Gross revenue is the number everybody quotes and the number nobody banks. A Nashville listing grossing $70,000 can easily net less than a Fort Worth listing grossing $52,000, because gross does not pay for cleaning, permits, turnover intensity, or property tax.
We manage in all three of these markets, so treat the framing accordingly — but the arithmetic below is arithmetic, and you can run it yourself.
The three markets, honestly
Nashville
The case for: Exceptional demand density. CMA Fest, the NFL Draft, a heavy convention calendar, a year-round bachelorette economy. High ADR on event weeks — genuinely high, if you price them.
The case against: The most restrictive permitting of the three. Davidson County’s Type 1 / Type 2 regime constrains non-owner-occupied properties in most residential zones, and that constraint is capitalized into purchase prices. High turnover intensity — two- and three-night stays mean substantially more cleans per month, and cleaning is your largest variable cost.
Nets well when: You have a permitted property in a permitted zone and you price events aggressively. The permit is the moat; if you have one, it is worth a great deal.
Dallas / Fort Worth
The case for: Lower entry prices, a broad and diversified demand base — corporate, medical, family, sports — and less dependence on any single event. The 2026 FIFA World Cup matches at AT&T Stadium are a real demand event on top of an already-solid baseline.
The case against: Texas property tax is a genuine drag on net, and it is the line item most out-of-state investors underestimate. Lower ADR than Nashville on peak weeks.
Nets well when: You want steadier, less event-dependent cash flow and you have modeled property tax properly.
Austin
The case for: Strong ADR, a distinctive guest base, high desirability in Downtown, East Austin and South Congress.
The case against: The heaviest regulatory load of the three, and it got heavier in 2026. Non-owner-occupied properties require a Type 2 license, and as of July 2026 the license number must be displayed directly on the listing. That is a compliance regime with teeth — the city can match listings against its registry automatically.
Nets well when: You are properly licensed. If you are not, Austin is the market most likely to end your operation entirely.
The model that actually matters
Do not compare gross. Build this for each property you are considering:
| Line | Notes |
|---|---|
| Gross booking revenue | Start here — but only start |
| − Cleaning (not passed to guest) | Scales with turnovers, not nights. This is where Nashville’s short stays bite. |
| − Management fee | Total dollars including add-ons, not the headline % |
| − Property tax | The Texas line. Model it precisely. |
| − Insurance (STR-specific) | Materially higher than a standard policy |
| − Permit / license / compliance | Renewal costs, and the time cost of staying current |
| − Supplies, linens, utilities, internet | |
| − Maintenance reserve | Budget 5–8% of gross. STRs wear faster than long-term rentals. |
| − Debt service | |
| = Net | The only number that matters |
The turnover trap
The single most common modeling error we see: treating cleaning as a fixed percentage of revenue. It is not. It is a function of how many times guests check out.
A property doing 20 nights a month at an average 5-night stay has 4 turnovers. The same 20 nights at an average 2.5-night stay has 8. At $130 a clean, that is a $520/month difference — over $6,000 a year — on identical gross revenue. Nashville’s demand profile skews short. Model it.
So which one
There is no universal answer, and anyone who gives you one is selling something. But as a rough heuristic:
- Highest ceiling, hardest entry: Nashville. The permit is the asset.
- Best risk-adjusted net for a first STR: Dallas–Fort Worth. Lower entry, steadier demand, fewer ways to be shut down. Model the property tax honestly.
- Highest regulatory risk: Austin. Excellent if compliant. Genuinely dangerous if not.
Related reading
Talk to a real person before you sign anything
HostStarter manages short-term rentals on a 12.5% flat fee. No setup fee, no contract, cancel with 30 days’ notice. If you want a second opinion on a proposal you already have in hand, we will read it with you and tell you what we would push back on — even if you do not hire us.