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Renting Out Your Guest House, DADU, or Garage Apartment in Nashville
Why small, separate spaces are Nashville's sweet spot — and how they often out-earn the big houses.
Some of the best short-term rentals in Nashville aren't big houses at all. They're the detached guest house out back, the apartment above the garage, the DADU tucked behind a bungalow, the finished basement with its own entrance. If you have one of these spaces on the property where you live, you're sitting on one of the most workable — and most clearly compliant — short-term rental opportunities in the city.
Here's how to think about it, and how to do it right.
Why Small, Separate Spaces Are a Natural Fit in Nashville
Because new non-owner-occupied short-term rentals aren't allowed in Nashville's residential neighborhoods, the owner-occupied path is where most homeowners live — literally. A detached or semi-detached unit on your lot is ideal for it: you keep your primary residence, guests get privacy and their own entrance, and you get income from a space that might otherwise sit empty. DADUs (detached accessory dwelling units), carriage houses, above-garage apartments, and guest houses are practically built for this.
There's a compliance bonus here, too, and it's a big one. Since 2020, Nashville law has barred owner-occupied permits from advertising a single, lived-in dwelling as a whole home:
"Advertisements for an owner-occupied STRP shall not advertise availability of the entire/whole home."Metro Code § 17.16.250.E, as amended by Ordinance BL2019-79
A separate unit sidesteps that limit entirely. Because you live in your main dwelling, a DADU, a garage or basement apartment with its own entrance, or the other unit of a duplex or HPR you occupy can be advertised and rented as an entire place — guests get a private, whole-space stay, and you stay fully compliant. It's one of the biggest reasons these spaces are such a sweet spot.
And here's what a lot of owners don't realize: these smaller spaces often out-earn the big ones. A well-run one-bedroom rents far more frequently than a three-bedroom-plus house — it books weekdays, not just weekends, so revenue comes in steadily across the whole month instead of in occasional weekend spikes. It costs less to furnish, clean, and maintain, which means more of what it earns is actual profit. And it draws a wider mix of guests the bigger houses miss entirely: business and medical travelers, people in town visiting family, couples on a quick getaway. In this market, bigger isn't better — well-matched is.
Step One: Confirm Your Space Qualifies
Before anything else, verify three things: that you occupy the primary residence on the lot, that your zoning allows an owner-occupied short-term rental, and that your lot doesn't already have a short-term rental permit (only one is issued per lot in single- and two-family zones). Overlays, HOAs, and deed restrictions can all come into play, so it's worth checking your specific address rather than assuming.
Step Two: Get Permitted and Safe
You'll apply through Metro Codes, prove owner-occupancy, pass a fire-safety inspection, verify working smoke alarms in every sleeping room and adjacent hallway, and submit a floor plan of the dwelling with your application. The permit fee is $313, renewed annually, and you'll register for lodging taxes, which are filed monthly. It's methodical, but it's absolutely doable — and it's the part we handle end-to-end for the owners we work with.
Step Three: Set Up a Space Guests Remember
Small spaces punch above their weight when they're done thoughtfully. A few things that consistently matter: a well-designed space, a genuinely comfortable bed and good linens, a well-stocked kitchen, fast Wi-Fi, blackout shades, a clear and private entrance, and a few local touches that make the space feel like a home, not a hotel. You don't need to spend a fortune. You do need to sweat the details — because guests notice, and your reviews will reflect it.
What This Looks Like Managed Well
Guest houses, DADUs, above-garage apartments, carriage houses, and standout one- and two-bedroom homes are exactly what Rest Easy Nashville specializes in. We're boutique by design — we cap our portfolio on purpose so every property gets our full attention. That means professional listing and photography, dynamic pricing, guest screening, and the two things guests praise most in our reviews: spotless turnovers and fast, genuine communication. (They sound basic; they're the difference between a five-star stay and a three-star one.) Add tax filing and monthly statements you can actually read, and because we build your listing under your own account with us as co-host, your Airbnb reviews and booking history stay yours.
If you've got a guest house, DADU, or garage apartment you've been eyeing as a rental, tell us about your place — we'll tell you honestly whether it's a fit and what it could do.
