. These meetings were successful.

On July 16th the Metro Council met again, this time with a large group of yellow shirts in the gallery emblazoned with ?Property Rights? on the front. Our efforts to delay the vote were again successful as you can see starting at 1:45:08

Our core group met and spoke regularly after July 16th and game planned 8-10 probable outcomes. We knew that we would not be able to defer the vote another Council meeting and decided to let several key Council Members puts their cards on the table. We went silent several days prior to the August 6th Metro Council meeting to gauge our progress to date. This was a highly entertaining meeting full of amazing Council Member debate, indecision, anger, confusion and subterfuge. When the dust settled, the substitute Bill was amended to limit the number of transfers to 2, but left the rest of the Bill intact. This was better than we hoped for and, more importantly, we finally saw all of the cards on the table. Of course, the yellow shirts were there watching too. Watch Council meeting video starting at 6:01:59

With the clarity of the now substituted and amended Bill, the group met and spoke nearly constantly between August 7th and the August 20th Council meeting. We identified 5 potential outcomes: 3 outcomes that were good for us, 1 mediocre (Council punting to the next session) and only 1 that was bad (reducing Council Member Allen?s Bill as substituted and amended to 1 or 0 transfer). We ranked the outcomes, game planned the next steps and lobbied to ensure the STR marketplace would be protected. Quite a few actions were taken during this time by members of the group as well as by strategic partners (politics sometimes makes for strange bedfellows). As predicted, there were several amendments filed for consideration last as well as 2 substitute Bills, one of which turned out to be a very welcome surprise. The surprising substitute Bill came from the original authors of BL2017-608 Henderson, Hagar and Johnson. In their substitute, we were surprised to see them wipe away all of the filing requirements and milestone hurdles of Council Member Allen?s original Bill. We were then shocked to see their delayed start date of Jan 2022, 2 years and 4 months from now. As anticipated, their substitute included no new permits or transfers in RM zoning past the effective date. We now had another potential outcome that was better than 1 of the 3 previously identified positive outcomes prior to the release of late filed amendments (we received a copy on Monday August 19th at 11:17am).

During the August 20th Council meeting, the body skipped consideration of the amendments and began deliberation on the Henderson/Hagar/Johnson substitute Bill first. This came as a surprise, but we were all very interested to see if Council could stumble their way into passing this new substitute Bill. The substitute Bill sponsors laid out their typical points and were bolstered by unwitting accomplice Council Member Sledge. With only one Council Member standing up in opposition, they moved to take the vote and the new substitute Bill passed 25 to 5 with 2 abstentions and 7 not voting.  Start watching Council meeting video at 1:59:53

Conclusion and Next Steps for RM Zoning

Now that we have completed our work with BL2019-1633 and the Nashville Metro Council, we can now move on to the second phase of our plan. As much as I?d like to share that plan, we cannot risk outlining in a public forum. I am happy to discuss with you individually (as long as you pinky swear to extreme secrecy) so you can understand where we are heading and how we plan on resolving the NOO STRP issue in RM zoning once and for all. I can say this: at the beginning of this process, a delayed start date was an extremely important goal for the group. We had hoped to move Council Member Allen?s proposed October 31, 2019 start date back 6-9 months. We never allowed ourselves to dream that we?d get 28 months!

If you?ve read all the way to this point, you understand the importance of working with a real estate professional who is entrenched in not only the marketplace, but also the politics to protect your investment. Please choose to work with a Realtor who understands what he/she is selling and how to properly guide you. See our complete list of short term rentals for sale in Nashville.

Grant Hammond

Broker, ABR, SFR ePRO

Call/Text:
(615) 945-7123

Contact Grant Hammond
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2020-01-01T15:26:16Z

Taylor Germantown Brownstones for Sale

Taylor Germantown townhomes for sale

Taylor Germantown is a luxury 22 home brownstone development that straddles two sides of Taylor Street on 2nd Avenue in Historic Germantown. Steve Ezell and Mike Hartley of Landmark Realty Services and Trimark Builders are bringing their considerable experience to bear along with principal Michael Ward of Allard Ward Architects to create a modern community that seamlessly melds into it?s historic surroundings. No detail has been ignored down to the color and reflectance of the commercial brick and the R-factor of the sealant on the Sierra Pacific window package. The development team strove to give each and every home features that would set these homes apart from the marketplace and those details are numerous: New York loft-style open tread metal stairs between the 2nd and 3rd floors, 25 foot light well vault above the wet bar, CAT6 & RG6 prewire for gigabyte capable homes and more.

2nd and Taylor in Nashville GermantownMany of these homes are 3 bedroom, 3.5 bath, 2 car and all feature a roof top terrace with considerable views that will only get better with the development of the TPA and Neuhoff sites. Phase 1 consists of 8 homes that have been under construction for nearly 12 months and will deliver in July, 2019. Phase 2 will begin in the next 30 days and will deliver prior to the end of 2019 as all of the infrastructure and site work has already been completed. Phase 3 is located on the north side of Taylor Street and will not commence until Phase 2 is mostly complete as Phase 3 will be used as a construction staging area to facilitate a faster build in Phase 2.

Taylor Germantown has not been officially listed for sale, but we have sold several homes based on our location alone. Here is our pre-listing pricing that will absolutely change once we have our launch party and officially list these homes on the MLS:

Site Map # 1 2 3 4
Address 211 Taylor Street 209 Taylor Street 207 Taylor Street 205 Taylor Street
Profile 2,046 sf – 3 bed, 3.5 bath, 2 car 2,014 sf – 3 bed, 3.5 bath, 2 car 2,014 sf – 3 bed, 3.5 bath, 2 car 2,014 sf – 3 bed, 3.5 bath, 2 car
Completion 7/30/19 7/30/19 7/30/19 7/30/19
Price SOLD SOLD SOLD SOLD
Site Map # 5 6 7 8
Address 203 Taylor Street 1331 2nd Avenue North 1329 2nd Avenue North 1327 2nd Avenue North
Profile 1,906 sf – 3 bed, 3.5 bath, 2 car 3,883 sf – 5 bed, 4.5 bath, 2 car 2,148 sf – 3 bed, 3.5 bath, 2 car 2,166 sf – 3 bed, 3.5 bath, 2 car
Completion 7/30/19 8/30/19 7/30/19 7/30/19
Price SOLD $1,495,000 – offer SOLD SOLD

Germantown Neighborhood Transitioning Quickly

Germantown Union TPAImmediately to the east of Taylor Germantown is a large full neighborhood block light green warehouse that used to house a Goodwill Industries sorting facility. That entire site was acquired by the TPA Group from Atlanta in 2018. The TPA Group is a private real estate investment, acquisitions, and development firm whose principals have acquired and developed in excess of 30 million square feet and 30,000 acres ? all valued at more than $10 billion. TPA is planning a mixed use development called Germantown Union and I have attached their ?First Look? book to this email. It includes creative office space, a boutique hotel and a food hall that is rumored to be the Gun Show from Atlanta.

Neuhoff Germantown developmentImmediately to the east of Germantown Union is the gigantic Neuhoff complex. We have now learned that site is under contract for nearly $42M and will be redeveloped into a more than half a Billion dollar mixed use development that will include 650,000 square feet of HQ office space, a luxury hotel, 150,000 square feet of retail and restaurant space, up to 600 multifamily units and a pathway to the riverfront that will feature a floating bar: https://www.bizjournals.com/nashville/news/2019/03/28/developer-unveils-planned-500m-revival-for.html?iana=hpmvp_nsh_news_headline

Contracting Phase 1 Taylor Germantown

We utilize a developer contract and give buyers 2 hours of time with our interior design team at Shonna Sexton Studio. Our contracts require a 5% earnest money deposit and proof of funds or financing. Phase 1 is fairly far along, but there are opportunities to make your design ideas a reality. Contact Grant Hammond for a private tour of Taylor Germantown: 615-945-7123

Taylor Germantown Phase 2 & 3 Pricing

It has become very clear to us that the heart of Germantown is in the process of shifting towards the river. With the more than $800,000,000 of development outlined above, we are expecting to price our future phases in the $400/sq ft or higher range. Should you be interested in a Phase 2 or 3 home, we are creating a priority waiting list. Please respond below with your contact information to be added to that list.

Grant Hammond

grant@granthammond.com
Broker, ABR, SFR ePRO

Call/Text:
615-945-7123

Contact Grant Hammond
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2018-11-20T02:03:38Z

Buying an Airbnb Short Term Rental Property Investment

Buying an Airbnb Short term Rental Property investment NashvilleAs Nashville has rocketed to the top of the bachelorette party destination list, so has the rental demand for Airbnb properties close to the downtown core. Owning a short-term rental can be a financial windfall for owners, but make sure you do your homework first. If you are considering making an investment in a short-term rental property in Nashville, here are a few things to consider:

 

The City of Nashville Regulates Airbnbs

Your property must be properly zoned, your neighborhood and HOA both allow short term renting and you must obtain a short-term rental property permit from Metro Codes in order to operate a short-term rental business from your property. As of January 1st, 2018, there are only 2 types of permits: Owner Occupied and Non-Owner Occupied.

Owner occupied short term rental permits: must be your primary residence, must be owned in your personal name (no LLCs, GPs, joint ventures, etc), must be confirmed by 2 documents showing the owner in fact occupies as their primary residence, must be in a neighborhood or homeowners association that allows short term renting, may include the rental of a single room or the entire residence.

Non-owner occupied short term rental permits: must be in a properly zoned non-residential district, are not a primary residence, applicant information must match the recorded deed, must be in a neighborhood or homeowners association that allows short term renting.

Obtaining a Short Rental Permit is Hard Work

Like dealing with most government entities, the Nashville Metro Codes department can steal small pieces of your soul. However, if you come prepared for long lines, overworked employees and all required materials, you?ll be just fine.

To obtain a short-term rental permit (STRP in our jargon), you?ll need several items including: a floor plan of your property showing egress windows, doors and smoke detectors; proof of liability insurance; proof of notification to adjacent property owners; proof of tax payments; responsible party documentation; homeowners association affidavit; and a notarized affidavit. Once you gather these materials, you?ll then meet with a zoning examiner who will start the application process. If you pass, the fire marshal will schedule a verification inspection at your property fairly quickly. If you pass again, congratulations, pay a $50 permit fee, post your permit on all listings, remit your required taxes and don?t forget to renew your permit every 365 days.

Oh, did I mention you must also obtain a Hotel Occupancy Privilege Tax Account Number, collect and remit those taxes for each rental to the State Finance Department no later than the 20th day of each month following collection and there is a maximum of 4 sleeping rooms per STRP permit? Sound a little daunting? Don?t fret. Many Nashville Airbnb property managers include permitting your property and processing all applicable taxes in their menu of services and I highly recommend you take them up on that offer!

A Nashville Airbnb Property Will Diversify Your Investments

Even if you own other rental properties, Airbnb rentals compete in a different market segment than traditional types of real estate. And if real estate is not currently a part of your investment portfolio, short-term rentals can be an easy way to dip your toe into the pool. Through asset diversification, you help insulate your investment portfolio from market volatility. What?s more, the revenue from short-term rentals may be able to cover more than just the mortgage on the property and this can be an attractive way for first-time real estate investors to get into the market. In many instances, Nashville Airbnb owners have been able to pay off their entire investment property mortgage in less than 5 years, giving them a free and clear asset that can be leveraged into additional investments.

High-Rise Condos Play by Different Rules

There are 9 gleaming high-rise condo buildings in Nashville that are simply breathtaking. They have amazing neighborhood locations, amenities, concierge services and panoramic views of Music City. But, they all have bylaws that forbid them as being used as short-term rentals. Period.

For instance, the Encore condos in downtown Nashville have bylaws that state ?no more than 20% of units can be investor-owned and all leases must be at least 360 days in length.? In fact, for those who violate these rules, the fines can get rather steep, exceeding $1,000 per day. Similar rules and fines hold true for Twelve Twelve, Icon, Terrazzo, Adelicia, Viridian, City Lights and practically all condo developments in Nashville.

For a condominium development to allow short-term rentals, the association must amend their bylaws to specifically allow such arrangements. Currently, only the following condo developments allow short-term rentals:

Generally, all planned unit developments (PUDs) have bylaw rental restrictions. These may be developments that include single family homes, townhomes and/or flats, but all have a homeowner?s association. Most attached and detached horizontal property regimes (HPRs) also have short term rental restrictions. There are even entire municipalities that have restrictions like the city of Brentwood that disallows short-term renting altogether.

Rental Property Tax Advantages

Under the new federal tax law that went into effect on January 1, owners of rental properties that are operated as businesses will be able to deduct mortgage interest on these properties, along with business expenses related to the rental. If you operate your Nashville rental as a business, you may also be able to deduct up to 20 percent of net rental income from your income taxes. As always, consult your tax accountant or attorney for advice.

Research Your Potential Airbnb Investment

Only you can decide whether investing in a short-term rental property is right for you. As with any investment, due diligence is warranted. Here is an excellent article on Smart Money Nation that gives you insight into owning an Airbnb and provides a handy calculator.

Once you have decided to pursue a short-term rental investment property, lean on my experience as one of the most well versed and skilled real estate brokers in Nashville. Over the past year, I have represented 71 short-term rentals and have access to several proven rentals that are not currently on the market. Leverage my relationships with local Airbnb management companies to negotiate lower management fees and use my relationship with builders and developers to secure a pre-construction property before it hits the MLS. Call/text me today to begin the process.

Grant Hammond

Broker, ABR, SFR ePRO

Call/Text:
(615) 945-7123

Contact Grant Hammond
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