Pigeon Forge - owner of 5/6 bedroom with indoor pool?

Question

Was looking to speak with an investor who owns a 5-6 bedroom cabin in pigeon forge that has an indoor pool? Would like to discuss your experience directly if someone would be willing to share. That is our next potential STR target.

Thanks in advance,

Jonathan

Thanks in advance,

Jonathan

Luke Carl · Answer

@Jonathan Pacilio before last year these properties didn’t exist so you may not find a ton of data. I do know one owner that has 2 pool cabins that are not new construction. I actually called her to find out if the pool was a PIA because we were buying a home with a pool in Florida. Surprisingly.... she told me she never hears about the pool from guests other than positivity. I guess I’ll find out as mine will be listed sooner than later.

As far as numbers... I doubt anyone from an Internet forum will open house their tax returns to you, and the thing is even if you find someone that will give you numbers... they aren't likely to have a year worth of numbers on such a property.

Here’s how I estimate profits on a new STR.....

Find your "Enemy"

ENEMY Requirements (As defined by Luke from the STR forum):

1. Within a 1/4 mile of your property

2. Must be self managed (no exceptions. If host has 45 properties... they're not self managing)

3. Must have 100 reviews on Airbnb (give or take. Will be harder on the new construction unless the host has other properties)

4. Similar Sq Ft and Sleeping Capacity to your prospective property

Find this person.... and destroy them.

Obsess over their calendar. Click on dates that are not booked and see what they're charging. Read all of their reviews and see what you could be doing better.

**NOTE! 90% of ALL Airbnb bookings happen within 30 days or LESS!! This is a worldwide statistic. I find that in my market... I don't really care much about bookings more than 6 weeks in advance. 12 weeks in advance and you're probably not charging quite enough. You're assuming (based on reviews) that this host knows what they're doing and can hit the market average for occupancy (which I would estimate on this property as 75%+++). Take what they're charging... Average it throughout the year... Get a pretty good idea of what they're making. Simple as that.

Feel free to check back with me in about 13 months and I'll have a years worth of data on my 4/5 with a pool and of course I'll be happy to share. Although it's not in east TN.

#GoGiver

Ken Boone · Answer

@Lucas Carl - Do those stats hold true in the 5-6 bedroom market?   I have always been told those bookings - although you do get some last minute type stuff, but a good portion of them are booked well in advance.  It is no longer a couple or small family situation that normally books a 1 or 2 bedroom cabin, but rather an extended family, church group, other types of groups, etc... and just based on the different individuals schedule of all the parties included, it would be hard to do a lot of last minute booking I would think.  What are your thoughts?

@Jonathan Pacilio - I can't say anything about that size pool cabin.  I have 2 two bedroom pool cabins in that market.  Having the indoor heated pool is the main draw in those cabins, and the gross rents far exceed the norm for a typical two bedroom cabin.  The pools at times can be a pain in the butt until you learn how to keep them managed.  Small indoor pools are a completely different animal than an outdoor pool.  They key is having a good pool service company.  It took me 3 attempts to get a decent pool service.  I first used my cleaning company as they told me they can handle pools.  That didn't go so good, I then used a specific pool cleaning company that came out once a week.  After a few months, I learned real quick that doesn't work.  You have to have pool service after every guest.  I don't care if they only stay 2 days, you have to have pool service.  I now have a good pool service company and the pain in the butt factor has gone away.

I am assuming you are looking at new construction, because a small number of pool cabins have been around, but nobody typically sells their pool cabins so you never see older ones on the market.  Here is what you need to watch out for:

Insist on a dehumidifier system in the pool room.  A lot of builders are not installing dehumidifiers in the pool rooms.  They will tell you that they are putting in a humidistat and an exhaust fan and that will keep the humidity in check.  I have run into 3 different builders so far that do not include dehumidifiers in their cabins and they all used that same argument.  I told the builder on my second cabin that I needed one, he insisted I do not.  I said look I already have a pool cabin and know how this goes.  He told me what they are doing is standard, blah blah blah.  A month after the cabin was finished he was running me a drain line and electric outlets for a dehumidifier.  Without one everything is covered in condensation, the windows, doors, outlet covers, etc..  Not as bad in the summer, but come late fall and winter, everything will be covered.  My buddy built with this same guy, I told him the same thing.  He decided he was going to go with what the builder said.. a few months later.. he now has  dehumidifier.

Avery Carl · Answer

@Ya Feng Lu you must be talking about Laurel Estates. Have you been there yet? It feels like a giant red and gray apartment complex. That coupled with the deeded requirement to use their on site management makes that a major thumbs down investment wise.

Ken Boone · Answer

@Jonathan Pacilio - No problem man.  Just hit me up with a PM and we can set something up.

@John Underwood - Yes the pools are heated year round.  Now I have seen some big pools in indoor cabins, but in most 2 bedroom cabins with pools, the pools are small.  We have to keep the heat going 24 x7 to maintain the temperature and guarantee that it stays consistent.  I don't ever want a guest to show up and its cold.  The electric bill will be significantly higher with a pool as you are heating and running the pool pump 24/7.  If the heater doesn't detect water flow, it stops heating, so you can't really cycle the pump on and off like a regular pool.

Yes it is worth the trouble, expense and maintenance.  My pool cabin rates are significantly higher than an average 2 bedroom cabin.  The thing is with 10 million+ visitors a year to that area, you get all kinds of folks.  So as far as pricing out of the budget goes, if someone is budgeting to stay in an average 2 bed cabin they won't book my cabin, except maybe in Jan-Feb when prices are lower, but I don't think I am really competing with those folks.

Jay Fradd · Answer

Very good advice from @Ken Boone. Spot on in all accounts including the booking tendencies of larger 6+ bedroom cabins (including pool cabins). Especially those that are established and been around a while.

I have a client that has three 6 bedroom pool cabins already having booked 121, 111, and 167 nights for 2020. And those rates certainly aren’t at reduced rates averaging $636 (in Cosby), $743, and $1,453 (extreme luxury 6 bedroom pool cabin) per night.

Avery Carl · Answer

@John Underwood I’ll hit you up offline. Too much to type here!

Mark Miles · Answer

As someone who tends to invest in nice big houses, there’s some definite pros & cons.You typically earn good money when it’s rented, but on the days when it’s sitting vacant you’re just bleeding cash. All expenses are way higher: it takes a TON of $$ to heat & cool a large house, property taxes are a killer, mortgage is higher, insurance is higher, landscaping / lawn care costs, flood insurance, etc etc.It’s also tough to book a large house at the last minute bc it takes large groups time to mobilize so you’re at a disadvantage with last minute bookings. If the house isn’t booked 3 weeks out, forget about it - might as well fly into town & use it yourself that week.Also people tend to use large houses as party houses so there’s a tendency to trash your place.All that said, I love owning large houses & I make good money on them most of the time, but be sure you know what you’re doing before jumping in. The wrong large house can be an absolute nightmare! Esp if you can’t get as high of an occupancy rate or as high of a nightly rate as you had hoped for. In those cases, you’ll simply be hemorrhaging cash.Might make more sense to start with a condo or small house if you’re new to this or if you’re entering a new geographic area!And the benefit if you scale up to a few condos or a few small houses is during the slow season you can get last minute bookings of small groups & at least fill some of the units. Like I said earlier, if I’m not booked a few weeks out, forget it - the whole house remains empty & the expenses pile up

Paul Sandhu · Answer

I had several enemies in my town when I was first starting.  3 of them.  They all quit the STR business because I provided a better service at the same price.  My competition didn't have clean houses or there was no cable/wifi or there was no washer/dryer.  That's also about the time the Hugh Hefner in me started interior decorating.

Ya Feng Lu · Answer

We are looking at a lot for a new built in Gatlinburg with an indoor pool. It seems to be a community where all the homes have an indoor pools and short term rentals needs to go through an exclusive management company. I received pro-formas from the builder but not sure if those numbers reflect reality. They are also expanding in phase 3 so there are a lot of similar homes that will be competing (55-60 upon completion) against each other once all the homes have sold. Has anyone had experience or owned one these that are part of a community?

Pigeon Forge - owner of 5/6 bedroom with indoor pool?

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