Smoky Mountain Vacation Rental
Nashville, TN · Member since 2017 · 28 posts · 14 votes
Smoky Mountain Vacation Rental
Most Popular Reply
Rental Property Investor · Temecula, CA · Member since 2020 · 128 posts · 55 votes
6yHi John - this came to me this morning from my Property Manager and I think its all pretty accurate:
Instead,
I want to look past this crisis and offer some encouragement for the
future. Things will get better. This will not last forever. We will
be here to see you through.
While we are likely in store for a very rough ride in the short term, I
want you to know – the Smoky Mountains will be the first vacation market
to recover. You can count on that. Put it in the bank. All the
reasons that make Sevier County Tennessee the
best place in the country to own income earning vacation property are
still right here. In fact, many of the things making us a desirable
destination, will ring especially true once the dust clears from the
COVID panic.
- We are a driving destination located within a day’s drive of 75% of the US population. You don’t have to get on a crowded airplane to visit the Smoky Mountains.
- We are a nature-driven tourist destination. The GSMNP is still our number one attraction, and those mountains are not going anywhere. Visitors to the Smokies don’t have to get in the crowds to enjoy their time here.
- We are affordable compared to other vacation destinations and staying in a private cabin offers entertainment and food preparation options that add vacation value.
- Renting a private mountain home will be more immediately appealing than hotels when guests return to planning vacations. Enjoying a private cabin keeps you out of those hotel elevators and common spaces.
- The Smokies is a family vacation destination – and some stress-free family time will be high on everyone’s wish list soon.
While I want each of you to be prepared for some tough months ahead, I
also want you to be encouraged. Our vacation market, like most of the
world, is on pause. However, things will not stay paused forever. The
show will go on. Our guests will return.
The Smokies will always be desirable, and we will be here promoting all those things that make our destination, and your beautiful cabins – the place to be.
76 Replies
- Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes6y
@John Craven I would recommend cancelling this contract. The economic recovery is going to be 1.5 - 3 years on a best case scenario. Tourism especially is going to be hit very hard.
You can see this playing out in the economic data from unemployment filings to public companies reporting earnings.
- Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes6y
Originally posted by @Caleb Heimsoth:
@John Craven I would recommend cancelling this contract. The economic recovery is going to be 1.5 - 3 years on a best case scenario. Tourism especially is going to be hit very hard.
You can see this playing out in the economic data from unemployment filings to public companies reporting earnings.
That's a bold prediction. I'm pessimistic about the outlook, but throwing out a hard time frame like that takes some real confidence. What specific economic data and which earnings reports are you using to come up with 1.5 - 3 years as your best case. And what are your base case and worst scenarios?
- Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes6y
Originally posted by @Joshua Myers:
Originally posted by @Caleb Heimsoth:
@John Craven I would recommend cancelling this contract. The economic recovery is going to be 1.5 - 3 years on a best case scenario. Tourism especially is going to be hit very hard.
You can see this playing out in the economic data from unemployment filings to public companies reporting earnings.
That's a bold prediction. I'm pessimistic about the outlook, but throwing out a hard time frame like that takes some real confidence. What specific economic data and which earnings reports are you using to come up with 1.5 - 3 years as your best case. And what are your base case and worst scenarios?
I couldn’t find the Forbes article that outlined all this but 1.5 - 3 years was best case scenario. Worst case was more like 12 to get back to where we were in February.
It’s going to get worse before it gets better. We’re just at the beginning, it’ll take til Q3 2020 to fully understand the economic impact.
More related to real estate investing all the major banks reported earnings this week and profit dropped ~ 50 percent on average compared to Q1 last year.
you can read on BP how lending is tightening and that’s only going to continue. As that continues prices will decrease (will vary by market). Unemployment will spike Q2 2020 and then decrease.
there is ways to predict all of this, just have to look at the data. Multiple indicators predicted a recession for this year 2-3 years ago (as an example). - 6yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votesI will add to all this that no one has any real idea how long the economic recovery will take. Everything is still up in the air. There is no real way to predict.
- Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes6y
Avery Carl Real Estate Agent from USA
replied about 10 hours ago
@JD Martin ".... my initial few investments were, and those are the pieces that got me to financial freedom ....which is why I am so enthusiastic about them."
@Avery Carl Very respectfully, the fact that they were some cornerstone pieces to your past achievement of financial freedom, should not necessarily be a reason for advocating the area in the future.
The nature of travel and real estate is in flux. If you are under contract on something that was a good idea a few months ago, it's probably time to hit pause if you can.
If you are under contract on something that was and is a smoking awesome deal, proceed! - 6yAvery CarlBusiness MemberReal Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
@John D. If the numbers work, the numbers work. And the numbers work.
- Investor · Greenville, SC · Member since 2017 · 69 posts · 15 votes6y
@John Underwood that’s an interesting strategy to get buyers interested in buying at a time like this. It might or might not be needed for that price point in the Greenville and surrounding area. I personally know of some properties getting sold in under 15 days around that price point, even during this time.
- 6yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Originally posted by @Hung Nguyen:
@John Underwood that’s an interesting strategy to get buyers interested in buying at a time like this. It might or might not be needed for that price point in the Greenville and surrounding area. I personally know of some properties getting sold in under 15 days around that price point, even during this time.
Its just an option that I could use. I can be flexible. I could carry back a 2nd for the persons down payment. The possibilities are endless on this I could do if needed to get my house sold. Granted most people at this price point should have plenty of means.
- Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes6y
Originally posted by @Caleb Heimsoth:
Originally posted by @Joshua Myers:
Originally posted by @Caleb Heimsoth:
@John Craven I would recommend cancelling this contract. The economic recovery is going to be 1.5 - 3 years on a best case scenario. Tourism especially is going to be hit very hard.
You can see this playing out in the economic data from unemployment filings to public companies reporting earnings.
That's a bold prediction. I'm pessimistic about the outlook, but throwing out a hard time frame like that takes some real confidence. What specific economic data and which earnings reports are you using to come up with 1.5 - 3 years as your best case. And what are your base case and worst scenarios?
I couldn’t find the Forbes article that outlined all this but 1.5 - 3 years was best case scenario. Worst case was more like 12 to get back to where we were in February.
It’s going to get worse before it gets better. We’re just at the beginning, it’ll take til Q3 2020 to fully understand the economic impact.
More related to real estate investing all the major banks reported earnings this week and profit dropped ~ 50 percent on average compared to Q1 last year.
you can read on BP how lending is tightening and that’s only going to continue. As that continues prices will decrease (will vary by market). Unemployment will spike Q2 2020 and then decrease.
there is ways to predict all of this, just have to look at the data. Multiple indicators predicted a recession for this year 2-3 years ago (as an example).Yes unemployment numbers are pretty shocking and banks have increased loan loss provisions (along with scheduled changes to accounting that had an impact on headline earnings), but there's a really big difference between saying that the economic data is ugly (and getting uglier) and putting a hard timeline on how long the recovery will take, especially when we're talking about individual markets. You say yourself that we won't understand the economic fallout until Q3, so it's hard to justify putting a timeline on any recovery.
I'm very pessimistic about the scenario, but I don't think we should be pushing hard timelines when giving buy/sell advice to fellow investors. No one, not the FED, not university and bank economists, and not even contributors to Forbes can accurately predict how long this thing will play out.
- Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes6y
I have 3 STRs in this area. I don't know what is going to happen. It is impossible to predict. I do agree that Dollywood and all these other attractions add to the tourism draw. If all of that shuts down do I believe my STRs are going in the tank - no. I think it will be a matter of time before things build back up to full operations. Maybe weeks, maybe months - who knows. I don't live there but have visited the area since the 80s. I can tell you that even back then, Cade's Cove would be jammed with vehicles going through in the summer and fall. If a bear stepped out it would be hours getting through the place just like it is today. The dining and shopping have always been there.. it was just more of a mom and pop thing which has now grown to what it is today. The fact is people come to the park and will come to the park.
I do believe the attractions help the area and add a percentage of visitors to the area. If some of them shut down, tourism may drop a bit, but not enough to make my cabins unprofitable. All I am saying is that the park is the main draw and always has been and that is not going away. The ancillary businesses that have developed around it, developed because of the park's draw. If something happens to those businesses, the park's draw will once again allow them to be re-build and thrive again.
Having said all that, I don't know that I would purchase at this point unless I came across a deal and I haven't seen a deal in that area in quite some time. The prices have skyrocketed there in the last 18 months like crazy. I am thinking that this is going to allow prices to settle and come down some to a more attractive price point over the next few months and slow down the crazed buying.
Now having said all that, the OP is purchasing a 5 bed cabin. I do 2 and 3 bed cabins so I don't have direct experience with the larger cabins, but I have talked to a lot of folks and know folks that do. The 5 bedroom cabins take a little more time to book and they are reserved farther out in advance. So no matter when the 5 bedroom is purchased there is going to be a longer ramp up period than a 2 bedroom. The 5 bedrooms are usually groups and multiple families that book so there is some coordination involved etc. Those are not usually last minute bookings. In my thinking the 5 bedroom cabins being purchased today, no matter what the current economic condition, is really planning for a ramp up towards fall at this point. Maybe get a some at the end of summer. Thinking this through, you may also have a decline in groups getting together to rent the larger cabins as well, because let's face it, the virus is not going away. It will diminish but still going to make rounds and returns just like the flu does. This whole event is definitely changing peoples thoughts about being in close quarters with other people. That could affect larger cabin rentals to some degree for months to come even after this is cleared up.
Man I can ramble and bounce all over the place can't I"? ;) Just some thoughts to ponder.
- Investor · Raleigh, NC · Member since 2013 · 1k+ posts · 708 votes6y
Originally posted by @Joshua Myers:
Originally posted by @Caleb Heimsoth:
Originally posted by @Joshua Myers:
Originally posted by @Caleb Heimsoth:
@John Craven I would recommend cancelling this contract. The economic recovery is going to be 1.5 - 3 years on a best case scenario. Tourism especially is going to be hit very hard.
You can see this playing out in the economic data from unemployment filings to public companies reporting earnings.
That's a bold prediction. I'm pessimistic about the outlook, but throwing out a hard time frame like that takes some real confidence. What specific economic data and which earnings reports are you using to come up with 1.5 - 3 years as your best case. And what are your base case and worst scenarios?
I couldn’t find the Forbes article that outlined all this but 1.5 - 3 years was best case scenario. Worst case was more like 12 to get back to where we were in February.
It’s going to get worse before it gets better. We’re just at the beginning, it’ll take til Q3 2020 to fully understand the economic impact.
More related to real estate investing all the major banks reported earnings this week and profit dropped ~ 50 percent on average compared to Q1 last year.
you can read on BP how lending is tightening and that’s only going to continue. As that continues prices will decrease (will vary by market). Unemployment will spike Q2 2020 and then decrease.
there is ways to predict all of this, just have to look at the data. Multiple indicators predicted a recession for this year 2-3 years ago (as an example).Yes unemployment numbers are pretty shocking and banks have increased loan loss provisions (along with scheduled changes to accounting that had an impact on headline earnings), but there's a really big difference between saying that the economic data is ugly (and getting uglier) and putting a hard timeline on how long the recovery will take, especially when we're talking about individual markets. You say yourself that we won't understand the economic fallout until Q3, so it's hard to justify putting a timeline on any recovery.
I'm very pessimistic about the scenario, but I don't think we should be pushing hard timelines when giving buy/sell advice to fellow investors. No one, not the FED, not university and bank economists, and not even contributors to Forbes can accurately predict how long this thing will play out.
Folks, everyone who is getting hung up on whether @Caleb Heimsoth gave a hard timeline or not:
That’s not the point. Of course nobody knows the full impact and exact timeline for sure. Note that Caleb didn’t say things were back to normal (I.e. back to where they were in January 2020) by 2021-2022. He predicted that this was probably the best case scenario for full recovery, but could take many more years. I totally agree - this is the stark reality we live in right now and it doesn’t require secret sources of information to come to this conclusion, just a realistic analysis of the information available in the public domain.Things ARE going to improve over time, but sadly, they are NOT going to back to early 2020 levels for a long time. Especially not for travel related sectors. And while the Great Smokies might be better off than other destinations, the impacts will be felt everywhere.
- Investor · Corpus Christi, TX-Texas · Member since 2015 · 81 posts · 56 votes6y
If I was under contract on anything I would get out, but that's just my opinion. In fact, I just sold two properties in TX (one in Jan and one in Mar) with a plan to buy a Smokies cabin this spring, but not really willing to go that route at this point. Yes, things could be back to "normal" (whatever the new normal is going to be) in a few months, but things could also go back to "normal" and then we have a second outbreak and things stop for longer. I'm not willing to risk sitting on an empty $500k cabin for 3 months (in the best case scenario) let alone for longer (much more likely).
Another thing to think about is all the people who can no longer pay their mortgages. How long will the banks be willing to let the payments slide? Even if we get back to normal in 3 months, there will be 20M people without jobs who still can't pay their mortgages. Will the banks let mortgages slide for 12 months? 18 months? Who knows. The ripple effects of missed mortgage payments, missed rent payments, 20M people out of jobs, etc. etc. etc. is going to result in a lot of foreclosures in the next 6-18 months. Id rather stay liquid and be able to pounce on anything that comes up. That's just me though.
On a side note, I'm actually really disappointed about not being able to buy a cabin. I've been super stoked about it for a year+ now and was ready to get going. There's an old saying, "there will never be a perfect time to buy." That's 99.99% true, however this current situation is the 0.01% time when its LITERALLY the worst time in human history to buy. Extremely high prices (which I was still willing to pay had this not happened), no revenue, and for the first time in history not a single person on the planet knows what's going to happen.
Keep your dry powder for a better time.
- Real Estate Agent · Fort Walton Beach, FL · Member since 2018 · 219 posts · 275 votes6y
Congratulations on your upcoming purchase! As a vacation rental owner, manager and real estate agent I completely understand your concerns. Yet, to echo some of the opinions stated above: if you did your research, crunched your numbers and selected the Smokey Mountains area for a reason, then you should have already built in some contingencies for potential setbacks. I'm in Fort Walton Beach/Destin in Florida, so completely impartial to the Smokey Mountains, but I agree that markets that are within driving distance will be the first to see the return of tourists. There will be other disasters. Hurricanes here, forest fires there. It's part of the investment model. There is no return without risk. It will probably take you at least a month to set up your vacation rental anyway to get comfortable (especially if you are self-managing). If you thought the purchase was a good investment before and the area is where you want to be that has probably not changed. If you were unsure to begin with and the pandemic is just making that uncertainty more apparent, that is a different situation. My rule of thumb for any new purchase is to make sure I have 4 to 6 months worth of fixed expenses in reserves. Best of luck to you. I'm sure you'll make the decision that best fits your situation.
- Nashville, TN · Member since 2017 · 28 posts · 14 votes6y
Thanks again everyone for all the responses. The seller ultimately agreed to postpone the closing for a bit, which will allow me to see how the market responds over the short term.
- Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes6y
@John Craven Good deal. That would not have happened prior to COVID-19. 6 weeks ago he would have said no, you would have backed out and he would not have cared because he would have probably sold it in 48 hours for more than you agreed on. That is how things have been going leading up to the virus. I think his response is a good indicator of the market situation there now in response to the virus. Glad to hear that for you. You always need to be comfortable with what you are doing in these situations. It's nice to sleep at night ;)
- Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes6y
@John Craven I've been thinking about the original question you posted. What is your investment time frame for the property? You asked about the next 3-6 months, but I assumed that this was a long term buy and hold investment.
- Nashville, TN · Member since 2017 · 28 posts · 14 votes6y
@Joshua Myers, good question. This cabin would be a long-term investment. I would plan on keeping the property so long as it is generating revenue.
- Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes6y
Originally posted by @John Craven:
@Joshua Myers, good question. This cabin would be a long-term investment. I would plan on keeping the property so long as it is generating revenue.
Can you ask the seller for a credit at closing, based on lost rental revenue over the next couple of months, that you can add to your reserves? That could get you closer to the same scenario you were looking at when you went in to contract.
- Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes6y
@Chase Cline ". There's an old saying, "there will never be a perfect time to buy." That's 99.99% true, however this current situation is the 0.01% time when its LITERALLY the worst time in human history to buy. Extremely high prices (which I was still willing to pay had this not happened), no revenue, and for the first time in history not a single person on the planet knows what's going to happen.
Keep your dry powder for a better time."
---
Thank you, I would have struggled to articulate it so well. While this vacation rental market may be in one of the best positioned markets given recent events, it does not negate the bigger picture of recent events.Your investment in the new reality of where we are is much riskier. Whatever decision criteria you used, it's time to revise.
If you are asking about the next 3-6 months, take a conservative view, and assume zero revenue, if shelter-in-place continues and there are sparks of outbreaks which freak everyone out and the local powers that be decide to go conservative and restrict home rentals into the Fall. It is very plausible that short-term rentals in may areas may be banned for another 3-6 months.
Locally here they have a target date to reopen of 6/19, but I would not be surprised at all if it was pushed back a few months, if the re-opening of some central states results in a spike in cases and deaths, as I suspect it will in the coming weeks. - Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes6y
Per the governor of Tennessee, the stay-at-home order will not be extended beyond April 30, with some businesses opening as soon as April 27 (though I've also heard dates as early as the 23rd). Most state parks will open on Friday April 25. Large cities will make some of their own decisions about re-opening, but Sevier County will be in line with the state guidelines. The theaters in the area are all advertising shows resuming May 9.
Local sources tell me the Smoky Mountain national park is discussing a re-opening date with the Cherokee Nation who governs the NC side around here. My understanding is the target re-opening timeframe is mid-May but is still being worked out. Dollywood is still in wait-and-see mode with projected opening no earlier than June 1.
Currently I'm concerned I'm not going to get all my repairs done before the onslaught of guests returns. I'm already having to navigate around new reservations. I'm sure there will be a ramp-up period but I'm feeling good about the summer.
- Rental Property Investor · Member since 2019 · 276 posts · 235 votes6y
I’m in Pigeon Forge right now. Signs all along the Parkway for dinner shows and a few other events are advertising re-opening for May 9.
- 6yPaul CoxPro MemberRental Property Investor · Manassas, VA · Member since 2013 · 194 posts · 156 votes
@leora
@Leora Merrell, Did you guys find your next cabin?
- Rental Property Investor · Member since 2019 · 276 posts · 235 votes6y
@Paul Cox working on it! Just closed on one of our SFH in Utah yesterday so we can officially 1031 now. Definitely feels different deciding on a cabin and doing this during all of the craziness going on and not knowing how the recovery will be.
- 6yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
You're off to the races @Leora Merrell! And don't forget that little "gift" the IRS has for you - you can now take until 7/15 to identify that new property. Extra time to let the market shake up a little bit might be just perfect for you.
The 1031 Investor5137 Reviews - Rental Property Investor · Member since 2019 · 276 posts · 235 votes6y
@Dave Foster Oh I’m sure I’ll be bugging you quite often. So glad you’re here to help me!
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