What do you think of this deal?

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What do you think of this deal?

Member since 2023 · 42 posts · 15 votes

$750k property 1112 sq ft with view in the smokies 1 bedroom + loft with a killer view.The property grosses 85-95K a year. Have asked for 2019 numbers

my gut tells me nahhhhhhh. It’s wayyyyyy overpriced

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Travis TimmonsPro Member

Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes

No. Stop looking in the Smokies. Unless you have a personal connection, other properties, you're local to the area, or some other compelling reason, deals just don't pencil there at current prices/rates. There are still underserved markets out there. Do your own research and find them.

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Kerry Noble JrPro Member
Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
3y
you answered your own question.......go with you gut.....it guides you
1 Reply
Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
3y
I don't have any experience with vacation STR properties, but from a 10,000ft. view paying $750K for a 1 bed, plus a loft, makes no sense. Even if the property pencils out strongly today the potential downside (economic slow down, recession, etc.) is to great for me to stomach. We could conservatively buy 4-5 cash-flowing LTR in my market, wouldn't have the stress of chasing 5 star reviews, cleaning, and minor issues are the tenants responsibility.
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Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
3y
No. Stop looking in the Smokies. Unless you have a personal connection, other properties, you're local to the area, or some other compelling reason, deals just don't pencil there at current prices/rates. There are still underserved markets out there. Do your own research and find them.
4 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
3y
Quote from @Saranya Sundararajan:

$750k property 1112 sq ft with view in the smokies 1 bedroom + loft with a killer view.The property grosses 85-95K a year. Have asked for 2019 numbers

my gut tells me nahhhhhhh. It’s wayyyyyy overpriced

terrible
0 Reply
Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
3y
Why is it ALWAYS the smokies people want to buy? The numbers for a property don't seem to ever add up to the sq footage and revenue of the property. I can see if you absolutely love it there and have a connection, but seriously there are 49 other states to choose to from and some of those have some pretty awesome STR returns.
[email protected]330-557-3021
1 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
That is way too expensive for a 1 bedroom cabin.
1 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
I agree with the other guys.....way too much for what you get. I'd find the next 'hot market' and forget about the existing ones...they are all over-saturated.
1 Reply
Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Quote from @Saranya Sundararajan:

$750k property 1112 sq ft with view in the smokies 1 bedroom + loft with a killer view.The property grosses 85-95K a year. Have asked for 2019 numbers

my gut tells me nahhhhhhh. It’s wayyyyyy overpriced

Shoot me the address and I’ll tell you what it will do in a normal year.
[email protected]806-672-7102
SMOKY MOUNTAIN FALLS INC.51 Review
Website View Page
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Saranya Sundararajan
OP
Member since 2023 · 42 posts · 15 votes
3y
Quote from @Collin Hays:

Quote from @Saranya Sundararajan:

$750k property 1112 sq ft with view in the smokies 1 bedroom + loft with a killer view.The property grosses 85-95K a year. Have asked for 2019 numbers

my gut tells me nahhhhhhh. It’s wayyyyyy overpriced

Shoot me the address and I’ll tell you what it will do in a normal year.
Sent it to your email!
0 Reply
Saranya Sundararajan
OP
Member since 2023 · 42 posts · 15 votes
3y
Quote from @Bruce Woodruff:

I agree with the other guys.....way too much for what you get. I'd find the next 'hot market' and forget about the existing ones...they are all over-saturated.
Thanks for the honest truth. Do you happen to have a recommendation
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Saranya Sundararajan
OP
Member since 2023 · 42 posts · 15 votes
3y
Quote from @Jaron Walling:

I don't have any experience with vacation STR properties, but from a 10,000ft. view paying $750K for a 1 bed, plus a loft, makes no sense. Even if the property pencils out strongly today the potential downside (economic slow down, recession, etc.) is to great for me to stomach. We could conservatively buy 4-5 cash-flowing LTR in my market, wouldn't have the stress of chasing 5 star reviews, cleaning, and minor issues are the tenants responsibility.
By your market, do you mean Indianapolis?
1 Reply
Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
3y
Do your own research and find the next hot market. And in case you were wondering, asking a stranger on an online forum does not count as research.
1 Reply
Saranya Sundararajan
OP
Member since 2023 · 42 posts · 15 votes
3y
Quote from @Travis Timmons:

Do your own research and find the next hot market. And in case you were wondering, asking a stranger on an online forum does not count as research.
Cooool. Thanks
0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Quote from @Saranya Sundararajan:

Quote from @Bruce Woodruff:

I agree with the other guys.....way too much for what you get. I'd find the next 'hot market' and forget about the existing ones...they are all over-saturated.

Thanks for the honest truth. Do you happen to have a recommendation

Not really, I haven't done the searches that you need to do because I have my places. I would bet anything that there are dozens of either a) undiscovered markets, or b) markets that will take off in the near future.
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Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
3y
Quote from @Saranya Sundararajan:

Quote from @Travis Timmons:

Do your own research and find the next hot market. And in case you were wondering, asking a stranger on an online forum does not count as research.

Cooool. Thanks

I don't mean to be discouraging and rude. If you're just starting out, we've all been there. You have some subject matter expertise. We all do...figure out what that is that gives you an unfair advantage and lean into it. Otherwise, you're just following the crowd and competing with buyers from both the local market and all over the country.
0 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
It's no surprise that real estate prices are on the rise, but this 1 bedroom cabin is way too expensive. That kind of price tag would normally be reserved for a much larger home. It's definitely worth considering other options before committing to such an investment.
[email protected]832-889-5607
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Mack Lengel
Smokies / Greenville, SC · Member since 2021 · 130 posts · 146 votes
3y
Quote from @Saranya Sundararajan:

$750k property 1112 sq ft with view in the smokies 1 bedroom + loft with a killer view.The property grosses 85-95K a year. Have asked for 2019 numbers

my gut tells me nahhhhhhh. It’s wayyyyyy overpriced

Yeah, I just put a 2-2 modern A-frame under contract for 590k that should do around 75-85k a year so I would say you could do better than that!
0 Reply
Konstantin GinzburgPro Member
Member since 2021 · 376 posts · 242 votes
3y
I would say that is a very extreme risk to take for an STR in a market that is at at saturation or likely over-saturation at this point. Especially if you are using revenue numbers from 2019. The few years since then have seen a huge rise in STR investment across the country with the Smokey's being one of those flooded markets. I can't imagine that property being able to break even if you are forced to convert it into a medium or long term rental if the STR market is either to saturated for you to break into at the moment or vacation rentals continues to decline as they had over the last few months. For me personally, that would represent a high risk deal with minimal risk mitigation built into the deal.
0 Reply
Saranya Sundararajan
OP
Member since 2023 · 42 posts · 15 votes
3y
Quote from @Mack Lengel:

Quote from @Saranya Sundararajan:

$750k property 1112 sq ft with view in the smokies 1 bedroom + loft with a killer view.The property grosses 85-95K a year. Have asked for 2019 numbers

my gut tells me nahhhhhhh. It’s wayyyyyy overpriced

Yeah, I just put a 2-2 modern A-frame under contract for 590k that should do around 75-85k a year so I would say you could do better than that!

That’s encouraging!
1 Reply
Saranya Sundararajan
OP
Member since 2023 · 42 posts · 15 votes
3y
Quote from @Konstantin Ginzburg:

I would say that is a very extreme risk to take for an STR in a market that is at at saturation or likely over-saturation at this point. Especially if you are using revenue numbers from 2019. The few years since then have seen a huge rise in STR investment across the country with the Smokey's being one of those flooded markets. I can't imagine that property being able to break even if you are forced to convert it into a medium or long term rental if the STR market is either to saturated for you to break into at the moment or vacation rentals continues to decline as they had over the last few months. For me personally, that would represent a high risk deal with minimal risk mitigation built into the deal.
Appreciate your perspective. Definitely not going for this property
0 Reply
Saranya Sundararajan
OP
Member since 2023 · 42 posts · 15 votes
3y
Quote from @Mack Lengel:

Quote from @Saranya Sundararajan:

$750k property 1112 sq ft with view in the smokies 1 bedroom + loft with a killer view.The property grosses 85-95K a year. Have asked for 2019 numbers

my gut tells me nahhhhhhh. It’s wayyyyyy overpriced

Yeah, I just put a 2-2 modern A-frame under contract for 590k that should do around 75-85k a year so I would say you could do better than that!

that sounds like a good deal! congrats!
1 Reply
Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
3y
Quote from @Mack Lengel:

Quote from @Saranya Sundararajan:

$750k property 1112 sq ft with view in the smokies 1 bedroom + loft with a killer view.The property grosses 85-95K a year. Have asked for 2019 numbers

my gut tells me nahhhhhhh. It’s wayyyyyy overpriced

Yeah, I just put a 2-2 modern A-frame under contract for 590k that should do around 75-85k a year so I would say you could do better than that!
This is what I am talking about. You put a 2/2 under contract for just under $600k and it's a grand slam of a deal worth bragging about? The Smokies crowd has lost their collective minds (and calculators).

Assuming 20% down, 7% interest on a 30 year note, 80k in gross booking revenue, normal maintenance, supplies, lawn, pest control, utilities, and market rate cleaning fees, 10k furnishing budget, taxes + insurance, and 3% booking platform fees, I pencil that out at a 7.17% cash on cash return IF you self manage. And that assumes a 7% interest rate. If it was 7.5%, cash on cash goes down to 5.82% as I calculate it.

I don't know anything about why you bought or if you care to make money (using as a vacation home for personal use as well). I also don't know if you paid cash and it doesn't matter. I'm not calling you out directly. Every situation is different. You could have 1031'd into this and avoided a giant tax bill as well. There are loads of factors that I do not know that would absolutely make this purchase make sense for you. I'm just using this as an example of what the market is like in the Smokies.

At a 5-10% cash on cash return, short term rentals are not a good investment when accounting for the time and attention that it takes to self manage. The land grab is over in the Smokies. It's time to move on to another market.
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Brooklyn McCarty
Investor · Member since 2022 · 1k+ posts · 754 votes
3y
No way for a 1 bedroom
0 Reply
Todd Jones
Member since 2023 · 243 posts · 199 votes
3y
Quote from @Travis Timmons:

Do your own research and find the next hot market. And in case you were wondering, asking a stranger on an online forum does not count as research.

I disagree. A lot of advice we get are from strangers. If this were true, we wouldn’t join a forum or go to meetups. Here, we may not know an individual’s true accolades but we can get a consensus.

Also, he didn’t indicate he did no other research. This may be just Avenue he took.

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Joseph Guzzardi Jr
Rental Property Investor · Member since 2019 · 411 posts · 148 votes
3y
@Saranya Sundararajan That's a no for me. More importantly, if you are looking at STR Gross revenue is a piece of the puzzle. You need to factor in hosting costs, utilities, supplies, maintenance etc..
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