Gatlinburg Investing - Let’s look at this “deal”

[Jeff Gold]

Just looked at “deal” in Gatlinburg for 3/3 with Mountain View with about 97k in revenue. 

It will go for 825-850k. On similar properties they are getting well over asking (and often over a dozen offers or more) and cash deals as many of you know…

20% down brings you to a mortgage of around 3200/month plus 2100/month management fee (25% of gross which is based on 2021 #'s) and you still have to pay taxes of approx 300/month, HOA 95/month and monthly expenses of approx 700/month (ac/heat, cable, homeowners insurance) plus upkeep/maintenance of cabin $150/month (just a guess but could be more).
65,500 in expenses (and I think this is a conservative number.
So, you are left with maybe 30-35k net annually..
You shelled out 170k plus closing expenses of 8500 (1%). 178,500 approx. 

Less then 20% CoC… unless you can increase your annual rental rates.

Also, there is no way of knowing if this market will continue to fly or come back down to earth. No way to fully calculate this risk…

I’m curious of the forum members thoughts are on this….

[Luke Carl]

Originally posted by @Jeff Gold:

@Luke Carl some good points… spoke to an agent yesterday and he said he didn’t see things slowing down next year based on demand he’s seeing. My understanding is the 2016 Smoky mountains fire took out a good amount of inventory and building is increasing based on demand and prices continue to soar. 

 Sounds like you’re looking for a reason not to do it. Stop that.