Smokey Mountains current situation on the ground

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Smokey Mountains current situation on the ground

Ryan Proffit
Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes

Hello, I have been following and searching threads on the Smokey Mountains. I am going to have some funds available soon, and am very interested in this area. I am just looking to get an update on expected gross income vs purchase price/bedroom. I fully plan to self manage, and have been taking a lot of notes from the forum. I am hoping to be able to buy 2 within the next 1.5 years hopefully. Hopefully the big fish from this area will chime in with some excellent intel as usual. I always vote for sage advice. Thanks in advance.

Ryan

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

Hey @Ryan Proffit!  Glad to share what I know.  The charts @Lauren Kormylo linked are really where I point people to, those have more thorough information than the broad strokes I'm about to give.  My rules of thumb - that is, conservative, middle-of-the-road estimates on gross annual income - are as follows: 0-1BR $35k/yr, 2BR $45k/yr, 3BR $55k/yr, 4BR $70k/yr, 5BR $85k/yr  

That's readily achievable for a middle-of-the-road cabin within 15-20 minutes of either downtown Pigeon Forge or downtown Gatlinburg if you're a competent manager.  

As for correlating with purchase price, while of course there's a general correlation of higher price = nicer property = higher rent potential, it's not necessarily going to scale proportionately. You can mismanage a nice cabin and do poorly, or be an awesome manager of an average cabin and do really well (though I think we all want to be awesome managers of awesome cabins and KILL IT!!!).  

Performance comes down to management in so many ways - which means I can't predict how you'll do as a manager, but the awesome thing is it means you control your own destiny!  (This does not mean you have to have handmade gift baskets for every guest; it mostly means being prompt and clear with your communication, responsive to any issues, and providing a clean, comfortable place to stay that is accurately reflected in your listing)

So, while I know we all want plug-and-play numbers, there's too many variables for something like that to be effective; this is what I have to offer. :)

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  • Lauren Kormylo
    Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes
    6y

    Here's Avery's blog with charts for different numbers of bedrooms and their incomes, scroll down:  https://theshorttermshop.com/c...

    6Reply
  • Ryan Proffit
    OP
    Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
    6y

    @Lucas Carl its a good one.

    0Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    6y

    Since this is a discussion forum, it would be awesome to also hear some first hand knowledge from other opinions in addition to Lucas Carl.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    Hey @Collin Hays, I am sure others will chime in but frankly, the Carl's are the experts for this area. Everyone on here trusts their judgement and experience. There really is no one that has more information on the Smokeys.

    Julie McCoy also has rentals there so she is a trusted source as well.

    1Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @Michael Baum:

    Hey @Collin Hays, I am sure others will chime in but frankly, the Carl's are the experts for this area. Everyone on here trusts their judgement and experience. There really is no one that has more information on the Smokeys.

    Julie McCoy also has rentals there so she is a trusted source as well.

    Might not even need a forum!

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    1Reply
  • Ryan Proffit
    OP
    Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
    6y

    @Lauren Kormylo

    Thank you. That is very helpful.

    1Reply
  • Chai Xiong
    Investor · Orlando, FL · Member since 2012 · 312 posts · 165 votes
    6y

    following.. ;)

    0Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    6y
    Originally posted by @Collin Hays:

    Since this is a discussion forum, it would be awesome to also hear some first hand knowledge from other opinions in addition to Lucas Carl.

     Something I said? 

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    2Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @Luke Carl:
    Originally posted by @Collin Hays:

    Since this is a discussion forum, it would be awesome to also hear some first hand knowledge from other opinions in addition to Lucas Carl.

     Something I said? 

    Heck no!  You’ve got awesome insight.  But being a discussion forum on STRs, it would be nice to have some dialogue that isn’t “just ask Lucas Carl.”

    I meant no disrespect to you.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    6Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    Hey @Ryan Proffit!  Glad to share what I know.  The charts @Lauren Kormylo linked are really where I point people to, those have more thorough information than the broad strokes I'm about to give.  My rules of thumb - that is, conservative, middle-of-the-road estimates on gross annual income - are as follows: 0-1BR $35k/yr, 2BR $45k/yr, 3BR $55k/yr, 4BR $70k/yr, 5BR $85k/yr  

    That's readily achievable for a middle-of-the-road cabin within 15-20 minutes of either downtown Pigeon Forge or downtown Gatlinburg if you're a competent manager.  

    As for correlating with purchase price, while of course there's a general correlation of higher price = nicer property = higher rent potential, it's not necessarily going to scale proportionately. You can mismanage a nice cabin and do poorly, or be an awesome manager of an average cabin and do really well (though I think we all want to be awesome managers of awesome cabins and KILL IT!!!).  

    Performance comes down to management in so many ways - which means I can't predict how you'll do as a manager, but the awesome thing is it means you control your own destiny!  (This does not mean you have to have handmade gift baskets for every guest; it mostly means being prompt and clear with your communication, responsive to any issues, and providing a clean, comfortable place to stay that is accurately reflected in your listing)

    So, while I know we all want plug-and-play numbers, there's too many variables for something like that to be effective; this is what I have to offer. :)

    12Reply
  • Ryan Proffit
    OP
    Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
    6y

    @Julie McCoy very helpful reply!

    1Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    6y

    I own a 1 bedroom log cabin in Cosby that “only” does $27K a year.  But it only cost me $125K.

    I own a 2 bedroom log cabin on Cosby that only does $32K a year.  But it only cost me $135K.

    I own a 2 bedroom authentic log cabin  near downtown Gatlinburg that does $65K a year.  But it sits right on the Roaring Fork River.  If it was the same cabin on a street somewhere, you could plan on $20-25K less.

    I own 4 properties, all of which are on rivers / creeks that have trout in them.  I have found that they command a premium for rent because the water is an amenity that isn’t easily duplicated.  That’s just my personal thing.

    Of course you have to pay a premium for waterfront property and *might* have to have flood insurance (2 of 4 of mine do), but they aren’t building any more rivers, and I believe the price appreciation for these types of properties is greatly enhanced due to the water amenity.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    11Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    6y

    I also want to add, avoid limiting yourself to just pigeon forge and Gatlinburg.  There are compelling yields to be had in Cobbly Nob and even Cosby.  The annual income isn’t as high, but neither are the prices.  I can have a cabin in Vail that generates $150K a year in rents, but it the purchase price is $1.5 million, that’s not very exciting.


    It’s all about the yield! 

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    9Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Collin Hays:

    I own a 1 bedroom log cabin in Cosby that “only” does $27K a year.  But it only cost me $125K.

    I own a 2 bedroom log cabin on Cosby that only does $32K a year.  But it only cost me $135K.

    I own a 2 bedroom authentic log cabin  near downtown Gatlinburg that does $65K a year.  But it sits right on the Roaring Fork River.  If it was the same cabin on a street somewhere, you could plan on $20-25K less.

    I own 4 properties, all of which are on rivers / creeks that have trout in them.  I have found that they command a premium for rent because the water is an amenity that isn’t easily duplicated.  That’s just my personal thing.

    Of course you have to pay a premium for waterfront property and *might* have to have flood insurance (2 of 4 of mine do), but they aren’t building any more rivers, and I believe the price appreciation for these types of properties is greatly enhanced due to the water amenity.

     Great info!  Riverfront/waterfront of any kind is definitely difficult to find in the area (you wouldn't think it would be so hard, there's no shortage of water, but...) and it creates an ambiance you can't find anywhere else.  

    1Reply
  • Allan Smith
    Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    Maybe I'm missing the forest for the trees, but I looked into buying a short term rental in the Pigeon Forge area and didn't feel like the income was worth the risk. 20 -30 K net by the time you pay a manager. But the house is 300k. If economy slows down I'm losing money and equity overnight.

    1Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    6y
    Originally posted by @Allan Smith:

    Maybe I'm missing the forest for the trees, but I looked into buying a short term rental in the Pigeon Forge area and didn't feel like the income was worth the risk. 20 -30 K net by the time you pay a manager. But the house is 300k. If economy slows down I'm losing money and equity overnight.

    None of us are paying a manager. Plus your numbers are too low. Hell I’ve got one that’s 550 sq ft that does 40k every year 

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    2Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Allan Smith:

    Maybe I'm missing the forest for the trees, but I looked into buying a short term rental in the Pigeon Forge area and didn't feel like the income was worth the risk. 20 -30 K net by the time you pay a manager. But the house is 300k. If economy slows down I'm losing money and equity overnight.

    Self management is mandatory if you want to make money with STRs. Also, STRs are a cash flow play, not an equity play. But a good STR will have enough margin that you'll have no trouble riding out a downturn; margins might get slimmer but they shouldn't disappear if you bought right.

    3Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    6y

    We manage about 30 properties and only charge 25%.  Most of our clients previously self managed. 

    I recommend self management, but only if you have the time.  If you don’t have the time, it is false economy that you aren’t paying a management fee, as you are missing out on a significant number of bookings.


    GOOD Self management is a part time job.  If you embrace that, it’s the best route financially.  If you don’t have the time, a good manager will make you substantially more money, because they DO have the time.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    2Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    @Collin Hays I agree with you, and how much time is required is relative to each person, I imagine; I have enough systems in place that I spend very little personal time on my properties.  But it takes time to figure out what systems work for each person.

    In my view it's more about having the flexibility to spare a few minutes to respond to things as they happen, vs. having a certain amount of minutes/hours per day to work on the properties.  I might only need 5 minutes a day, but I never know when those 5 minutes will occur.  (that said, I only have 4 properties to manage, not 30!)

    I suppose I should caveat that I'm mostly referring to the everyday guest communication stuff; if there's a legitimate issue, or repairs to be made on a property, then I'm certainly spending more time on it.  However, these fortunately do not happen often.  

    1Reply
  • Alan Ford
    Rental Property Investor · Temecula, CA · Member since 2020 · 128 posts · 55 votes
    6y

    @Julie McCoy - per @Lucas Carl after my consult with him - my property manager (or my actual properties) may be an exception but I don’t think it’s right to put out a blanket statement that you can only make money through self managing. My properties both are beating the high end of the numbers you mentioned above and that is before any cleaning fees etc. $73k for my 4bd (before cleaning fees) and $38k for my 2bd (but I got it in May).

    After every single expense, utilities, mortgage, taxes, Maintenence, and 30% cut to the property manager- each of my properties are making pure cash profit (not including equity) of over $1,150 per month. Roughly a 26% ROI on my down payment.

    I am fully willing to admit my results may not be common, but while I know this forum is vastly leaning towards self management- it isn’t accurate to say it isn’t possible to make good money with a PM. This forum is a wealth of valuable knowledge, and has helped many many people. Lets just be careful with absolutes in my opinion.

    Doubly odd when you factor in that my PM does zero AIRBNB or VRBO etc. business.

    And - to be honest - something to be said with literally doing nothing and making money. Never having to take one phone call when something goes wrong (and it will) is a nice feeling.

    6Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    6y

    It really all depends on the investor.  Some folks want to invest and get their checks.  We have clients in TN from thousands of miles away who have seen their property maybe once.  Several are executives who aren’t interested in taking calls about not being able to get the TV to work or that there’s a snake in the dryer.

    These types are glad to pay the 25% and move along.

    But if you are wired in such a way that you like to get “down into the weeds” to squeeze out some of that 25%, self management is for you.

    But...it’s not really a 25% savings, as when you are self managing, you likely have 12-16% in overhead on the VRBO or ABNB platforms.  

    So at the most, you are saving 13-14% to self manage.  Most likely, a self manager will lose that plus some in lost bookings due to slow responses alone.

    I’m not pushing management cos, but I think that self managers need to know the true cost of time and money of self managing.  I’ve done both.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    2Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    Hey @Alan Ford, there are always exceptions to every rule. What does the PM provide for the 30%. I assume all maintenance and cleanings etc?

    I think it is great you are making an excellent return using a PM. It's just that many of us can't.

    In my area I have had some PM's tell me how much more business I will have. I just have a hard time believing they can get bookings in late January to February at a snowy, frozen lake house. I am sure there are some cool "We watch Ice Floe's" groups to watch the floe in front of my house, but I am thinking they are far and few between.

    Right now we get fully booked for the summer with no PM.

    I don't think that everyone here thinks it is never a good idea. Just not in the Smokey Mountain regions where competition if fierce or where you have a single season rental.

    Awesome that you are doing so well using a PM. Where are your units located?

    0Reply
  • Alan Ford
    Rental Property Investor · Temecula, CA · Member since 2020 · 128 posts · 55 votes
    6y

    @Michael Baum One in Pigeon Forge and one in Gatlingburg. Actually, I pay for “repairs” and the cleaning fee is paid as an addition to the room rate. The PM nor I make any profit on the cleaning fee. There is no question that I might be able to squeeze out a few thousand dollars more a year on each property - but as someone else mentioned.... is it worth the hassle and effort? To me, at this time, it’s not. That could change at any moment- pretty much as soon as my PM stops making money for me haha.

    I totally agree that PM isn’t for everyone and that not all are equal.

    But PM’s have been making people a lot of money in this area for many many years. Long before AIRBNB and VRBO came along. The dynamic is shifting and fully agree with the Carl’s that someday in the near future the AirBNB crowd will take over. Just think it’s a little too cut and dry to say it’s not possible to make money with a PM. There are a lot of them and they have been around a long time. Not all of their customers are “suckers” I mean they were smart enough to be real estate investors in East TN right?

    My only regret is not buying into the market a decade ago lol.

    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    Hehe! Awesome @Alan Ford. Very cool. If you are killing it and happy, then more power to ya!

    0Reply
  • Jay Fradd
    Real Estate Agent · Gatlinburg, TN · Member since 2015 · 67 posts · 70 votes
    6y
    Originally posted by @Lauren Kormylo:

    Here's Avery's blog with charts for different numbers of bedrooms and their incomes, scroll down:  https://theshorttermshop.com/c...

    There seems to be a significant error in the data on that page. The ADR for the 50th percentile of 6+ bedrooms says the average ADR was $7,732/night in April 2018. That makes it so the average 50th percentile ADR is higher than the 75th percentile for both the monthly total and the yearly average. Which is impossible obviously. 

    0Reply
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