Is now a good time to invest in the Smokies?

Question

Another question I am getting all of the time.  Here's my take.

Is this a good time to invest in the Smokies? (biggerpockets.com)

Ryan Moyer · Answer

YES!!

Shaun Moore has a great quote about this on his podcast regarding the current market.  He says something like "people are quick to give themselves all the credit when things are going well, and none of the credit when they're not".  Essentially people succeeded when a blind monkey succeeded and they think it's because of something they did, and then when things start taking a reasonable level of competence they don't have they start blaming it on the broader market, convincing themselves it's impossible to make money in this market.

And it's not even that the market is poor now, it's just really good instead of really really really good.  So these people bought at the right time, they think "I'm freaking awesome at this", and then when things start to settle a little bit back towards normal they start blaming everything else.  "It's the economy!".  When in reality they're just saying they suck too much to do this when it's just easy to make money, instead of when it was super easy to make money.

I hate to pick on the guy, but Robuilt is kind of an example of this, though slightly different.  His returns are actually pretty poor relative to the market he bought them.  He basically bought at the right time, and now makes the majority of his money teaching and on social media.  His STRs barely bring in as much revenue in total as many of us here generate from 1 or 2 properties.  The dude bought a $3M Scottsdale mansion at the peak of the market that generates $12k-$15k revenue per month in the HIGH SEASON, and people are lining up to pay for his course on how to do it, totally blind to the notion that it only works for him at all because of the tax benefits it provides for his large teaching/social media income, and any of them would be bankrupt after making a purchase that bad.

John Underwood · Answer

You always have to buy right no matter when or where you are.

It's just tougher but still possible most everywhere.

Ben Zimmerman · Answer

Past performance does not guarantee future success.  It's easy to make money during a bull market and when this happens people often overinflate their sense of investing sophistication because they just made a ton of money.  However it takes no skill to make money when everyone around you is also making money.  As you said, an untrained monkey could have made money in the last decade.  These are the types of people who tend to get wiped out because they think that life will always be this easy and never develop any actual knowledge of investing.

Short term is also becoming very saturated in many areas making it difficult to achieve decent occupancy rates unless you have a super premium property.  This can easily wipe someone out if they overpay for a property during the bull run hype, only to find out that so did everyone else and there is simply too much competition and rates don't support the mortgage payments.

John Underwood · Answer

It is always possible that someone overpays even in a great market.

Collin Hays · Answer

I remember 1999.  I bought shares in a lot of tech companies and I felt like I was Warren Buffett.  I could have written a book on investing in the stock market.  A year later, things looked a bit different.

John Carbone · Answer

Not really true. Anyone who bought anything the last decade has done well just by signing their name to a mortgage, especially a STR, an untrained monkey could have made money in real estate.

John Carbone · Answer

Good post and topic! I bought three in the smokies at the peak in 2021. Two of them needed renovations of about 100k. If rentals numbers maintain or come close to what I’ve been getting, they will be fully paid off in 4-5 years. If people are still paying a rent multiplier of 8x then I will have doubled the equity on top.

It’s an interesting market in the smokies, sort of like the old Wild West. A bad purchase can put you under or you can find some hidden gems.

Brooklyn McCarty · Answer

The Smokies is a great market, if you can make your numbers work, go for it!

Collin Hays · Answer

Blind Monkey?  Did someone call my name?

Drew Sygit · Answer

You make your money when you buy!

Is now a good time to invest in the Smokies?

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