STR in Waynesville NC still worthwhile?

Question

Hi Everyone,

We're looking into an cottage STR in Waynesville (right in town) but really wondering if at this point in time the STR up there is saturated. We love the area, but I'm finding airdna is saying the net income would really only cover the mortgage, and looking at the trends I'm only seeing about 50 % occupancy.

Any 2023 advice.

Collin Hays · Answer

"Cash flowing" with a significant mortgage isn't realistic except for brief periods of market imbalance and low interest rates.  It's no more realistic to ask your vacation home to "cash flow" than it is to ask your 401K to "cash flow."  Both are long-term holds that pay big dividends as time goes on.

The true value of a vacation home is that other people are paying off a majority of the debt of the asset.  Try that with any other investment.  Over time, the amount you owe gets smaller and smaller, and one day, you'll find that you have an asset worth 2 or 3 times the purchase price, and guests are the ones that paid for 80 percent of it.

Mike Anderson · Answer

Yes its saturated. It's mostly all saturated and demand is lower too overall. Things need to find their level again. I love Waynesville and the market, but I'm sitting on the sidelines until this all balances out, or i get a screaming deal. You gut is accurate, and your data points are accurate.

2023 advice? Visit the area to get a better feel for areas you like and keep paying attention to the market. Open your search up to places like Bryson City, Boone area, Black Mountain, Lake Lure. There are other areas... Study the area, understand the numbers and wait for the opportunity.

Loriel Keaton · Answer

We own 5 rentals in nearby Maggie Valley and our company manages others in Waynesville and Maggie. Our numbers are projected to be the same or better than last year. We stay about 90% occupied.

That said, it has slowed some this year and I would not buy a high priced, turn key home and expect it to be profitable. You need flexibility in your pricing to be competitive. Properties that are well cared for and with good reviews are still doing very well here.  It has been a fantastic area for us.

Mitch Davidson · Answer

@Daniella Freese. I live nearby and have investments in Asheville and Bryson City. STR revenue has been down nationwide since last Spring. Some reports show that it's down about 50% for our general region, including east TN as well. So I think you'll reach a similar conclusion for any town in our area, and will need to base your decisions on what you think the next year or two will look like (after many STR's are likely sold and converted to owner-occupant or LTR housing...and after high federal borrowing rates stop cramping people regarding discretionary spending), as well as what you forecast for appreciation. Waynesville, for example, is fairly close to Asheville compared to Bryson City, and thus presents a better opportunity for appreciation in my opinion. And it's an easier market to operate in by comparison. For cash flow though, it's not going to be good at least for a little while unless perhaps you're buying with cash or at least putting down a huge amount of cash. Happy to discuss further if you like.

STR in Waynesville NC still worthwhile?

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