With all the price increase is it still worth investing in smokys

[Rajkumar Theagarajan]

Hi everyone, I'm looking to invest in the STR market in Gatlinburg/pigeon forge area. The price that I've been seeing for 3bed cabins are ranging from 500k - 580k. 2 years ago these cabins were sold in the 350k - 400k range. My question is although the cash flow for most of these properties will be great (annual gross >65k) is it still worth the ROI because of the rising cost of these cabins? Would love to hear your suggestions 😊

[Leslie Anne Morris]

It depends on your particular underwriting metrics and exactly what you’re looking for in relation to goals. If you can find something special and the numbers work for your investing strategy then the time is always now 

[John Underwood]

Quote from @Rajkumar Theagarajan:

Hi everyone, I'm looking to invest in the STR market in Gatlinburg/pigeon forge area. The price that I've been seeing for 3bed cabins are ranging from 500k - 580k. 2 years ago these cabins were sold in the 350k - 400k range. My question is although the cash flow for most of these properties will be great (annual gross >65k) is it still worth the ROI because of the rising cost of these cabins? Would love to hear your suggestions 😊

 As you said for a property that can still cash flow well then the answer is yes.

[Collin H.]

Quote from @Rajkumar Theagarajan:

Hi everyone, I'm looking to invest in the STR market in Gatlinburg/pigeon forge area. The price that I've been seeing for 3bed cabins are ranging from 500k - 580k. 2 years ago these cabins were sold in the 350k - 400k range. My question is although the cash flow for most of these properties will be great (annual gross >65k) is it still worth the ROI because of the rising cost of these cabins? Would love to hear your suggestions 😊

It’s not about the price; it’s about the yield.  I personally wouldn’t be happy with $65K per year gross rent on a $580K investment.

If that was the best I could do, I’d instead buy $580K worth of shares of Phillip Morris stock and enjoy my 8%-and-rising dividend and collect my checks.

[Luke Carl]

Are the old days that you can go back and read about on this forum gone? The days of 50% and even 100% coc return? yes.
I was around then and it was wild and we didn’t even know it. No one was using Airbnb in the biggest vacation market in America just 6-8 years ago.

Although they started in 2007, Airbnb really has only been around for about 10 years. It was a super bowl commercial in 2011 that put them on the map. So this concept of “do it yourself to get huge returns” is relatively new. I was on the front lines. In fact I own the oldest Airbnb in the Smokeys. Although I prefer Vrbo but that’s another story. 

It’s also gotten a lot easier. When I started and was getting ridiculous numbers, we didn’t have things like Pricelabs or igms, airdna, stessa or ynab. 

Is the secret out? Probably. 

Can average Joe still pick up a property and make a better return from a distance than LTR? In most cases heck yeah. Keep in mind for every average Joe that gets in another one decides they’re sick of toilets and reviews and gets out. Only us crazy people do this real estate thing lol.  

[Fiza Ah]

The problem is current yields don't indicate future yields. People traveled more domestically since 2020. Now international travel is up 100%. I'd run conservative numbers based on 2017 and 2018 if you can 

[John Underwood]

Quote from @Luke Carl:

Are the old days that you can go back and read about on this forum gone? The days of 50% and even 100% coc return? yes.
I was around then and it was wild and we didn’t even know it. No one was using Airbnb in the biggest vacation market in America just 6-8 years ago.

Although they started in 2007, Airbnb really has only been around for about 10 years. It was a super bowl commercial in 2011 that put them on the map. So this concept of “do it yourself to get huge returns” is relatively new. I was on the front lines. In fact I own the oldest Airbnb in the Smokeys. Although I prefer Vrbo but that’s another story. 

It’s also gotten a lot easier. When I started and was getting ridiculous numbers, we didn’t have things like Pricelabs or igms, airdna, stessa or ynab. 

Is the secret out? Probably. 

Can average Joe still pick up a property and make a better return from a distance than LTR? In most cases heck yeah. Keep in mind for every average Joe that gets in another one decides they’re sick of toilets and reviews and gets out. Only us crazy people do this real estate thing lol.  

 Excellent points.

I wonder how many people get into this due to all the hype and then get out when they aren't making much money for the work because they didn't buy the right property at the right price.

[Corby Goade]

I don't know the market in the Smokies, but I've been doing this for a long time and I understand the mindset behind this question- these boards are littered with "should I wait" posts. The reality is that you should be asking questions on these boards about process for sure, but from a financial standpoint- every person has different goals, resources and risk tolerance. To complicate things further, every market offers differet returns, tenant profiles and feasable exit strategies. 

Only YOU can decide if a deal works for you. I am a full time investor and I can tell you that if I posted ANY deal I've done on these boards, I'd be torn to shreds. Yet here I am, travelling with my family when I want, going out to eat when I want, living a life I never thought possible for me. 

Anyone can do this, but you have to be prepared to be uncomfortable for a while. There's no two ways about it. Your first few deals with be scary and stressful- not because they are bad deals, but because you are stretching and learning. 

Don't wait for a homerun deal, find a decent deal that works for YOU and jump in. You can do it, 100%.

Good luck!

[Chris Bauer]

Quote from @Corby Goade:

I don't know the market in the Smokies, but I've been doing this for a long time and I understand the mindset behind this question- these boards are littered with "should I wait" posts. The reality is that you should be asking questions on these boards about process for sure, but from a financial standpoint- every person has different goals, resources and risk tolerance. To complicate things further, every market offers differet returns, tenant profiles and feasable exit strategies. 

Only YOU can decide if a deal works for you. I am a full time investor and I can tell you that if I posted ANY deal I've done on these boards, I'd be torn to shreds. Yet here I am, travelling with my family when I want, going out to eat when I want, living a life I never thought possible for me. 

Anyone can do this, but you have to be prepared to be uncomfortable for a while. There's no two ways about it. Your first few deals with be scary and stressful- not because they are bad deals, but because you are stretching and learning. 

Don't wait for a homerun deal, find a decent deal that works for YOU and jump in. You can do it, 100%.

Good luck!

I love this… the more I read and listen to as a beginner, the more I realize that you just need to take action and it’s the base hits and doubles that allow you to scale and build your portfolio… you can’t wait around for the homerun deal.

[John Carbone]

Quote from @Chris Bauer:

Quote from @Corby Goade:

I don't know the market in the Smokies, but I've been doing this for a long time and I understand the mindset behind this question- these boards are littered with "should I wait" posts. The reality is that you should be asking questions on these boards about process for sure, but from a financial standpoint- every person has different goals, resources and risk tolerance. To complicate things further, every market offers differet returns, tenant profiles and feasable exit strategies. 

Only YOU can decide if a deal works for you. I am a full time investor and I can tell you that if I posted ANY deal I've done on these boards, I'd be torn to shreds. Yet here I am, travelling with my family when I want, going out to eat when I want, living a life I never thought possible for me. 

Anyone can do this, but you have to be prepared to be uncomfortable for a while. There's no two ways about it. Your first few deals with be scary and stressful- not because they are bad deals, but because you are stretching and learning. 

Don't wait for a homerun deal, find a decent deal that works for YOU and jump in. You can do it, 100%.

Good luck!

I love this… the more I read and listen to as a beginner, the more I realize that you just need to take action and it’s the base hits and doubles that allow you to scale and build your portfolio… you can’t wait around for the homerun deal.

I think in this market you need the home run deal to protect yourself on the downside. That home run may turn into a double with winds blowing in. If you do a single or double now, you are liable to be caught stealing before you make it home! 

[Derek Brawders]

It's so knowing which pitch to swing at... a HR every now and again is good, but if you want a good average it comes down to the right preparation,  knowledge and work to maintain that major league salary.. at least that is the mindset I'm looking at in my approach. 🙂

Learning every day as i can and striving for the goals ive set for myself.

[Bill Brandt]

If people were buying and failing you should see prices dropping. You can also look for quick resales at “break even” prices. If prices are continuing to rise either people are making money at it, or god forbid. They’re buying them simo,y as vacation homes “before prices get insane” and not renting them out. 

I think STR people forget that, some number I'll make up, like 80% of vacation homes sit empty when the owner's not using it. They're paying the same price with a 0% return as they still think it was a good deal.

[Paul Wolfson]

Quote from @Fiza Ah:

The problem is current yields don't indicate future yields. People traveled more domestically since 2020. Now international travel is up 100%. I'd run conservative numbers based on 2017 and 2018 if you can 

 @Fiza Ah how do you run historical numbers? Websites like AirDNA only show current data.

[Fiza Ah]

I look at calendars in the same area on Airbnb (acting like a guest) and calculate their occupancy and rates. I usually use 3-5 data sources to come up with my own numbers.

As someone who's been doing Airbnb for close to a decade, I would also caution that occcupancy keeps dropping as everyone and their mother tries to get into the Airbnb game. I'm actually going long-term over Airbnb because the ROI is minimal after expenses