Help with Analysis - 1 Bedroom Cabin near Pigeon Forge TN

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Help with Analysis - 1 Bedroom Cabin near Pigeon Forge TN

Vanrith You
Long Beach, CA · Member since 2017 · 8 posts · 2 votes

Hi Everyone,

I'm looking at a property that's near Pigeon Forge. I wanted another set of eyeballs to see if this deal works.

Its a 1 bed 1 bath cabin 850 sq ft that's about 10 mins from the Island.

The price is at $475K. From AirDNA, the revenue would be about 54.5K per year, 204 night rate, and 73% occupancy.

I would be putting 10% down on a vacation home. The mortgage rate I'm getting quoted for is 7.5 or 7.6%.

I'm not sure if I'm running my number correctly, but would this deal be a net positive for me.

I feel like the numbers are close to being positive, but it could be negative if there's a lot cleaning fees.

I can share more of my numbers if anyone wants to see them.

Thanks,

Vanrith

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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Quote from @Vanrith You:

Hi Everyone,

I'm looking at a property that's near Pigeon Forge. I wanted another set of eyeballs to see if this deal works.

Its a 1 bed 1 bath cabin 850 sq ft that's about 10 mins from the Island.

The price is at $475K. From AirDNA, the revenue would be about 54.5K per year, 204 night rate, and 73% occupancy.

I would be putting 10% down on a vacation home. The mortgage rate I'm getting quoted for is 7.5 or 7.6%.

I'm not sure if I'm running my number correctly, but would this deal be a net positive for me.

I feel like the numbers are close to being positive, but it could be negative if there's a lot cleaning fees.

I can share more of my numbers if anyone wants to see them.

Thanks,

Vanrith


There are very few Pigeon Forge or Gatlinburg 1 bedroom cabins that would do in the mid $50s, except in the bubble years of 2021 or 2022. Unless there's something truly unique or spectacular about this cabin, you're too high, probably by $8-10K a year minimum.  

[email protected]806-672-7102
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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y

    Cleaning fees are a pass through. The guests pay these.

    But something as small as cleaning fees could put you in the red then this isn't a money maker.

    I'd look for a 2 or 3 bedroom cabin over a  bedroom. 

    A 1 bedroom is only going to appeal to a couple who want a cheap place to stay.

    3Reply
  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    3y

    So roughly calculating your debt service with PMI, property taxes and insurance, you are looking at a monthly of around $3450 which takes your yearly debt service to around 41k, let's add another 1k/month for all other expense and you are now at 53k. In the current market I think it's gonna be a stretch to get 54k for a 1 bedroom. But let's say you do. Then it gets back to the why are you doing this? Are you wanting purely an investment or do you want a cabin to use yourself and just rent it out and have someone else help pay for it simply because you want a cabin? If it's an investment I would not be interested in numbers anywhere near that close. No matter what people say, there is work involved in self managing an STR. So if your numbers work out, you would be making 1k/yr based on my rough numbers which means you would be working and dealing with the debt service and other issues concerning your cabin for $83 per month. Is that worth your time? Again it gets back to your reason for making this purchase.

    4Reply
  • Sarah KensingerPro Member
    Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
    3y

    Just running the numbers you gave through quick analyzing, this is a deal I would not purchase! Your COC is minus with projected monthly profit of only a couple hundred dollars. STR are too much work for just a couple hundred every month, at that point LTR would make better sense.

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    1Reply
  • Vanrith You
    OP
    Long Beach, CA · Member since 2017 · 8 posts · 2 votes
    3y

    I'm looking to use it as an investment property, but also the ability to add a outdoor firepit and possibly mini-golf. But I get at this interest rate and rental market, it's costing it close or negative.

    0Reply
  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    3y

    IMO an outdoor fire-pit and mini golf on a 1 bed room cabin is not gonna be enough to jack up your nightly rates substantially.  If you do this it's not gonna be because it cash flows, its gonna be because you hope long term its gonna pay off.  

    1Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    You should learn to do the underwriting yourself. Including calculating net operating income and cash on cash. Those are basic and you can do it on a napkin if you need to quickly. I have a class out on YouTube where I ran through how I underwrite cabins in the Smoky Mountains. The link is in my bio here. 

    1Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    3y

    Just calculating CoC, this doesn't seem like a profitable deal. There has to be better deals in the Smokies than this specific one for your price range.

    0Reply
  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    3y
    Quote from @Zach Edelman:

    Just calculating CoC, this doesn't seem like a profitable deal. There has to be better deals in the Smokies than this specific one for your price range.


     Well that is the crux of the matter.  There really are no deals to be had in the Smokies right now that is just the price you are gonna pay at this point.  Maybe a few off market deals might pop up here and there but they have been few and far between the last year or so.  It just is what it is right now.  If you want to get in to this market right now you have to pay the price.

    1Reply
  • Vanrith You
    OP
    Long Beach, CA · Member since 2017 · 8 posts · 2 votes
    3y
    Quote from @Leslie Anne Morris:

    You should learn to do the underwriting yourself. Including calculating net operating income and cash on cash. Those are basic and you can do it on a napkin if you need to quickly. I have a class out on YouTube where I ran through how I underwrite cabins in the Smoky Mountains. The link is in my bio here. 


    Thanks. I used the BiggerPocket rental calculator. I came to the same conclusion, but I was sure if I ran them correctly. I'll check out your video.
    0Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    3y
    Quote from @Vanrith You:

    Hi Everyone,

    I'm looking at a property that's near Pigeon Forge. I wanted another set of eyeballs to see if this deal works.

    Its a 1 bed 1 bath cabin 850 sq ft that's about 10 mins from the Island.

    The price is at $475K. From AirDNA, the revenue would be about 54.5K per year, 204 night rate, and 73% occupancy.

    I would be putting 10% down on a vacation home. The mortgage rate I'm getting quoted for is 7.5 or 7.6%.

    I'm not sure if I'm running my number correctly, but would this deal be a net positive for me.

    I feel like the numbers are close to being positive, but it could be negative if there's a lot cleaning fees.

    I can share more of my numbers if anyone wants to see them.

    Thanks,

    Vanrith


    There are very few Pigeon Forge or Gatlinburg 1 bedroom cabins that would do in the mid $50s, except in the bubble years of 2021 or 2022. Unless there's something truly unique or spectacular about this cabin, you're too high, probably by $8-10K a year minimum.  

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    4Reply
  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
    3y
    Quote from @John Underwood:

    Cleaning fees are a pass through. The guests pay these.

    But something as small as cleaning fees could put you in the red then this isn't a money maker.

    I'd look for a 2 or 3 bedroom cabin over a  bedroom. 

    A 1 bedroom is only going to appeal to a couple who want a cheap place to stay.

     If they're pulling the revenue data from AirDNA then it is including cleaning fees in the revenue, and hence cleaning will need to be subtracted back out as an expense.

    I think this is something that trips a lot of people up when underwriting.

    AirDNA total revenue DOES include cleaning fees.

    AirDNA adr does NOT include cleaning fees.

    This is why when you multiply ADR * Occupancy on AirDNA you get a number that is less than the total revenue.

    So if using the total revenue number then cleaning does need to be subtracted as an expense.  If using ADR then it does not.

    Cosmic Vacations4.9174 Reviews
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    4Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    3y

    Stop. Looking. In. The. Smokies. 

    The math doesn't math there.

    4Reply
  • Vanrith You
    OP
    Long Beach, CA · Member since 2017 · 8 posts · 2 votes
    3y
    Quote from @Ryan Moyer:
    Quote from @John Underwood:

    Cleaning fees are a pass through. The guests pay these.

    But something as small as cleaning fees could put you in the red then this isn't a money maker.

    I'd look for a 2 or 3 bedroom cabin over a  bedroom. 

    A 1 bedroom is only going to appeal to a couple who want a cheap place to stay.

     If they're pulling the revenue data from AirDNA then it is including cleaning fees in the revenue, and hence cleaning will need to be subtracted back out as an expense.

    I think this is something that trips a lot of people up when underwriting.

    AirDNA total revenue DOES include cleaning fees.

    AirDNA adr does NOT include cleaning fees.

    This is why when you multiply ADR * Occupancy on AirDNA you get a number that is less than the total revenue.

    So if using the total revenue number then cleaning does need to be subtracted as an expense.  If using ADR then it does not.


    I think that was my problem. Thanks for the clarification.
    0Reply
  • Vanrith You
    OP
    Long Beach, CA · Member since 2017 · 8 posts · 2 votes
    3y
    Quote from @Travis Timmons:

    Stop. Looking. In. The. Smokies. 

    The math doesn't math there.


    Any suggestions on location? I was looking around the Boone Area in NC or around other national parks.
    0Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    3y

    If you like national parks and are on the west coast, look at Olympic National Park in Washington. For $475k, you could probably get a 4-5 bedroom place up there (at that bedroom count, it may need a little updating, but you get the point...it's not a 1 bedroom). It's a bit more seasonal, but who cares? Every market is seasonal. There are many national park markets that could get you 80-90k+ of gross revenue on a $475k investment. You just have to dig a little deeper and get past the big ones that everyone knows (Smoky Mtn, Zion, Yellowstone, Yosemite, Joshua Tree, etc.). 

    Full disclosure - I don't own a property near Olympic National Park, but it pencils out FAR better than the Smokies from a cash on cash perspective.

    The link below shows visitation numbers going back to 1979. Google "big 63 national parks" if you want to narrow your search. The list below shows all national park sites, which include national monuments, lakeshores, historic sites, and other more obscure destinations managed by the park service.

    While my initial message was probably too cynical, I am happy to help if you think that I can be a resource. Shoot me a DM if you want to discuss further. Please don't underestimate the amount of work and money it takes to get a short term rental to market. It's really hard and expensive. It is lucrative if done well but is absolutely not for everyone. There are very few furnished, turnkey markets out there, and they provide little to no cash on cash return. You gotta do the work of possibly renovating/updating and furnishing to get a solid return.

    https://irma.nps.gov/Stats/

    1Reply
  • Brooklyn McCarty
    Investor · Member since 2022 · 1k+ posts · 754 votes
    3y

    Lots of great resources out there to help learn how to analyze properties. I would not want to be dependent on a group of people from the internet to tell me if something is a good deal or not. You need to learn how to do that yourself 

    0Reply
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