I had a visit with a prospective new client yesterday that gave me a bit of relief.  She and her husband recently purchased a beautiful cabin in Gatlinburg, and they retained my firm to manage it.  As I do with every prospective new client, we had a long conversation about their goals and financial expectations.  Frankly, the expectations of many investors in the Smokies are unrealistic, so I like to ferret this out before either us or the client do anything further.  There is no sense in beginning a business relationship when you know full well that you cannot meet the client's financial expectations, and I'm not going to blow smoke to try to gain a client.  

This client has reasonable expectations.  They purchased the cabin as a long-term play, fully realizing they will be in the red for the first few years.  That's reality. That's healthy.  I purchased my first property in the Smokies in the fall of 2025, for $240,000.  Annual rents were about $16,000.  In the early years, my goal was for the income to at least make the mortgage payment.  I didn't start making a monthly profit until around 2012.   But since then, other people have paid off the property for me, it has tripled in value, and gross rents are now $45,000 a year.  THIS is why you buy and hold a long-term investment!  

The concept of borrowing money to buy a vacation rental and making a fast buck is a very recent, and short-lived, phenomenon.  Free money during COVID, super low interest rates, and incredible demand.  For three years.   Lots of get rich quick books and videos were made during this time.  It's easy!  Do it all from your iPhone while sunning on the beach!  Anyone can do it!  Some of the characters pushing this narrative are still beating the drum.  But other than this three-year window, borrowing money to buy a vacation rental AND immediately posting a monthly profit have NEVER been a realistic expectation in the Smokies.  

The real estate listings in the Smokies are full of investors who have realized this and have decided to move on.  Many bought a lie.  It is encouraging to see buyers coming in after them that have a longer-term outlook.  It is a rotation back to reality.  Yes, 2024 and 2025 rents are "down."  But down compared to what?  Compared to a once in a century economic volcano?  Rents are simply returning to equilibrium, as painful as that is to investors.  

And this is a GREAT time to invest in the Smokies.  Deals are out there, if you have realistic expectations!