First Time Invester STR Tennessee

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First Time Invester STR Tennessee

Account Closed
Real Estate Agent · Sevierville TN · Member since 2020 · 32 posts · 16 votes

Hello everyone I'm new to the BP community and have already read a lot of forums for STR in Sevierville TN area but would like some advice on my situation. I'm 25 with a great 9-5 job, my wife just quit her job to stay at home with our two kids and it has been a great decision although losing her salary was hard to let go of. So I started researching how we could bring in extra income and came upon Air DNA and the potential of STR in pigeon forge and Gatlinburg area. By the end of this year I should have 20-30k that I could put down towards a STR in that area, but I would like to either build my own small cabin one bedroom with loft ~1000 sqft, or purchase an existing cabin. Would it be possible to find something 150-200k in that area that would help us achieve some passive income? My wife is very detailed oriented and would be great at managing the property so we would do that aspect ourselves. We've built two homes and love building so we can create the look and feel we desire, but I know it can get expensive depending on land. We don't have any other debts except our mortgage, but limited funds for down payment. Any tips would be greatly appreciated, I know I have read a lot of Lucas and Avery Carl's posts and they could help me here I just don't know how to tag them in this post. Thanks everyone!

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y

@Luke Carl and @Avery Carl can help with this.

I would think you could do better finding a deal on an existing house/cabin than building new and be up and running much faster.

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  • Account Closed
    OP
    Real Estate Agent · Sevierville TN · Member since 2020 · 32 posts · 16 votes
    6y

    I forgot to mention we live about an hour and a half from Sevierville so we would be able to check on the property frequently. 

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    @Luke Carl and @Avery Carl can help with this.

    I would think you could do better finding a deal on an existing house/cabin than building new and be up and running much faster.

    4Reply
  • Mark Miles
    Rental Property Investor · Philadelphia, PA · Member since 2016 · 540 posts · 714 votes
    6y
    Originally posted by @Account Closed:

    Hello everyone I'm new to the BP community and have already read a lot of forums for STR in Sevierville TN area but would like some advice on my situation. I'm 25 with a great 9-5 job, my wife just quit her job to stay at home with our two kids and it has been a great decision although losing her salary was hard to let go of. So I started researching how we could bring in extra income and came upon Air DNA and the potential of STR in pigeon forge and Gatlinburg area. By the end of this year I should have 20-30k that I could put down towards a STR in that area, but I would like to either build my own small cabin one bedroom with loft ~1000 sqft, or purchase an existing cabin. Would it be possible to find something 150-200k in that area that would help us achieve some passive income? My wife is very detailed oriented and would be great at managing the property so we would do that aspect ourselves. We've built two homes and love building so we can create the look and feel we desire, but I know it can get expensive depending on land. We don't have any other debts except our mortgage, but limited funds for down payment. Any tips would be greatly appreciated, I know I have read a lot of Lucas and Avery Carl's posts and they could help me here I just don't know how to tag them in this post. Thanks everyone!

     Here ya go buddy. Thank me later

    @Luke Carl

    2Reply
  • Account Closed
    OP
    Real Estate Agent · Sevierville TN · Member since 2020 · 32 posts · 16 votes
    6y

    Thank you @John Underwood and @Mark Miles I like the idea of finding something already built, just haven’t seen much in that price range but I know someone like Avery could help us find something. 

    1Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    6y

    Here I am! Miss Avery will be on this weeks Bigger Pockets Podcast! Take a listen on Thursday and you'll learn a lot about STR in general.

    Podcast Guest on Show #30
    4Reply
  • Mark Miles
    Rental Property Investor · Philadelphia, PA · Member since 2016 · 540 posts · 714 votes
    6y

    Well you're certainly looking in one of the best areas & what a bonus that you live nearby! You'll do way better there than the folks looking for STR opportunities in New Hampshire, Woodstock & Alaska. Just a hunch ;)

    0Reply
  • Account Closed
    OP
    Real Estate Agent · Sevierville TN · Member since 2020 · 32 posts · 16 votes
    6y

    @Mark Miles Haha well that’s good news! Thankful for communities like this that are so open to helping newbies like myself! Another thing that helps is I had a small business for a short time so I have some experience with filing taxes and how it works in TN although real estate is a complete different ball game than what I was doing, but it doesn’t hurt. 

    0Reply
  • Account Closed
    OP
    Real Estate Agent · Sevierville TN · Member since 2020 · 32 posts · 16 votes
    6y

    @Luke Carl I’ll tune in! Thanks for the heads up

    0Reply
  • Malina Lieven
    Sandpoint, ID · Member since 2018 · 3 posts · 1 vote
    6y

    I'm in the Vacation Rental industry, a controller for a company that manages 150+ properties, and we have a VR (Vacation Rental) in our ADU. I would make sure you have a great crew on the ground before you get started. You'll need a dependable cleaner, inspector, and on-call maintenance. You may want to look at starting closer to home until you get the hang of VR as it is of work, but is definitely worth it. Are you able to build an ADU on your current lot?

    I'm not familiar with your area, but I would start by watching Stay Here on Netflix as you'll get some great pointers on how a VR should look and some great take aways on what you should be doing for guests.  

    0Reply
  • Mark Miles
    Rental Property Investor · Philadelphia, PA · Member since 2016 · 540 posts · 714 votes
    6y
    Originally posted by @Malina Lieven:

    I'm in the Vacation Rental industry, a controller for a company that manages 150+ properties, and we have a VR (Vacation Rental) in our ADU. I would make sure you have a great crew on the ground before you get started. You'll need a dependable cleaner, inspector, and on-call maintenance. You may want to look at starting closer to home until you get the hang of VR as it is of work, but is definitely worth it. Are you able to build an ADU on your current lot?

    I'm not familiar with your area, but I would start by watching Stay Here on Netflix as you'll get some great pointers on how a VR should look and some great take aways on what you should be doing for guests.  

    With all due respect if someone is fortunate enough to live only 1.5 hrs from the Mecca - the Holy Grail of STR that is the Smoky Mtns (TN or NC side) - then I wouldn't pass up that opportunity. I live 1.5 hours from Delaware. Not exactly the Mecca

    3Reply
  • Reagen Natho
    Real Estate Agent · Texas Tennessee · Member since 2019 · 93 posts · 83 votes
    6y

    Hello! I just wanted to chime in and let your know that what you are wanting to achieve is totally doable. My husband and I purchased our first cabin from @Avery Carl in April 2019 and it's performance has exceeded our expectations! Avery has a great team to help you find the right cabin for you and @Luke Carl is a great sounding board for STR management questions/advice. Keep in mind that you can put 10% down utilizing a second home mortgage and maybe get a little more cabin than you are currently thinking about. Parker Borofsky (not sure why it won't tag her) was so awesome work with on the mortgage side and was incredibly helpful with my husband's unique employment situation. I'm a stay at home mom and completely manage our cabin from all over the US (currently in TX) as my husband travels for work. Best of luck!

    2Reply
  • Account Closed
    OP
    Real Estate Agent · Sevierville TN · Member since 2020 · 32 posts · 16 votes
    6y

    @Reagen Natho I’m so glad you shared that with me, and I’ll pass it on to my wife! Being possibly 10-12 months away I know I may be way too early to be looking at properties, but I just wanted to get an idea of if it was possible in the price range we would probably be looking in. It’s nice to hear success stories from others like you all. I’ll talk to Parker when the time comes, I appreciate the information greatly! Best of luck to you all.

    0Reply
  • Malina Lieven
    Sandpoint, ID · Member since 2018 · 3 posts · 1 vote
    6y
    Mark - as I said, if you are going to do it long distance, they will want to make sure to have a great crew on the ground.  I'm sure they won't want to make that drive because someone is having an issue in the property, the cleaner didn't show up, or a million other issues that can arise at a VR.

    Originally posted by @Mark Miles:
    Originally posted by @Malina Lieven:

    I'm in the Vacation Rental industry, a controller for a company that manages 150+ properties, and we have a VR (Vacation Rental) in our ADU. I would make sure you have a great crew on the ground before you get started. You'll need a dependable cleaner, inspector, and on-call maintenance. You may want to look at starting closer to home until you get the hang of VR as it is of work, but is definitely worth it. Are you able to build an ADU on your current lot?

    I'm not familiar with your area, but I would start by watching Stay Here on Netflix as you'll get some great pointers on how a VR should look and some great take aways on what you should be doing for guests.  

    With all due respect if someone is fortunate enough to live only 1.5 hrs from the Mecca - the Holy Grail of STR that is the Smoky Mtns (TN or NC side) - then I wouldn't pass up that opportunity. I live 1.5 hours from Delaware. Not exactly the Mecca

    0Reply
  • Chuck Kramer
    Orlando, FL · Member since 2017 · 241 posts · 254 votes
    6y

    Hard to find a property in that price range and getting harder every day. Most "rent ready" properties are well over $220 sq ft and many are at or over $300 sq ft now! You can build for $185-225 sq ft, depending on exact location and such, but builders are booked way out with most better ones looking at 1.5-2 years ahead.

    Don't mean to discourage you in any way, just being realistic. @Avery Carl can help you out with scoping properties.

    Being close is a plus, but not required. You do need a good team of cleaner/handyman and a list of solid vendors (many of us can assist with that or point you to good resources).

    Keep one thing in mind though, and it is important. The STR market in Sevier County, and especially its customers, are unlike anywhere else in the USA. Many have come in with experience or advice from people gained elsewhere and gotten their behinds kicked black and blue. Pass on the "be successful with airbnb" or "10 things you need in your vacation rental" as they just don't apply. This is a mature market and the clientele is highly varied.

    Before buying, make SURE you do your due diligence. In the last month or so I have run into a investors who ran here to the Smokies after hearing about our great returns and grabbed the first things that looked good, using agents who also don't really understand self-managed STRs. 

    That includes 3 who bought cabins in non-rental areas, another one who bought one in the City of Gatlinburg that was *never* going to pass inspection, and at least 3 others that didn't know they needed permits and business licenses until they got cease and desist letters. Another bought a new 5-bedroom home just to find that turning it into a rental required an $18K sprinkler system and a number of other changes. Oh, then there was the woman who bought a great looking cabin that turned out to be next door to a guy that raised and trained hunting dogs.

    Two words; DUE DILIGENCE all around.

    You can make it work and Avery can help. Reach out to her.

    1Reply
  • Mark Miles
    Rental Property Investor · Philadelphia, PA · Member since 2016 · 540 posts · 714 votes
    6y
    Originally posted by @Reagen Natho:

    Hello! I just wanted to chime in and let your know that what you are wanting to achieve is totally doable. My husband and I purchased our first cabin from @Avery Carl in April 2019 and it's performance has exceeded our expectations! Avery has a great team to help you find the right cabin for you and @Luke Carl is a great sounding board for STR management questions/advice. Keep in mind that you can put 10% down utilizing a second home mortgage and maybe get a little more cabin than you are currently thinking about. Parker Borofsky (not sure why it won't tag her) was so awesome work with on the mortgage side and was incredibly helpful with my husband's unique employment situation. I'm a stay at home mom and completely manage our cabin from all over the US (currently in TX) as my husband travels for work. Best of luck!

    But if that doesn't sound enticing Levi, I hear Alaska is lovely this time of year...

    0Reply
  • Ruth Blue
    Realtor · Pigeon Forge, TN · Member since 2018 · 230 posts · 111 votes
    6y

    Breaking through the sales talk! @Account Closed Smart investors are rehabbing or building. Ask your realtor to share MLS land with you or tour some plots. Wears Valley and Sevierville have great lands available to build your dream cabins. Especially since ya'll are familiar with building, the process will be totally doable. Builders are quoting 125 to 175 for 1 bedroom with loft which fly off the sale shelf and go pending in 24 hours here.

    "Would it be possible to find something 150-200k in that area that would help us achieve some passive income? " These deals are available but you have to want to rehab in that price range. BRRRR TIME!

    2Reply
  • Account Closed
    OP
    Real Estate Agent · Sevierville TN · Member since 2020 · 32 posts · 16 votes
    6y

    @Chuck Kramer Thanks for the information. Due diligence is definitely important, especially with it being something I’ve never done before, but honestly were those investors just rushing into it and not creating the right contacts to make a good decision or what? All those instances just seem pretty easy to navigate with the right contacts like the Avery’s for instance. Just curious as to why your building cost per sqft and @Ruth Blue cost are pretty significantly different, unless you all are talking different areas to build. My father in law is a general contractor he is the one who built our first house and he can usually build a home for $130-$140 sqft, I don’t think he would want to take on a project that far from home but I was aiming at around $150/sqft not counting property cost. I know there are a lot of factors though that would increase that cost a lot such as having to have a well for water and foundation costs could be high depending on the lot. I like the idea of just buying a cabin already built, but it’s also nice building new and not having to worry about costly repairs such as hvac etc. I’m still very early in this process with a lot of options to weigh so I appreciate everyone’s input! 

    0Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    Hey @Account Closed was my Realtor when I was getting started in the area (now I'm my own agent, ha!) and I got started smooth as can be - while I was living in California. Her team will make sure you get started with solid contacts for all the people you're likely to need in order to run your STR from anywhere in the world (though it's great to only be 1.5 hours away).

    As for building, it's a process.  Something to consider here is the overwhelming majority of land is undeveloped - while there's typically power at the road, there's no sewer or water to most, so you'll incur the not insignificant costs of putting in a well and septic system, on top of the lot costs, and then you get into the build costs (then furnishing costs, add a hot tub, etc).  Depending on the topography, site work and foundation can be costly, as well.  Finding a builder who's willing to build something small for <$200sqft will be a tall order - the area's crazy busy and lots of the new builds are 4+BR, so finding someone willing to take on a <1000sqft project is likely to be a challenge.  

    That said, @Chuck Kramer is absolutely right that finding something good <$200k is very challenging in this market, and what pops up is gone within 24 hours, usually for cash.  It's not impossible, but it requires both patience and the ability to act very quickly when something pops up.  

    You're asking all the right questions, so keep it up!

    2Reply
  • Ruth Blue
    Realtor · Pigeon Forge, TN · Member since 2018 · 230 posts · 111 votes
    6y

    @Account Closed owns land in Wears Valley and has meet a few builders. There's a gentleman from Florida building right now on top of Clabo Mtn. He is a builder in Florida and broke ground 3 weeks ago on a 3/2. I know he said his well he hired a company from NC. Seems alot of builders and subs from just outside our bubble are happy to help fill the gaps where the few Sevierville companys are backlogged. On that note I should also mention that speaking with a friend who was supposed to start building halted because the price went up more the 50% after approving blueprint plans and paying deposit. 

    So many options either way building or buying this area continues to grow! 

    1Reply
  • Chuck Kramer
    Orlando, FL · Member since 2017 · 241 posts · 254 votes
    6y

    @Account Closed my numbers come from 3 places; we are interviewing builders to put up 2 homes on lots we own and that is the range we have in the 4 proposals so far. We also own a restaurant that is very popular with locals and close to the county government buildings and we get several builders in for breakfast a few days every week so talk with them a lot when in town. Lastly, it helps to have a relative work in a city’s permit and planning office.

    Just line up your financing, @Avery Carl has a good source for that too,  ahead of time and be prepared to move when you see something. Dont be put off by something already under contract. The last 2 we bought were and we put in backup offers and got them.

    2Reply
  • Account Closed
    OP
    Real Estate Agent · Sevierville TN · Member since 2020 · 32 posts · 16 votes
    6y

    Thank you all @Julie McCoy @Ruth Blue @Chuck Kramer Do lenders take into account the revenue that will be coming in when getting Pre-approved or no? I know the revenue would be an estimate, but I would think lenders near the area would have a pretty good idea of what to expect. 

    0Reply
  • Chuck Kramer
    Orlando, FL · Member since 2017 · 241 posts · 254 votes
    6y

    Most will not, but some local lenders more familiar with the market are most likely to do that. Tennessee State bank, SmartBank, Mountain Commerce, and First Tennessee, and Sevier County Bank are known to factor incoming revenue.

    1Reply
  • Lorraine Jefferson
    Member since 2020 · 2 posts · 1 vote
    6y

    Hi, my name is Lorraine. I'm new to the idea of investing. After reading the first 4 chapters in the beginners guide, I think I would like to invest in REIT, or mobile homes. How do you get started with investing in mobile homes with land in Columbia Tennessee.

    Thanks

    1Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Lorraine Jefferson:

    Hi, my name is Lorraine. I'm new to the idea of investing. After reading the first 4 chapters in the beginners guide, I think I would like to invest in REIT, or mobile homes. How do you get started with investing in mobile homes with land in Columbia Tennessee.

    Thanks

    Lorraine, you are in the wrong forum.  You should start a new thread in the relevant forum.

    0Reply
  • Gerald Pitts
    Lender · Asheville NC · Member since 2016 · 469 posts · 317 votes
    6y

    HI Levi, I did one second home loan (10% down) with Parker Borofsky (can't tag her, but search BP for her), and am now doing an investor loan  on 2nd cabin with 15% down.  It has to be 15 or 20 down depending on your qualifications.  With the investor loan, the projected income did count towards eligibility.  I second what everyone says about Avery and Lucas Carl, as well as self-management.  They will help you with all of your boots on the ground and any questions getting started that you don't get answered on here.  I self manage from Nashville.  So I get over there a little bit, but don't really need to. 

    1Reply
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