Tennessee is famous for having no income tax on wages, and investors sometimes read that as a state that stays out of their deals. It does not. Tennessee charges a tax every time a deed or a mortgage is recorded, taxes the LLC that holds the property on its profits, and in Nashville has closed most neighborhoods to new investor-owned short-term rentals. None of that stops a good deal, but all of it belongs in the numbers, whether the money is a hard money loan, a private money loan or a DSCR loan.
Tennessee's recordation tax has two parts, set out in Tennessee Code Section 67-4-409. The realty transfer tax is 37 cents per $100 of the greater of the price or the property's value, due when a deed is recorded. The indebtedness tax, often called the mortgage tax, is 11.5 cents per $100 of the loan, with the first $2,000 exempt, due when the deed of trust is recorded. Some counties add a local amount on top.
For an investor, the second part is the one people forget, because it applies to every loan, not every purchase. Take the most common Tennessee plan: buy with a hard money loan, renovate, then refinance into a long-term DSCR rental loan.
On a $180,000 purchase financed with a $150,000 hard money loan, the transfer tax is about $666 and the mortgage tax about $170. When the renovated house is refinanced into a $220,000 DSCR loan, a new deed of trust is recorded and the mortgage tax is charged again, about $251. If the plan is to sell instead, the next buyer's deed carries its own transfer tax, which usually becomes part of the negotiation. None of these is large on its own, but on a thin flip they add up, and they belong on the budget line for closing costs from the first day.
Tennessee does not tax wages. It does tax businesses. Every entity doing business in Tennessee with limited liability for its owners, including LLCs and S corporations, generally owes the state's franchise and excise taxes. The excise tax is 6.5 percent of net earnings apportioned to Tennessee. The franchise tax is 0.25 percent of net worth, with a $100 minimum; since 2024 it is calculated on net worth only, after the legislature repealed the old property measure that taxed the book value of real estate.
That matters because our lending partner lends only to business entities, so almost every Tennessee deal we arrange is held in an LLC or corporation. A profitable flip held in a Tennessee LLC can owe excise tax on the profit even though the owner pays no state income tax personally. Some family-owned entities that hold rental property qualify for an exemption, and the rules turn on the details, so confirm the position with a Tennessee CPA before you set up the entity. This is general information, not tax advice.
Property tax itself is assessed at 25 percent of appraised value for residential property, with the county and city rate applied to that. As in every state, the seller's bill tells you about the seller, not about you after a renovation.
Nashville is the state's most expensive market. Greater Nashville Realtors put the median single-family price across its nine-county region at $537,000 in June 2026, up from about $528,300 a year earlier, with about six months of inventory and homes averaging 51 days on the market. That is a balanced market, not a frantic one, and a flip needs a holding budget to match.
The rule that catches the most investors is Nashville's short-term rental code. Every short-term rental needs a permit from Metro Codes, and permits come in two kinds: owner-occupied and not owner-occupied. Metro does not issue new not-owner-occupied permits in the AR2A, R, RS or RM zones, which cover most of the city's residential land, including neighborhoods investors love, such as East Nashville, Germantown, The Nations, Sylvan Park and 12 South. An existing permit in those zones does not transfer to a buyer.
So a house bought in a residential zone on the strength of its Airbnb income will usually have no Airbnb income once you own it. For a DSCR loan, that means underwriting on long-term rent, not nightly rates. Check the zoning of the exact parcel, and whether a permit can be issued to you, before you count a dollar of short-term income.
Memphis is the other large investor market, with far lower prices than Nashville. There, the lender's minimum after-repair value of $100,000 is the line to watch, because a real share of the cheapest Memphis housing sits below it. Knoxville and Chattanooga fall between the two.
More Tennessee investors search for a DSCR loan than for any other kind of investor financing. A DSCR loan qualifies the property, not your paycheck: the lender compares the rent to the payment, including principal, interest, taxes and insurance. That suits self-employed investors and anyone growing a portfolio past what a bank will count.
Our lending partners' DSCR rental program starts at rates as low as 5.99 percent, with origination points from 1.5 percent, loan amounts from $75,000 to $2 million at up to 80 percent of value, and no minimum credit score. Cross-collateral loans are allowed across two or more properties, and portfolio loans are considered case by case. The starting rate goes to the strongest files; yours depends on the property's cash flow and the rest of the application.
In Tennessee, three things decide whether the DSCR works: long-term market rent (not short-term rent, in most of Nashville), the real property tax at 25 percent of the new value, and a real insurance quote. Remember the mortgage tax on the new deed of trust, too.
Tennessee is one of the states where our lending partners pay placement fees, and none of its counties is on the lender's restricted list. The published fix-and-flip and bridge programs lend up to 100 percent of cost and 70 percent of the after-repair value, with a minimum loan of $50,000, a minimum credit score of 600, and loans of up to twelve months; the lender's underwriting guidelines set a nine-month standard term, with extensions considered case by case. The published starting rate is 10.99 percent plus 1.99 origination points.
The 10.99 percent starting rate is available after two loans have been paid off in good standing with our lending partner; a first-time borrower should expect to start above it and earn the way down.
The guidelines also set an after-repair value of at least $100,000, a renovation budget capped at $40,000 for a borrower with zero or one completed project, and at least $15,000 in reserves. Whether you call it a hard money loan, a private money loan or an investment property loan, these are the numbers that size a Tennessee purchase-and-renovation deal.
A Nashville-area example: a house worth $400,000 after renovation supports up to $280,000 at 70 percent. If purchase and renovation cost $300,000 together, the investor brings about $20,000, plus closing costs, the transfer and mortgage taxes, and reserves.
1. Add both recordation taxes to closing costs. Transfer tax on the deed, mortgage tax on every loan, including the refinance.
2. Decide which entity will own it, and ask a CPA how Tennessee's franchise and excise taxes apply to it.
3. In Nashville, check the zoning before counting short-term rent. New non-owner-occupied permits are not issued in most residential zones.
4. Price the tax at 25 percent of the value after renovation, times the local rate.
5. Check the after-repair value clears $100,000, which matters most in Memphis.
6. Get written contractor bids and carry a ten percent contingency. A first or second project is capped at $40,000 of renovation, which goes quickly at Nashville labor prices.
7. If the exit is a DSCR refinance, run it on long-term rent, the new tax and a real insurance quote.
A DSCR built on Airbnb income in a Nashville residential zone. Without a permit you can obtain, that income does not exist.
An after-repair value under $100,000. Common in parts of Memphis and in smaller towns.
A closing budget with no recordation tax in it. Two taxes, charged on the deed and on every loan.
A large renovation as a first deal. Two completed projects are needed before the guidelines allow a budget above $40,000.
A Nashville house you'll live in, even part-time. If you or a close family member will reside there, the lender counts it as owner-occupied, and our lending partners cannot finance it.
Published fix-and-flip pricing starts at 10.99 percent plus 1.99 points for borrowers with two loans repaid in good standing; newer borrowers should budget above that. Tennessee's recordation taxes on the deed and the loan, plus appraisal, title and closing costs, are separate.
Yes. Yes. The DSCR rental program lends $75,000 to $2 million on Tennessee rentals, up to 80 percent of value, from 5.99 percent, with no credit-score minimum. The loan is sized on the property's rent, so in most of Nashville that means long-term rent rather than short-term rental income.
In everyday use, no. People search both phrases for the same thing: a short-term loan from a non-bank lender, secured by the investment property rather than your paycheck. In Tennessee, as everywhere we work, the program terms are the same whichever phrase brought you here.
Yes, and in Knoxville, Chattanooga and the suburbs around Nashville. Tennessee has no county on the restricted list; Memphis and Nashville deals are sized the same way, deal by deal, above the $100,000 floor.
On a fix-and-flip loan, yes: each guarantor's credit is pulled, with a 600 middle-score minimum, and a recent bankruptcy, foreclosure or short sale usually needs a written explanation to be considered. The DSCR rental program has no minimum score, because it leans on the property's rent.
Yes. Business-purpose lending on Tennessee investment property is well established, and the state even taxes the recording of those loans like any other. The lender and anyone arranging the loan still have to comply with state and federal law, so ask for licensing information and confirm it. This is general guidance, not legal advice.
Want the long version? Two free landlord books cover what a rental really costs to hold and what the new federal housing law actually changed.
Answer these and we will tell you whether it is fundable, on what terms, and how fast it could close. Investment property only — our lending partners do not finance a home you will live in.
We will run the numbers and come back to you. If it is time-sensitive, call 903-636-7511.
Dominion Hard Money does not lend its own funds; it arranges financing through third-party lending partners. All financing is arranged for business purposes only and secured by non-owner-occupied investment property. Not a commitment to lend. All loans subject to underwriting, property review, and approval by the lender. Terms vary by property, borrower experience, and exit strategy.
Georgia · Alabama · DSCR loans · Fix and flip loans · Private money lenders · Loan calculator