Gatlinburg: $1000 psf

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Gatlinburg: $1000 psf

Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

I figured this day was coming.  A good friend of mine just bought two-500 sq ft rental homes in Gatlinburg for $1 million.  Granted, these are near downtown and right on the Roaring Fork River.

This isn’t an out of state speculator; he’s a seasoned local pro, and said the numbers on this work quite well.


Still, incredible.

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y

Do you actually know the numbers? If each unit rents for $175 a night for $300 nights a year, that's only $105,000 before expenses. A good long-term rental will earn 1% of the purchase price monthly, which would be $10,000 per month or $120,000 per year. So the earnings are quite a bit lower than a long-term rental and that's before considering the additional expenses (utilities, lodging taxes, landscaping, etc.). 

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  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 993 posts · 1k+ votes
    4y

    If these are the ones I'm thinking of I remember seeing them listed a couple years ago for less than half that and sitting on the market for months.  Obviously the market is very different now and I'm sure the numbers work better now than they did then, but still crazy!

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    Crazy. But if the numbers work, they work......

    0Reply
  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    Wow that is crazy.  I keep saying it's the wild wild west there right now.  Just about everything I am seeing in that market is crazy.

    0Reply
  • Nathan W.
    Austin, TX · Member since 2013 · 153 posts · 104 votes
    4y

    I saw a 3,024 SF house listed for $785/SF ($2.375m) a couple fo days ago. Not quite $1,000 psf but high considering the size. 

    0Reply
  • Joshua Strickland
    Investor · Flowery Branch, GA · Member since 2019 · 413 posts · 412 votes
    4y

    3 rules of real estate: Location, location, location

    Every time I start to think this market is tapped out it surprises me.

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    Do you actually know the numbers? If each unit rents for $175 a night for $300 nights a year, that's only $105,000 before expenses. A good long-term rental will earn 1% of the purchase price monthly, which would be $10,000 per month or $120,000 per year. So the earnings are quite a bit lower than a long-term rental and that's before considering the additional expenses (utilities, lodging taxes, landscaping, etc.). 

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Nathan Gesner:

    Do you actually know the numbers? If each unit rents for $175 a night for $300 nights a year, that's only $105,000 before expenses. A good long-term rental will earn 1% of the purchase price monthly, which would be $10,000 per month or $120,000 per year. So the earnings are quite a bit lower than a long-term rental and that's before considering the additional expenses (utilities, lodging taxes, landscaping, etc.). 


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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Nathan Gesner:

    Do you actually know the numbers? If each unit rents for $175 a night for $300 nights a year, that's only $105,000 before expenses. A good long-term rental will earn 1% of the purchase price monthly, which would be $10,000 per month or $120,000 per year. So the earnings are quite a bit lower than a long-term rental and that's before considering the additional expenses (utilities, lodging taxes, landscaping, etc.). 

    Two words:  Roaring Fork.  

    Houses on the Roaring Fork rent for big bucks.  Walk to downtown.  And try finding a cabin to rent anywhere in the Gatlinburg area where you can catch a fat rainbow from the back porch, and the kids can play all day in the water.

    Different deal.

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  • Kyle Smith
    New to Real Estate · Member since 2020 · 220 posts · 107 votes
    4y

    I can’t make those numbers work if I financed 80% of that deal.  What’s the expected yearly gross per unit?  I would expect $125-$250/night and that’s on the higher end.  I would figure $40k-$60k gross/year in todays market and much lower in a  recession year. 

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Kyle Smith:

    I can’t make those numbers work if I financed 80% of that deal.  What’s the expected yearly gross per unit?  I would expect $125-$250/night and that’s on the higher end.  I would figure $40k-$60k gross/year in todays market and much lower in a  recession year. 

     $250 a night on Roaring Fork is easy.  Here is a 1000 sq ft cabin just upstream that is booked year round.  $471 per night.   People pay to be on water.

    https://www.vrbo.com/1632454

    If you are at $250 per night average, you’re at $75K per year per unit at 300 nights a year.  But on Roaring Fork, you should be able to hit 325 nights a year.

    At $150K a year income, and financing 800K @ 5% for 15 years, you see still clearing around $6K a month.  After utilities etc, you’re still at $4500 a month-ish.

    Not bad.

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  • Joshua Strickland
    Investor · Flowery Branch, GA · Member since 2019 · 413 posts · 412 votes
    4y

    Honestly, I’d happily pay a premium to stay within walking distance of downtown Gatlinburg. Parking is a headache and Mountain View’s are a dime a dozen. I’m jealous of the river view.

    1Reply
  • Stephen Ray
    Bel Air, MD · Member since 2018 · 30 posts · 19 votes
    4y

    I can't believe that $1000 sq ft is now being justified as reasonable. That 1000sq ft cabin above isn't $471 all year round. Just check it in April/May at 180. I'm sure your buddy has done his homework if he's local and is spending a million $$ but that price is spicey. That being said convenience to downtown is awesome and I've been looking for a riverfront place. 

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Stephen Ray:

    I can't believe that $1000 sq ft is now being justified as reasonable. That 1000sq ft cabin above isn't $471 all year round. Just check it in April/May at 180. I'm sure your buddy has done his homework if he's local and is spending a million $$ but that price is spicey. That being said convenience to downtown is awesome and I've been looking for a riverfront place. 

    Due to their scarcity, a true riverfront property is going to run 50% higher than a comparable non-water front property and perhaps twice as high. 

    I haven't seen a riverfront property on MLS in Gatlinburg in probably 2 years, and I've seen only one Roaring Fork property on MLS since 2005.  

    What this guy did was go to the owners and asked “how much?”  They gave him the number, he wrote the check.


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  • Kyle Smith
    New to Real Estate · Member since 2020 · 220 posts · 107 votes
    4y

    Roaring Fork Road is a long walk to the strip though I think.  15min walk?  But if it’s getting in the 400’s a night, heck yeah.  I’m always learning on this forum. 

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  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 993 posts · 1k+ votes
    4y
    Quote from @Collin Hays:
    Quote from @Stephen Ray:

    I can't believe that $1000 sq ft is now being justified as reasonable. That 1000sq ft cabin above isn't $471 all year round. Just check it in April/May at 180. I'm sure your buddy has done his homework if he's local and is spending a million $$ but that price is spicey. That being said convenience to downtown is awesome and I've been looking for a riverfront place. 

    Due to their scarcity, a true riverfront property is going to run 50% higher than a comparable non-water front property and perhaps twice as high. 

    I haven't seen a riverfront property on MLS in Gatlinburg in probably 2 years, and I've seen only one Roaring Fork property on MLS since 2005.  

    What this guy did was go to the owners and asked “how much?”  They gave him the number, he wrote the check.


     Is there a link to the property?

    I swear there was one on a river front (maybe it was creek front and that's what I'm mixing up?) with two small cabins advertising "the only cabins walkable to the main downtown strip" on the MLS within the last 2 years. I remember considering it. It sat there for a while before the big real estate explosion. Not sure if it was the same property or not but the description of this place sounds identical.

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Kyle Smith:

    Roaring Fork Road is a long walk to the strip though I think.  15min walk?  But if it’s getting in the 400’s a night, heck yeah.  I’m always learning on this forum. 


    It really depends on where on Roaring Fork Road.  Where Roaring Fork Road meets 321, you’re basically downtown.  As you drive up the Road, you are further from downtown.

    Homes on Roaring Fork Road that are also waterfront are limited to odd/numbered addresses.  That’s approximately 12-15 homes - I haven’t counted recently.  All but one were destroyed in the Gatlinburg fire.  

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Ryan Moyer:
    Quote from @Collin Hays:
    Quote from @Stephen Ray:

    I can't believe that $1000 sq ft is now being justified as reasonable. That 1000sq ft cabin above isn't $471 all year round. Just check it in April/May at 180. I'm sure your buddy has done his homework if he's local and is spending a million $$ but that price is spicey. That being said convenience to downtown is awesome and I've been looking for a riverfront place. 

    Due to their scarcity, a true riverfront property is going to run 50% higher than a comparable non-water front property and perhaps twice as high. 

    I haven't seen a riverfront property on MLS in Gatlinburg in probably 2 years, and I've seen only one Roaring Fork property on MLS since 2005.  

    What this guy did was go to the owners and asked “how much?”  They gave him the number, he wrote the check.


     Is there a link to the property?

    I swear there was one on a river front (maybe it was creek front and that's what I'm mixing up?) with two small cabins advertising "the only cabins walkable to the main downtown strip" on the MLS within the last 2 years. I remember considering it. It sat there for a while before the big real estate explosion. Not sure if it was the same property or not but the description of this place sounds identical.


    I believe these are recent construction.  There are two listings currently that are on RF Road, but they are not waterfront.  They are across the street.  

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  • Chris I.
    Gilbert, AZ · Member since 2018 · 93 posts · 42 votes
    4y
    Quote from @Collin Hays:
    Quote from @Kyle Smith:

    I can’t make those numbers work if I financed 80% of that deal.  What’s the expected yearly gross per unit?  I would expect $125-$250/night and that’s on the higher end.  I would figure $40k-$60k gross/year in todays market and much lower in a  recession year. 

     $250 a night on Roaring Fork is easy.  Here is a 1000 sq ft cabin just upstream that is booked year round.  $471 per night.   People pay to be on water.

    https://www.vrbo.com/1632454

    If you are at $250 per night average, you’re at $75K per year per unit at 300 nights a year.  But on Roaring Fork, you should be able to hit 325 nights a year.

    At $150K a year income, and financing 800K @ 5% for 15 years, you see still clearing around $6K a month.  After utilities etc, you’re still at $4500 a month-ish.

    Not bad.


     The "parking lot" of that vrbo rental... 😂   Hope you don't have a truck!

    0Reply
  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 993 posts · 1k+ votes
    4y
    Quote from @Collin Hays:
    Quote from @Ryan Moyer:
    Quote from @Collin Hays:
    Quote from @Stephen Ray:

    I can't believe that $1000 sq ft is now being justified as reasonable. That 1000sq ft cabin above isn't $471 all year round. Just check it in April/May at 180. I'm sure your buddy has done his homework if he's local and is spending a million $$ but that price is spicey. That being said convenience to downtown is awesome and I've been looking for a riverfront place. 

    Due to their scarcity, a true riverfront property is going to run 50% higher than a comparable non-water front property and perhaps twice as high. 

    I haven't seen a riverfront property on MLS in Gatlinburg in probably 2 years, and I've seen only one Roaring Fork property on MLS since 2005.  

    What this guy did was go to the owners and asked “how much?”  They gave him the number, he wrote the check.


     Is there a link to the property?

    I swear there was one on a river front (maybe it was creek front and that's what I'm mixing up?) with two small cabins advertising "the only cabins walkable to the main downtown strip" on the MLS within the last 2 years. I remember considering it. It sat there for a while before the big real estate explosion. Not sure if it was the same property or not but the description of this place sounds identical.


    I believe these are recent construction.  There are two listings currently that are on RF Road, but they are not waterfront.  They are across the street.  


     Yeah looks like I was thinking of something else.  These are the ones I was thinking of, which are on a creek not on the river.

    https://www.zillow.com/homedet...

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Ryan Moyer:
    Quote from @Collin Hays:
    Quote from @Ryan Moyer:
    Quote from @Collin Hays:
    Quote from @Stephen Ray:

    I can't believe that $1000 sq ft is now being justified as reasonable. That 1000sq ft cabin above isn't $471 all year round. Just check it in April/May at 180. I'm sure your buddy has done his homework if he's local and is spending a million $$ but that price is spicey. That being said convenience to downtown is awesome and I've been looking for a riverfront place. 

    Due to their scarcity, a true riverfront property is going to run 50% higher than a comparable non-water front property and perhaps twice as high. 

    I haven't seen a riverfront property on MLS in Gatlinburg in probably 2 years, and I've seen only one Roaring Fork property on MLS since 2005.  

    What this guy did was go to the owners and asked “how much?”  They gave him the number, he wrote the check.


     Is there a link to the property?

    I swear there was one on a river front (maybe it was creek front and that's what I'm mixing up?) with two small cabins advertising "the only cabins walkable to the main downtown strip" on the MLS within the last 2 years. I remember considering it. It sat there for a while before the big real estate explosion. Not sure if it was the same property or not but the description of this place sounds identical.


    I believe these are recent construction.  There are two listings currently that are on RF Road, but they are not waterfront.  They are across the street.  


     Yeah looks like I was thinking of something else.  These are the ones I was thinking of, which are on a creek not on the river.

    https://www.zillow.com/homedet...


     Still quite rare and worth a pretty penny.  If these were downtown such as the lower end of Roaring Fork, double the price.  Water sells.

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  • Frank Borzen
    Member since 2020 · 61 posts · 39 votes
    4y

    @Collin Hays how do you feel about the waterfront cabins in Townsend/Walland? There seem to be a lot of options. Too far out from PF/Gatlinburg?

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Frank Borzen:

    @Collin Hays how do you feel about the waterfront cabins in Townsend/Walland? There seem to be a lot of options. Too far out from PF/Gatlinburg?

    Townsend is a wonderful area, and there are many STR owners there that are doing well. You do not have to be in close proximity of Gatlinburg to do well. I own properties in Cosby that perform exceptionally well.


    There is almost always a significant premium for a waterfront home versus a like home that is a block away from the water. 

    A beachfront home will be worth more than a “walk to the beach” home a few hundred yards away.

    Scarcity and desirability meet.  That doesn’t necessarily mean that they are a superior investment. Lexus is made by Toyota.  Yet many consumers are perfectly willing to pay 20% more for the Lexus badge and added niceties.  Is it a better investment?  That is going to depend on who you ask.

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  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    @Frank Borzen I am interested in what @Collin Hays thinks as well but I will tell you what I think.  The waterfront cabins in Townsend, will do much better than the non waterfront cabins in Townsend.  However, my guess is that it won't do as good as a non waterfront cabin in PF/Gatlinburg - I could be wrong.  When visiting we used to always stay in Townsend, just to stay out of the hustle and bustle of PF/Gatlinburg, but in the last couple decades, internet has still not reached Townsend, cell coverage is awful and if you need to stay connected it is very difficult.  Now there are still some that want that, but most people are not thrilled about that so you are not going to get the same demand/prices that you will get in PF/Gatlinburg - IMO.  Not a lot of food options over there.  It's a great place to stay to get away from crowds and if your main goal is to visit Cade's Cove over and over.. which has been what I have typically done cause I like the photography opportunities there.

    I have always loved it over there, but like I said I need to stay connected at least part of the time, and it is really difficult over there and limited food options.

    1Reply
  • Frank Borzen
    Member since 2020 · 61 posts · 39 votes
    4y

    @Collin Hays @Ken Boone thank you. I agree with your thoughts. Taking a quick look there appear to be a few amazing cabins right on the Little River, but they are in the 650k range. I just don't see those numbers working for positive cash flow.

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y

    looks like there is another member of the $1K psf club in Gatlinburg.  At least the ask.


    https://www.zillow.com/homedet...

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