If you’ve been eyeing Tennessee for your next real estate investment, you’re not alone. Over the past few years, the state has become one of the nation’s hottest rental markets. From cozy mountain towns filled with tourists to bustling urban centers with steady job growth, Tennessee offers something for every type of investor, whether you’re seeking short-term vacation rentals or stable, long-term cash flow.
As a licensed real estate agent with over 15 years of experience, I’ve worked with countless investors building portfolios across Tennessee. In this article, I’ll walk you through the 10 best places to buy rental property in 2025 with honest insights, current data, and real-world tips to help you invest wisely.
Before we dive in, think about your investment strategy: Are you targeting high-yield vacation rentals or long-term tenant housing? Both can perform exceptionally well when approached with the correct data and local expertise.
Let’s break down the best cities for each type of rental strategy.
Table of Contents
Short-Term Rental (STR) Hotspots
Tourism is a significant drive for Tennessee’s economy, particularly in areas such as the Smoky Mountains, Nashville, and historic towns that offer unique experiences for visitors. That’s why short-term rentals have become incredibly lucrative in the state. Some even outperform traditional rentals in their monthly income.
Key advantages of STR investing here include:
- High occupancy rates in key tourist hubs
- Strong daily rates, especially during peak travel seasons
- STR-friendly zoning in mountain and leisure markets
- Opportunity to own purpose-built cabins, condos, and vacation homes
With the right property and local management, STRs in Tennessee can deliver impressive gross yields and a steady stream of bookings year-round.
1. Sevierville
Sevierville is, without a doubt, one of the best short-term rental (STR) markets in the entire country, not just Tennessee. Tucked at the entrance to Great Smoky Mountains National Park, the town sees year-round tourism thanks to Dollywood, the Smoky Mountains, outlet shopping, and family attractions that make it a top vacation destination in the Southeast.
What sets Sevierville apart? High occupancy rates, strong nightly rates, and STR-friendly zoning. Many properties here are purpose-built cabins designed with short-term guests in mind, featuring amenities such as hot tubs, mountain views, game rooms, and fire pits. These homes are more than just rentals; they’re experiences, and guests pay premium rates to stay in them.
Most investors look for 2–4-bedroom cabins, and some of the best deals are just outside the city limits, where you get peace, privacy, and ease of permitting. Some cabins generate over $6,500 per month, with gross rental yields exceeding 17%, depending on management costs and booking volume.
“Sevierville is where the math works and the bookings follow. It’s one of the rare vacation markets where both demand and cash flow are sky-high.”
- Median Home Price: $398,767
- Annual STR Revenue: $69,552
- Rental Yield: 17.45%
2. Pigeon Forge
Just down the road from Sevierville, Pigeon Forge is a powerhouse in Tennessee’s short-term rental market, offering incredible guest demand, family-friendly attractions, and a booming tourism economy. Home to Dollywood, The Island, and year-round entertainment, it consistently ranks among the top vacation destinations in the Southeast.
What makes Pigeon Forge especially attractive for investors is the high guest turnover and strong seasonal pricing. Cabins and condos with 2–4 bedrooms tend to perform best, particularly those with hot tubs, theater rooms, or scenic views. Many STR properties in this area are purpose-built vacation rentals, making them ideal for turnkey investments.
Average daily rates in peak seasons (spring, summer, and holidays) are among the highest in the region, and occupancy rarely dips below 60% throughout the year. Add in the relatively STR-friendly environment, and it’s easy to see why investors are moving in fast.
One note of caution: inventory moves quickly. “If you find a cabin with a strong income history and the right permits, don’t wait.” Many top-performing properties receive multiple offers within a matter of days.
- Median Home Price: $573,300
- Annual STR Revenue: $64,142
- Rental Yield: 11.18%
3. Gatlinburg
Gatlinburg is a classic Smoky Mountain gem, a picturesque mountain town known for its cozy downtown, walkability, and rich blend of outdoor adventure and quirky tourist attractions. It’s a short drive from Sevierville. Still, its atmosphere is more condensed and pedestrian-friendly, making it a favorite for travelers who want a cabin-in-the-woods feel with easy access to shops, restaurants, and trails.
As a short-term rental market, Gatlinburg delivers strong financial performance year-round. Travelers flock here for the Great Smoky Mountains National Park, Ober Mountain (skiing and summer tubing), Ripley’s attractions, and honeymoon-style cabins. Cabins with mountain views, fireplaces, or within walking distance of downtown tend to outperform in both booking rates and nightly pricing.
Regulations are generally favorable for STRs; however, the city has become increasingly competitive over the past few years, with prices rising and high-performing properties in high demand. Investors should move quickly when they spot a well-located 2–3-bedroom cabin with unique features, such as game rooms, loft layouts, or secluded hot tubs.
Even as prices inch up, Gatlinburg still retains its value due to constant tourism and the limited supply of vacation rentals in the surrounding hills. Gatlinburg offers a postcard-perfect vacation vibe, and guests are willing to pay for the experience. If you manage it well, it can have a cash flow from day one.
- Median Home Price: $639,767
- Annual STR Revenue: $67,500
- Rental Yield: 10.55%
Expert insight: Look for properties close to the Arts & Crafts Loop or with direct access to downtown. “Cabins with good parking, strong guest reviews, and easy roads (especially in winter) stay booked year-round.”
4. Nashville
Nashville remains one of the top urban short-term rental (STR) markets in the US, but it comes with a stringent restriction: zoning and permitting are crucial. The city attracts millions of tourists each year due to its unmatched live music, vibrant food scene, and lively nightlife. Whether it’s bachelorette parties in The Gulch, honky-tonk fans on Broadway, or music industry events, demand never slows down.
What’s the catch? STR rules are strict, and many properties are not eligible for short-term rental licenses unless located in commercial zones. That said, approved STR properties in core neighborhoods, such as Downtown, East Nashville, and Midtown, can generate gross revenues of over $6,000 per month.
Multi-unit properties and townhomes are especially popular here, and when permitted, they’re real cash cows. The key in Nashville is not just finding a great location, but it’s finding a legal one.
- Median Home Price: $439,667
- Annual Revenue: ~$43,700
- Rental Yield: ~10%
Investor Tip: Look for newer builds with existing non-owner-occupied (NOO) short-term rental (STR) permits; these are gold and generate significant cash flows.
5. Jackson
Jackson is the sleeper pick on this list, as it is an emerging STR market that delivers solid returns. Located off I-40 between Memphis and Nashville, this mid-size city attracts a steady stream of visitors for local events, regional hospitals, universities, and weekend travel.
Jackson’s low entry price and manageable competition make it ideal for newer STR investors. A well-furnished 2–3-bedroom home or townhouse can easily generate $2,000 per month with limited marketing, especially near Union University or downtown.
The STR market here is still growing, so yields are often in double digits. Plus, investors face fewer regulatory hurdles compared to major tourist hubs. With event-driven tourism, regional traffic, and low inventory, Jackson can generate a positive and strong cash flow opportunity.
- Median Home Price: $247,517
- Annual Revenue: $26,004
- Rental Yield: 10.51%
Long-Term Rental (LTR) Markets
While short-term rentals grab headlines and remain the talk of the town with higher revenues, long-term rentals remain the backbone of Tennessee’s rental economy. With consistent population growth, a low cost of living, and a thriving job market, the state offers long-term rental investors both stability and strong cash flow.
Benefits of investing in LTRs in Tennessee:
- Steady, reliable monthly rent from long-term tenants
- Lower management intensity compared to STRs
- Strong tenant bases in college towns, military cities, and healthcare hubs
- Favorable landlord laws and no state income tax
If you’re looking for a more passive, predictable investment strategy, these long-term rental markets offer great potential. Let’s dive into the long-term rentals list now.
6. Memphis
Memphis is a cash flow king for long-term rental investors. With one of the lowest median home prices in the state and consistent tenant demand, it’s a go-to city for BR investors and turnkey buyers.
Tenants include a mix of blue-collar workers, hospital staff, students, and government employees. While appreciation is slower than in Middle Tennessee, rental yields here are often above 10%, even after expenses.
Neighborhood selection is critical. One street can make or break your investment, so local expertise matters. Popular investment zones include Whitehaven, Raleigh, and parts of Parkway Village, but always verify rent history and vacancy rates before investing.
- Median Home Price: $151,308
- Annual Rent: $1,325
- Rental Yield: 10.5%
Investor Tip: Target Class B/C neighborhoods with solid tenant history and local property managers.
7. Knoxville
Knoxville offers a balanced mix of cash flow and property appreciation. As home to the University of Tennessee, the city has a dependable stream of student renters, healthcare workers, and young professionals. It’s also one of the fastest-growing metros in the state.
Properties close to the university, downtown, or major hospitals tend to rent the quickest. Duplexes, triplexes, and smaller multifamily homes are especially valuable in this market.
The average rental yield hovers around 7%, but equity growth is strong, and tenant turnover is low when properties are well maintained. Knoxville is also experiencing an increase in demand for short-term rentals, particularly near downtown and the campus.
- Median Home Price: $346,667
- Annual Rent: $1,900
- Rental Yield: 6.6%
8. Chattanooga
Chattanooga is one of Tennessee’s most dynamic cities. With its stunning mountain views, riverside location downtown, and thriving tech scene, it has become a magnet for remote workers, creatives, and startups. Known as “Gig City,” it was the first US city to offer 1-gigabit fiber internet citywide.
The LTR market here is tight, with low vacancy rates (<5%) and increasing demand for walkable, amenity-rich housing. Long-term investors often purchase properties in neighborhoods such as North Shore, Highland Park, or St. Elmo.
Both traditional long-term rentals and mid-term furnished options perform well. It’s a place where lifestyle renters outnumber necessity renters, so presentation and location matter. If you wish to be on the benefiting side, consider a small multifamily near downtown with low vacancy and strong tenant quality.
- Median Home Price: $307,667
- Annual Rent: $1,669
- Rental Yield: 6.51%
9. Johnson City
Johnson City is the understated gem of Northeast Tennessee. With a growing medical sector, multiple colleges (including East Tennessee State University), and a rising number of retirees, the market offers consistent rental demand with low volatility.
Home prices remain very affordable, particularly for single-family homes or duplexes. While appreciation is modest, cash flow is reliable, and property taxes are low. This type of market is suited for buy-and-hold investors focused on predictable income rather than rapid growth. Rents are climbing steadily, and while appreciation isn’t explosive, it’s stable and predictable.
This rising star in Northeast Tennessee offers low entry prices, low vacancy rates, and a reliable tenant pool comprising students, healthcare workers, and retirees. It’s a brilliant market for investors looking to buy, self-manage, or invest in smaller multifamily properties, making this a low-risk, high-consistency market.
- Median Home Price: $304,250
- Annual Rent: $1,500
- Rental Yield: 6%
Expert Insight: “Johnson City gives you affordable homes, strong local tenants, and steady growth. It’s a slow-and-steady winner. Stable LTRs with long leases; low vacancy makes this market nearly passive.”
10. Murfreesboro
Just southeast of Nashville, Murfreesboro is a prime suburb with explosive growth in families, healthcare, and education. It’s one of the most competitive long-term rental markets in the state, with strong tenant quality and rising rents.
Home values have appreciated sharply, but rental demand has kept pace with this growth. Townhomes, duplexes, and newer single-family homes in good school zones are top performers. It’s a long-term investment, offering moderate yields (~6%) and excellent property appreciation potential. Investors looking to balance cash flow with value growth love this market.
Home prices are higher here than in Johnson City or Memphis, but the demand for rentals is robust, driven by young families, students, and professionals priced out of Nashville. While it’s more of an appreciation play than a pure cash-flow market, the rental yields still make sense, especially on newer construction homes and build-to-rent communities.
- Median Home Price: $400,917
- Annual Rent: $2,100
- Rental Yield: 6.3%
Investor Tip: “Murfreesboro is a growth market with excellent schools, new inventory, and strong tenant stability, requiring minimal maintenance. Target newer builds in growing subdivisions with HOA-managed amenities.”
Buy a Rental Property in Tennessee with HomeAbroad
Tennessee is one of the few states where investors can find high-performing STRs and strong cash-flow LTRs, all within a few hours’ drive. Whether you’re drawn to the Smoky Mountains or the suburbs of Nashville, there’s a rental strategy here for you.
But great investments don’t happen by accident.
If you’re ready to start your investment journey in Tennessee, HomeAbroad is the easiest way to make it happen. From tailored mortgage solutions to curated property listings, expert real estate agents, and turnkey support services, HomeAbroad was built to help investors like you buy with confidence.
Whether it’s your first property or your fifth, we’re here to help. HomeAbroad is a one-stop PropTech and FinTech platform built to simplify US real estate investing for both national and international and out-of-state buyers.
When you’re ready to buy, HomeAbroad provides:
- Tailored foreign national mortgage solutions
- An AI-powered property search engine for high-yield investments
- Vetted real estate agents in every primary US market
- End-to-end services, including an LLC setup, US bank account opening, Insurance, property management, and ongoing investment guidance
Ready to buy your next rental property in Tennessee? Let’s make it easy, profitable, and fully supported with HomeAbroad.
FAQs
Is Tennessee a landlord-friendly state?
Yes. Tennessee has favorable eviction laws, no rent control, and solid protections for property owners. It’s a business-friendly state that respects landlords’ rights.
Are short-term rentals legal everywhere in Tennessee?
Not quite. Cities like Nashville require permits and enforce zoning rules, while places like Sevierville and Gatlinburg are more open, though still regulated. Always check the local laws before making a purchase.
Do I need to live in Tennessee to purchase a rental property within the state?
With HomeAbroad, you can purchase rental property anywhere in Tennessee and manage rentals remotely. With the right team in place, out-of-state investing is not only possible but also a wise investment decision.
At HomeAbroad, we ensure the reliability of our content by relying on primary sources such as government data, industry reports, firsthand accounts from our network of experts, and interviews with specialists. We also incorporate original research from respected publishers when relevant. Discover more about our commitment to delivering precise and impartial information in our editorial policy.
Zillow: TN, Median Purchase Price and Median Monthly Rent
AIRdna: TN, Vacation Rental Data
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