STR in Gatlinburg/ Pigeon Forge/ Sevierville

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STR in Gatlinburg/ Pigeon Forge/ Sevierville

Amber Krueger
Rental Property Investor · Madison, WI · Member since 2019 · 19 posts · 9 votes

I'm heading to the Gatlinburg/Pigeon Forge/ Sevierville area next week and am going to look at short term rentals while I'm there. I've listened to Avery Carl and reached out to a realtor with the Short Term Shop to set up some showings. I'm wondering if the market is saturated or if there is anything coming down the pipeline that would make it difficult to rent short term. I have a STR in Upper Michigan that is going well. Something in TN would be much higher risk in the possibility of an economic down turn due to the price point and mortgage payment. I look forward to getting down there and learning more! Any advice/experience is appreciated!

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

I have no idea about the Short Term Shop in particular, but I would definitely be consulting with folks - probably more than one -  that have been through the ups and downs in the Smokies.  The last 4 to 5 years aren't representative of reality.  It's been a massive bull market.  The Smokies are a wonderful place to invest long term, but I am talking to folks several times per week now that are in deep water; they simply didn't make deals that work when the rental market is more normal. 

It seems that everyone intended to plan for a downturn, but far underestimated the depth of the downturn when even a modest oversupply combined with decreased demand takes hold:  A decline in demand isn't necessarily linear with a decline in rents.  If there are 2000 cabins and 2100 guests looking for those cabins, rents rise substantially - there is a 5% undersupply.  Rents go up a lot more than 5% in that scenario - try 20-30%!  That is where we have been for several years.

The same is true in reverse.  Let's say supply of cabins has increased by 10% - up to 2200 cabins now - but demand has normalized - to perhaps 1800 guests looking for those cabins, you've now got competition among cabins to get those 1800 guests booked.  This is where we are approaching.  MANY cabins are sitting empty right now.  Huge cabins are sitting empty even offering $300 a night, that were renting for $600-800 a night just a year ago.  That's the truth.  Go to VRBO and take a look for yourself.

I am not a RE professional but am happy to give you my unbiased take on any property that you are looking at. I've been investing the Smokies since 2005.  My number is in my profile.  

[email protected]806-672-7102
SMOKY MOUNTAIN FALLS INC.51 Review
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  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    4y

    It’s still a great idea to invest here and the time is always now. Make sure you buy something special with amenities and not just a basic cabin. They will be able to guide you. 

    4Reply
  • Jonathan DempseyBusiness Member
    Rental Property Investor · Pocono Pines, PA · Member since 2018 · 153 posts · 117 votes
    4y

    Hi Amber, 

    You're in good hands with the Short Term Shop.  These guys have been studying the market for awhile.  The conversation definitely boils down to how willing you are to stretch financially with market uncertainty.  A great question to ask yourself before making any purchase.  

    If you go with a higher priced higher grossing asset, you're definitely a bit more exposed to both the upside or downside of the market.

    Example Using Simple Numbers:

    $1M purchase with $10K net revenue and $7K PITI. A 35% decrease leaves you at $6500 net, or a $500 loss.

    $100K purchase with $1K net revenue, and $700 PITI. A 35% decrease leaves you at $650 net, or a $50 loss to carry.

    The upside of a 10% increase in projected revenues is $1000/mo extra cashflow versus $100/mo.  If you are in a good financial scenario going into the deal and can weather the 35% reduced doomsday scenario, I don't see a reason not to leverage a bit and make the bigger play.  Your risk appetite is totally up to you and your confidence in your asset!

    6Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y

    I have no idea about the Short Term Shop in particular, but I would definitely be consulting with folks - probably more than one -  that have been through the ups and downs in the Smokies.  The last 4 to 5 years aren't representative of reality.  It's been a massive bull market.  The Smokies are a wonderful place to invest long term, but I am talking to folks several times per week now that are in deep water; they simply didn't make deals that work when the rental market is more normal. 

    It seems that everyone intended to plan for a downturn, but far underestimated the depth of the downturn when even a modest oversupply combined with decreased demand takes hold:  A decline in demand isn't necessarily linear with a decline in rents.  If there are 2000 cabins and 2100 guests looking for those cabins, rents rise substantially - there is a 5% undersupply.  Rents go up a lot more than 5% in that scenario - try 20-30%!  That is where we have been for several years.

    The same is true in reverse.  Let's say supply of cabins has increased by 10% - up to 2200 cabins now - but demand has normalized - to perhaps 1800 guests looking for those cabins, you've now got competition among cabins to get those 1800 guests booked.  This is where we are approaching.  MANY cabins are sitting empty right now.  Huge cabins are sitting empty even offering $300 a night, that were renting for $600-800 a night just a year ago.  That's the truth.  Go to VRBO and take a look for yourself.

    I am not a RE professional but am happy to give you my unbiased take on any property that you are looking at. I've been investing the Smokies since 2005.  My number is in my profile.  

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    16Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y

    Realtors should also take note as we head into a downturn here. Be careful how you pitch deals to prospective clients. I know of people who were sued in the 2006-2009 era (both brokers and realtors) for misleading clients. A lot of realtors are new to the market since that time period and haven’t seen a downturn. If a client buys a 1m property and they lose half the value, that will likely ruin them financially. Some will try to seek recourse in a last ditch effort to salvage their financial life. Prospective clients are making huge decisions on stuff like this, the stakes are high, act accordingly.

    2Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @John Carbone:

    Realtors should also take note as we head into a downturn here. Be careful how you pitch deals to prospective clients. I know of people who were sued in the 2006-2009 era who were both brokers and realtors for misleading clients. A lot of realtors are new to the market since that time period and haven’t seen a downturn. If a client buys a 1m property and they lose half the value, that will likely ruin them financially. Some will try to seek recourse in a last ditch effort to salvage their financial life. Prospective clients are making huge decisions on stuff like this, the stakes are high, act accordingly.

    There are a lot of similarities between 2006 and 2021/22:  Everyone had to have a cabin in the Smokies to rent out.  See the price history of this cabin.  There are a number of them in this development - Maranatha - that were built.  All with indoor pools.  This cabin originally sold for $899K in 2006.  What happened in the next few years wasn't pretty.  It would eventually sell for $205,000 in 2010.   A similar outcome for all of the cabins in this resort.  Of course, they've long since recovered, but it took 14-15 years.  

    If someone tells you "but this time is different," run Forest, run!   Boom and bust cycles are a part of the deal with vacation homes.  No way around it.  

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    5Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    Prices are very high there right now and that makes it difficult to make money. I'd be cautious at these prices and wait to see if prices start coming down like they are in other parts of the country.

    8Reply
  • Kyle Smith
    New to Real Estate · Member since 2020 · 220 posts · 107 votes
    4y
    Quote from @Collin Hays:
    Quote from @John Carbone:

    Realtors should also take note as we head into a downturn here. Be careful how you pitch deals to prospective clients. I know of people who were sued in the 2006-2009 era who were both brokers and realtors for misleading clients. A lot of realtors are new to the market since that time period and haven’t seen a downturn. If a client buys a 1m property and they lose half the value, that will likely ruin them financially. Some will try to seek recourse in a last ditch effort to salvage their financial life. Prospective clients are making huge decisions on stuff like this, the stakes are high, act accordingly.

    There are a lot of similarities between 2006 and 2021/22:  Everyone had to have a cabin in the Smokies to rent out.  See the price history of this cabin.  There are a number of them in this development - Maranatha - that were built.  All with indoor pools.  This cabin originally sold for $899K in 2006.  What happened in the next few years wasn't pretty.  It would eventually sell for $205,000 in 2010.   A similar outcome for all of the cabins in this resort.  Of course, they've long since recovered, but it took 14-15 years.  

    If someone tells you "but this time is different," run Forest, run!   Boom and bust cycles are a part of the deal with vacation homes.  No way around it.  


    Hi Collin, is it starting to look pretty bad out there?  You were making comparisons to 2009 which I know was tough in this market but also Gatlinburg wasn’t near as well known and popular back then.  Do you feel a majority of those who ran numbers based on 2018-2019 occupancies are doing okay?   I’m curious because that’s how I’ve been running my numbers for prospective cabins.  thanks 

    0Reply
  • Pretty Khare
    Investor · Austin, TX · Member since 2021 · 83 posts · 80 votes
    4y
    Quote from @Collin Hays:
    Quote from @John Carbone:

    Realtors should also take note as we head into a downturn here. Be careful how you pitch deals to prospective clients. I know of people who were sued in the 2006-2009 era who were both brokers and realtors for misleading clients. A lot of realtors are new to the market since that time period and haven’t seen a downturn. If a client buys a 1m property and they lose half the value, that will likely ruin them financially. Some will try to seek recourse in a last ditch effort to salvage their financial life. Prospective clients are making huge decisions on stuff like this, the stakes are high, act accordingly.

    There are a lot of similarities between 2006 and 2021/22:  Everyone had to have a cabin in the Smokies to rent out.  See the price history of this cabin.  There are a number of them in this development - Maranatha - that were built.  All with indoor pools.  This cabin originally sold for $899K in 2006.  What happened in the next few years wasn't pretty.  It would eventually sell for $205,000 in 2010.   A similar outcome for all of the cabins in this resort.  Of course, they've long since recovered, but it took 14-15 years.  

    If someone tells you "but this time is different," run Forest, run!   Boom and bust cycles are a part of the deal with vacation homes.  No way around it.  

    Are comparisons to 2008 really appropriate at this time? 2008 was a housing bubble induced recession, so yes the housing prices collapsed (biggest drop since the Great Depression of 1930s). However, right now we have a fed dealing with 40 year high inflation, which is a different scenario. This isn’t a housing bubble, it is an everything bubble (stocks crypto, housing etc.)

    Have the housing prices gone up by a lot in the last two years? For sure.
    Are the Smokies a riskier real estate market than others? I think, YES because the Smokies market is dependent on vacationers and does not have the stability that having a large population base of primary homeowners provides.
    Should you runs your numbers, using 2020-21 Gross Revenue? Absolutely NOT.
    Will this be another 2008 style market collapse? Probably NOT.

     

    4Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    4y
    Quote from @Amber Krueger:

    I'm heading to the Gatlinburg/Pigeon Forge/ Sevierville area next week and am going to look at short term rentals while I'm there. I've listened to Avery Carl and reached out to a realtor with the Short Term Shop to set up some showings. I'm wondering if the market is saturated or if there is anything coming down the pipeline that would make it difficult to rent short term. I have a STR in Upper Michigan that is going well. Something in TN would be much higher risk in the possibility of an economic down turn due to the price point and mortgage payment. I look forward to getting down there and learning more! Any advice/experience is appreciated!


    Amber as you can see you opened a can of worms lol. If you ask the internet if you should buy a house, you’ll get lots of answers. Don’t worry you’re in wonderful hands with the shop and you’re welcome to reach out to me personally anytime. I’d be happy to help.  

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    3Reply
  • Avery CarlBusiness Member
    Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
    4y

    The Smokies is definitely what I would call a blue chip market in terms of short term rental investing. It has stood the test of time through economic events, natural disasters, and of course the pandemic. The prices have grown to reflect that. Deals can still be had with patience and persistence. However, the point of real estate investing is to build your wealth and in turn help you sleep easier. If the prices are so high that the mortgage payment is going to keep you up at night, then go a different direction. We have 14 other markets to choose from, and a number of them are significantly cheaper than The Smokies. If that market ends up being too uncomfortable for you but you still want to get in the STR game, we can certainly help you pivot to find something that is less of a budgetary stretch. And if you want to wait it out and see what the market does, all of this stuff will still be here for you to pick up later.

    Podcast Guest on Show How to Get More Airbnb Bookings This Spring and Summer Break
    8Reply
  • Nancy Bachety
    Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes
    4y

    Be aware that waiting out this current market is like keeping your money in a savings account waiting for the stock market to recover. Both markets are cyclical and historically recover. If your numbers work, and they'll have to be some projections, don't wait. If they don't, find another one that does. You're only looking for the one that works. Airdna just published data on the current trends in STR. They showed bookings and revenue are up over however guests are waiting to reserve to the last minute. But they are booking. We have a 2/2 in Sevierville and that is what we've experienced.

    1Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Kyle Smith:
    Quote from @Collin Hays:
    Quote from @John Carbone:

    Realtors should also take note as we head into a downturn here. Be careful how you pitch deals to prospective clients. I know of people who were sued in the 2006-2009 era who were both brokers and realtors for misleading clients. A lot of realtors are new to the market since that time period and haven’t seen a downturn. If a client buys a 1m property and they lose half the value, that will likely ruin them financially. Some will try to seek recourse in a last ditch effort to salvage their financial life. Prospective clients are making huge decisions on stuff like this, the stakes are high, act accordingly.

    There are a lot of similarities between 2006 and 2021/22:  Everyone had to have a cabin in the Smokies to rent out.  See the price history of this cabin.  There are a number of them in this development - Maranatha - that were built.  All with indoor pools.  This cabin originally sold for $899K in 2006.  What happened in the next few years wasn't pretty.  It would eventually sell for $205,000 in 2010.   A similar outcome for all of the cabins in this resort.  Of course, they've long since recovered, but it took 14-15 years.  

    If someone tells you "but this time is different," run Forest, run!   Boom and bust cycles are a part of the deal with vacation homes.  No way around it.  


    Hi Collin, is it starting to look pretty bad out there?  You were making comparisons to 2009 which I know was tough in this market but also Gatlinburg wasn’t near as well known and popular back then.  Do you feel a majority of those who ran numbers based on 2018-2019 occupancies are doing okay?   I’m curious because that’s how I’ve been running my numbers for prospective cabins.  thanks 


    Each deal is its own animal.  2022 has been a stellar year, not far from 2021.  

    But I just now went to VRBO to book a cabin in Gatlinburg starting tomorrow night for 15 guests, and there are over 300 available, many for less than $200 per night, yet still unbooked.


    Draw your own conclusions.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    1Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Pretty Khare:
    Quote from @Collin Hays:
    Quote from @John Carbone:

    Realtors should also take note as we head into a downturn here. Be careful how you pitch deals to prospective clients. I know of people who were sued in the 2006-2009 era who were both brokers and realtors for misleading clients. A lot of realtors are new to the market since that time period and haven’t seen a downturn. If a client buys a 1m property and they lose half the value, that will likely ruin them financially. Some will try to seek recourse in a last ditch effort to salvage their financial life. Prospective clients are making huge decisions on stuff like this, the stakes are high, act accordingly.

    There are a lot of similarities between 2006 and 2021/22:  Everyone had to have a cabin in the Smokies to rent out.  See the price history of this cabin.  There are a number of them in this development - Maranatha - that were built.  All with indoor pools.  This cabin originally sold for $899K in 2006.  What happened in the next few years wasn't pretty.  It would eventually sell for $205,000 in 2010.   A similar outcome for all of the cabins in this resort.  Of course, they've long since recovered, but it took 14-15 years.  

    If someone tells you "but this time is different," run Forest, run!   Boom and bust cycles are a part of the deal with vacation homes.  No way around it.  

    Are comparisons to 2008 really appropriate at this time? 2008 was a housing bubble induced recession, so yes the housing prices collapsed (biggest drop since the Great Depression of 1930s). However, right now we have a fed dealing with 40 year high inflation, which is a different scenario. This isn’t a housing bubble, it is an everything bubble (stocks crypto, housing etc.)

    Have the housing prices gone up by a lot in the last two years? For sure.
    Are the Smokies a riskier real estate market than others? I think, YES because the Smokies market is dependent on vacationers and does not have the stability that having a large population base of primary homeowners provides.
    Should you runs your numbers, using 2020-21 Gross Revenue? Absolutely NOT.
    Will this be another 2008 style market collapse? Probably NOT.

     


    No one is calling for a financial crisis ala 2008-09.  Go to VRBO and pretend to book a McMansion cabin in Gatlinburg for tonight.  There are hundreds sitting empty.  That isn’t rain or sunshine, just fact.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    2Reply
  • Mark S.
    Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 474 votes
    4y

    @Collin H. Excellent advice!

    0Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    @Amber Krueger You've gotten a lot of excellent opinions and advice in this thread.  I'm just going to talk about my experience... I'm closing on my 7th cabin in the Smokies today, and it's my biggest purchase yet.  I'm still a firm believer in this market!

    There's been a lot of discussion about things trending down here lately... well, year over year my portfolio is down about 4% YTD from 2021, but I always knew 2021 would be an outlier, so I'm quite pleased with performance overall.  The properties I've added in the last 12 months (three of them) are performing well.  I began investing here in 2017.

    Historically, while property values did dive significantly during the 2008 recession (which was pre-self management of vacation rentals and locally most cabins were second homes and/or had management fees around 40%) - but tourism in the area saw a very small decline over that same time period.  The way vacation rentals are valued locally has changed dramatically since then; now the values are much more tied to revenue potential and without a dramatic decline in revenues, it seems unlikely values will fall in such a precipitous way.  

    Hundreds of millions of dollars are being actively spent on commercial development here - two of the most high profile projects are the Cherokee Nation's attraction development and the biggest Buc-ee's in the nation, both located at exit 407 off I-40, the main access point to the region.  That indicates a high level of confidence by those organizations in the area's continued tourism economy.  (btw... for everybody talking about big cabins sitting empty right now... YEAH.  School just came back and Labor Day is around the corner.  Large groups don't typically travel right this minute, especially on Monday/Tuesday!)

    All that said - it IS an expensive market. It may not be the right choice for everyone. Given that it appears to be near peak for this time period, I would recommend that anybody looking to invest here have the reserves and nerve to weather some fluctuation in the near term. Buy smart - fortunately right now buyers have more negotiating power than they have in the last several years. Don't overleverage yourself. If you're concerned that you'll be in trouble if rents don't cover expenses during the upcoming slow months of January/February, that's a good indication you're stretching yourself too much. This is true in any market - and any STR market is going to have seasonality with some months less profitable than others.

    Definitely come, check it out, and enjoy your time here - and hopefully all this will help you decide if the Smokies are the right market for you right now, or potentially in the future.  As @Avery Carl said, there's lots of other great markets as well that you may feel more comfortable with at the moment!

    10Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    4y

    Great thread here. Like @John Underwood and I have said in other posts, people still will go on vacation. They will save up and head out. They might not head to the airport and fly to wherever, but driving to PF or Idaho or FL is well within the means of most working families. By all accounts, there is a TON to do all year round in the Gatlinburg/Pigeon Forge/ Sevierville area. No matter what you like to do you can find it there.

    I don't see things dropping off to nothing. Just buy the right cabin in the right area and you should be OK.

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Quote from @Nancy Bachety:

    Be aware that waiting out this current market is like keeping your money in a savings account waiting for the stock market to recover. Both markets are cyclical and historically recover. If your numbers work, and they'll have to be some projections, don't wait. If they don't, find another one that does. You're only looking for the one that works. Airdna just published data on the current trends in STR. They showed bookings and revenue are up over however guests are waiting to reserve to the last minute. But they are booking. We have a 2/2 in Sevierville and that is what we've Iexperienced.

    I am not trying to be mean. I do have cash sitting on the side lines in my stock accounts waiting for things to recover, then I will jump back in on the up swing. Maybe apples and oranges I know.


    1Reply
  • Pretty Khare
    Investor · Austin, TX · Member since 2021 · 83 posts · 80 votes
    4y
    Quote from @Avery Carl:

    The Smokies is definitely what I would call a blue chip market in terms of short term rental investing. It has stood the test of time through economic events, natural disasters, and of course the pandemic. The prices have grown to reflect that. Deals can still be had with patience and persistence. However, the point of real estate investing is to build your wealth and in turn help you sleep easier. If the prices are so high that the mortgage payment is going to keep you up at night, then go a different direction. We have 14 other markets to choose from, and a number of them are significantly cheaper than The Smokies. If that market ends up being too uncomfortable for you but you still want to get in the STR game, we can certainly help you pivot to find something that is less of a budgetary stretch. And if you want to wait it out and see what the market does, all of this stuff will still be here for you to pick up later.

    That’s some great advice. I was also actively looking in Smokies through Short Term Shop a couple of months ago but now wanting in the sideline to see how tha market plays out.

     What gross revenue to sale price and cash on cash returns would you consider conservative underwriting in the current market environment in the Smokies? Thanks 
    0Reply
  • Pretty Khare
    Investor · Austin, TX · Member since 2021 · 83 posts · 80 votes
    4y
    Quote from @Julie McCoy:

    @Amber Krueger You've gotten a lot of excellent opinions and advice in this thread.  I'm just going to talk about my experience... I'm closing on my 7th cabin in the Smokies today, and it's my biggest purchase yet.  I'm still a firm believer in this market!

    There's been a lot of discussion about things trending down here lately... well, year over year my portfolio is down about 4% YTD from 2021, but I always knew 2021 would be an outlier, so I'm quite pleased with performance overall.  The properties I've added in the last 12 months (three of them) are performing well.  I began investing here in 2017.

    Historically, while property values did dive significantly during the 2008 recession (which was pre-self management of vacation rentals and locally most cabins were second homes and/or had management fees around 40%) - but tourism in the area saw a very small decline over that same time period.  The way vacation rentals are valued locally has changed dramatically since then; now the values are much more tied to revenue potential and without a dramatic decline in revenues, it seems unlikely values will fall in such a precipitous way.  

    Hundreds of millions of dollars are being actively spent on commercial development here - two of the most high profile projects are the Cherokee Nation's attraction development and the biggest Buc-ee's in the nation, both located at exit 407 off I-40, the main access point to the region.  That indicates a high level of confidence by those organizations in the area's continued tourism economy.  (btw... for everybody talking about big cabins sitting empty right now... YEAH.  School just came back and Labor Day is around the corner.  Large groups don't typically travel right this minute, especially on Monday/Tuesday!)

    All that said - it IS an expensive market. It may not be the right choice for everyone. Given that it appears to be near peak for this time period, I would recommend that anybody looking to invest here have the reserves and nerve to weather some fluctuation in the near term. Buy smart - fortunately right now buyers have more negotiating power than they have in the last several years. Don't overleverage yourself. If you're concerned that you'll be in trouble if rents don't cover expenses during the upcoming slow months of January/February, that's a good indication you're stretching yourself too much. This is true in any market - and any STR market is going to have seasonality with some months less profitable than others.

    Definitely come, check it out, and enjoy your time here - and hopefully all this will help you decide if the Smokies are the right market for you right now, or potentially in the future.  As @Avery Carl said, there's lots of other great markets as well that you may feel more comfortable with at the moment!

    Thanks for your insights and congrats for closing your seventh cabin!! Would you be comfortable sharing any high level numbers on the properties you closed recently. Thank you
    0Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y

    I’d say 99 percent of  properties right now are bad deals. I wouldn’t give up looking though, they are out there. 

    1Reply
  • Mark Lawson
    Real Estate Broker · Chattanooga , TN · Member since 2008 · 46 posts · 25 votes
    4y

    Make sure you find an agent who knows what they are doing. There are more complaints filed with the TN real estate commission out of that county than the rest of the state combined so there are some not so great agents there. One thing to look out for is some zoning is not grandfathered in on STR's and once deed transfer you can no longer have a STR in that home.

    1Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Quote from @Mark Lawson:

    Make sure you find an agent who knows what they are doing. There are more complaints filed with the TN real estate commission out of that county than the rest of the state combined so there are some not so great agents there. One thing to look out for is some zoning is not grandfathered in on STR's and once deed transfer you can no longer have a STR in that home.

    The reality is almost nobody on here wants to discuss these boring topics you mention. People like the discussions that involve kool-aid spiking on parade floats. 
    0Reply
  • Pretty Khare
    Investor · Austin, TX · Member since 2021 · 83 posts · 80 votes
    4y
    Quote from @John Carbone:

    I’d say 99 percent of  properties right now are bad deals. I wouldn’t give up looking though, they are out there. 

     @John Carbone what is your criterial for a good deal right now? thanks

    0Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Quote from @Pretty Khare:
    Quote from @John Carbone:

    I’d say 99 percent of  properties right now are bad deals. I wouldn’t give up looking though, they are out there. 

     @John Carbone what is your criterial for a good deal right now? thanks

    Sent you a message. 
    1Reply
  • Paul Wolfson
    Los Angeles, CA · Member since 2019 · 77 posts · 32 votes
    4y
    Quote from @Collin Hays:
    Quote from @Pretty Khare:
    Quote from @Collin Hays:
    Quote from @John Carbone:

    Realtors should also take note as we head into a downturn here. Be careful how you pitch deals to prospective clients. I know of people who were sued in the 2006-2009 era who were both brokers and realtors for misleading clients. A lot of realtors are new to the market since that time period and haven’t seen a downturn. If a client buys a 1m property and they lose half the value, that will likely ruin them financially. Some will try to seek recourse in a last ditch effort to salvage their financial life. Prospective clients are making huge decisions on stuff like this, the stakes are high, act accordingly.

    There are a lot of similarities between 2006 and 2021/22:  Everyone had to have a cabin in the Smokies to rent out.  See the price history of this cabin.  There are a number of them in this development - Maranatha - that were built.  All with indoor pools.  This cabin originally sold for $899K in 2006.  What happened in the next few years wasn't pretty.  It would eventually sell for $205,000 in 2010.   A similar outcome for all of the cabins in this resort.  Of course, they've long since recovered, but it took 14-15 years.  

    If someone tells you "but this time is different," run Forest, run!   Boom and bust cycles are a part of the deal with vacation homes.  No way around it.  

    Are comparisons to 2008 really appropriate at this time? 2008 was a housing bubble induced recession, so yes the housing prices collapsed (biggest drop since the Great Depression of 1930s). However, right now we have a fed dealing with 40 year high inflation, which is a different scenario. This isn’t a housing bubble, it is an everything bubble (stocks crypto, housing etc.)

    Have the housing prices gone up by a lot in the last two years? For sure.
    Are the Smokies a riskier real estate market than others? I think, YES because the Smokies market is dependent on vacationers and does not have the stability that having a large population base of primary homeowners provides.
    Should you runs your numbers, using 2020-21 Gross Revenue? Absolutely NOT.
    Will this be another 2008 style market collapse? Probably NOT.

     


    No one is calling for a financial crisis ala 2008-09.  Go to VRBO and pretend to book a McMansion cabin in Gatlinburg for tonight.  There are hundreds sitting empty.  That isn’t rain or sunshine, just fact.


     Hi Collin. I'm curious, how would you run numbers using 2018 data if you wanted to be conservative? For example, the average daily rate and occupancy rate on AirDNA shows current data -- but how would you do it for 2018 for example? Thanks in advance.

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