Hey there! I've been looking for our next STR investment and have been drawn to the Smokies...like so many other investors. I, of course, am looking for a deal. A diamond in the rough that we can improve and then increase rents and value. Not a major rehab, just something that's underperforming that we could fix. As I evaluated the inventory, I started to notice the lack of "deals". This isn't a big surprise- it's a major tourist destination. But I was noticing that a number of properties available for sale had been purchased within the last 2-4 years and were now listed at 30%+ their previous sales price. As I did some more digging, I found out that Gatlinburg / Pigeon Forge / Sevierville area has seen listing prices increase 24% in the last 12 months and 38% in the last 24 months. This is of course a bummer for me, as I'm looking for a solid investment and I can't imagine rent rates are keeping pace with these accelerating listing prices. So I'm hoping to hear from you all that invest in the area. Are your STRs performing the way you'd like them to? Do the rents and occupancy rates justify these increased sales prices? Are there still deals to be had in the Smokies? Let's discuss!

@Ruben Izgelov You're asking all the right questions. But those are not short answers! You have a lot of research ahead of you. If you decide to buy after reading a thread or two… danger awaits ;-) Honestly, this is a thing you need to REALLY plow into. Lots of threads. Lots of calling agents. Lots of visits with PMs (whether you use one or not, they know things). And visits with owners where you want to be. At the core is what @Luke Carl linked. While you can buy info from Airdna… be aware that it's not gospel. Also… @Dustin Turner When doing you research be SUPER SUPER CAREFUL to ask what owners or PMs mean when they say property could/should/does "make" $xxxxx. So far, owners on this thread have been clear that they mean net nightly not including tax or cleaning. That differentiation is HUGE. So huge! It's apples to elephants if you don't clarify. I've been quoted, "Oh, that should make in the mid-80's" but what they meant was gross. As in nightly fees + cleaning costs + taxes + whatever other fees. Double, triple check what metric you're being quoted. Gross nightly ≠ gross guest charges.

Post-covid19 (has a nice ring to it) we have three random dates left in June and we're hearing that familiar chime several times a day for our Sevierville cabin. We are at the point of raising rates for July (30+ days out). We've owned since Oct 2018 and rates have only gone up, except for the nearly- barren three months of the pandemic. If this is the market you want to be in, don't let rising prices scare you away. They command attention and supportive nightly rates that yield owner profits. We have three STR in other locations but Smokey Mtns gets a lot of attention.

@Rob Foss (sorry, not sure how to tag on Android), that was Julie that said 40% was a good estimate. It looks like Ken answered your question though.

@Rob Foss - 40% is a good number when you self manage. If you hire a property manager it will be no where to close to that.

Are the Smokies Too Hot?

Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

6y

"Deals to be had" is a relative term. It's all about yield. I don't buy anything with the reasonable potential of an annual yield of gross rents less than 15% of the price paid for the property. I really prefer 18%. Those yields are obviously becoming increasingly difficult to find in the Smokies. However, rents-to-price in the 12% range seem to be very common. I am guessing that's still a hell of a lot better than most other STR markets in the country.

If I was looking to score a really good yield in the Smokies, I think my strategy right now would be to find a really good, unique place to build. I had a cabin on the Roaring Fork River in Gatlinburg that burned to the ground in the Gatlinburg fires. I was able to rebuild a super deluxe log cabin with every amenity for about $330K, and it's doing around $60-63K a year - so that's in that 18-19% range. I wouldn't part with the cabin for almost any amount, because I can't turn around and replace that income very easily, and its value will continue to climb, given its unique location.

There are obviously thousands of cabins in the Smokies. Many, however, are just houses, and their price appreciation potential is more limited. If you can find really unique properties or settings - on water, amazing views, historical value, etc., you can not only have a respectable yield, but enjoy significant price appreciation.

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Ken Boone

Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes

6y

@Dustin Turner My STRs are performing beyond my initial expectations so yes they are performing very much the way I would like them to. If there are deals to be had in the Smokies they are all off market and you would have to have some connections I assume. As far as the rents and occupancy rates justifying the increased sales prices - I dunno. That depends on what you want. My first two cabins gave me a 30% CoC return the first year, my 3rd I haven't had a full year yet to know, but I guarantee that it won't be near 30% CoC and that one costs me the most since prices were continually going up. I doubt you can get a return like that in the current market but that might be possible in larger cabins which I have not looked into. That 3rd cabin is doing well though and is making me money. Occupancy rates are outstanding in all of my cabins. You just have to analyze the property you are interested in and determined your costs and projected income and make a determination if the return is one you will be happy with. You just have to remember this is not passive investing like LTRs so for me that means I want a much higher return to compensate for the work involved.

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

6y

I also want to add that I think Cosby is a value play right now in the Smokies. Yields are very strong, and prices are significantly less than Gatlinburg. It's a 30 minute drive. I bought two small cabins on a river in Cosby in 2012 for $260K and everyone thought I was nuts. Well those two cabins do in the high $50s combined per year. I also have a much larger cabin there that I paid $240K for (way overpaid back then) in 2005, that does anywhere from $38-43 a year. Cosby is a gem for rentals.

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Ken Boone

Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes

6y

@Collin Hays You hit it right on the head with your comment about something unique about the property. I think to maximize your return that is the absolute key. There are thousands and thousands of cabins up there all with a nice king suite, a hot tub and arcade cabinet. To rise above the crowd and get the higher incomes you need something more

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Luke CarlPro Member

Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes

6y

Originally posted by @Dustin Turner:

Hey there! I've been looking for our next STR investment and have been drawn to the Smokies...like so many other investors. I, of course, am looking for a deal. A diamond in the rough that we can improve and then increase rents and value. Not a major rehab, just something that's underperforming that we could fix.

As I evaluated the inventory, I started to notice the lack of "deals". This isn't a big surprise- it's a major tourist destination. But I was noticing that a number of properties available for sale had been purchased within the last 2-4 years and were now listed at 30%+ their previous sales price.

From Zillow (don't hate)

As I did some more digging, I found out that Gatlinburg / Pigeon Forge / Sevierville area has seen listing prices increase 24% in the last 12 months and 38% in the last 24 months. This is of course a bummer for me, as I'm looking for a solid investment and I can't imagine rent rates are keeping pace with these accelerating listing prices.

So I'm hoping to hear from you all that invest in the area. Are your STRs performing the way you'd like them to? Do the rents and occupancy rates justify these increased sales prices? Are there still deals to be had in the Smokies?

Let's h

Happy with my 5!

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

6y

Originally posted by @Ken Boone:

@Collin Hays You hit it right on the head with your comment about something unique about the property. I think to maximize your return that is the absolute key. There are thousands and thousands of cabins up there all with a nice king suite, a hot tub and arcade cabinet. To rise above the crowd and get the higher incomes you need something more

Ken, I have only bought properties on rivers/creeks where kids can swim, fish, and tube. All of my cabins, there is literally a small river in the back yard. They are extremely hard properties to find, because they aren't making any more rivers, but those are the only properties I am interested in for my purposes.

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Ken Boone

Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes

6y

@Collin Hays That would be nice. I would love one on the river. I just went Kayaking down the Little Pigeon River through PF on Wednesday and was checking out the cabins along that river as I went ;) I saw one listed today on the river near the parkway and I think they wanted 500k for it - 2 bed cabin. Are your cabins on stilts? Have you ever had any issues with flooding?

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

6y

Ken our cabins are not on stilts. They are all above Zone X flood plain except for the two small cabins in Cosby. There have been some massive floods since we have owned them, but never have had water in the house. When we rebuilt in Gatlinburg, we were required by gatlinburg to raise her foundation 6 feet, which removed it from flood plain.

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Luke CarlPro Member

Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes

6y

@Collin Hays I like how you did the crawl space to match the river! Very cool!

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Joshua Strickland

Investor · Flowery Branch, GA · Member since 2019 · 413 posts · 412 votes

6y

@Dustin Turner I am set to close on my first STR in Pigeon Forge next week and planning to buy more barring any unforeseen circumstances. If the data provided from the seller and airdna are correct I will be looking around a 30% CoC return and potentially a lot more as I ran my numbers conservative. When I was looking there were a lot of over priced cabins, but the good returns are still out there. If you find one that looks right, just ask the seller if they will provide their rental history data and ask how it was listed. Sellers seemed fine with giving out that info and if they had it listed with one of the local companies like Cabins USA or another local property management company and not on Airbnb/VRBO then it could likely be undervalued in nightly rate and/or occupancy.

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

6y

You just have to always be on the lookout for a deal because they usually don't last long.

You could always do some work to try and locate off market properties.

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

6y

Originally posted by @Luke Carl:

@Collin Hays I like how you did the crawl space to match the river! Very cool!

Thanks Luke. They wanted to do that fake rock stuff and I thought it would look like a homemade bar of soap, so I just ordered a bunch of rock. Same for the fireplace.

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

6y

Originally posted by @Joshua Strickland:

@Dustin Turner I am set to close on my first STR in Pigeon Forge next week and planning to buy more barring any unforeseen circumstances. If the data provided from the seller and airdna are correct I will be looking around a 30% CoC return and potentially a lot more as I ran my numbers conservative. When I was looking there were a lot of over priced cabins, but the good returns are still out there. If you find one that looks right, just ask the seller if they will provide their rental history data and ask how it was listed. Sellers seemed fine with giving out that info and if they had it listed with one of the local companies like Cabins USA or another local property management company and not on Airbnb/VRBO then it could likely be undervalued in nightly rate and/or occupancy.

That is correct. A rental history isn't that important to me if I know what the surrounding houses do. Cabins are grossly mismanaged all the time, by management companies and owners alike. I own a management co., and will put our performance against a solo owner any day of the week.

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Matt Tatum

Investor · Ooltewah, TN · Member since 2014 · 5 posts · 2 votes

6y

Originally posted by @Collin Hays:

"Deals to be had" is a relative term. It's all about yield. I don't buy anything with the reasonable potential of an annual yield of gross rents less than 15% of the price paid for the property. I really prefer 18%. Those yields are obviously becoming increasingly difficult to find in the Smokies. However, rents-to-price in the 12% range seem to be very common. I am guessing that's still a hell of a lot better than most other STR markets in the country.

If I was looking to score a really good yield in the Smokies, I think my strategy right now would be to find a really good, unique place to build. I had a cabin on the Roaring Fork River in Gatlinburg that burned to the ground in the Gatlinburg fires. I was able to rebuild a super deluxe log cabin with every amenity for about $330K, and it's doing around $60-63K a year - so that's in that 18-19% range. I wouldn't part with the cabin for almost any amount, because I can't turn around and replace that income very easily, and its value will continue to climb, given its unique location.

There are obviously thousands of cabins in the Smokies. Many, however, are just houses, and their price appreciation potential is more limited. If you can find really unique properties or settings - on water, amazing views, historical value, etc., you can not only have a respectable yield, but enjoy significant price appreciation.

Well said. You'll hear that the same deals can't be found from years ago, but that doesn't at all mean it is a bad deal.

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Julie McCoy

Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes

6y

@Dustin Turner I'm going to echo what others are saying - it's all about the returns. The returns here are excellent, which is driving investor interest, which is what's driving prices up. Once the returns aren't so shiny, the market will plateau, but until then? Even coronavirus couldn't hurt prices here.

With this market, you'll want to do some reasonable projections on returns and see if you're satisfied with them. Everybody's target number is different. While it's true the margins aren't quite as fat as they have been in the past, that doesn't mean they aren't still good, and I have yet to learn of another market that will beat it.

I agree with @Collin Hays that a unique feature is a benefit, though the "ordinary" cabins perform well too. Building is easier said than done, as quality builders tend to have long waiting lists, and good lots can be hard to find. There are some good pre-construction options out there, they won't be custom but there's opportunity to put your own stamp on it.

He is also correct that there are many mismanaged cabins out here, and rental history is of negligible importance. Unfortunately this does not tend to translate to lower prices - buyers are savvy and sellers know what they've got, even if they aren't willing to self-manage themselves.

I'm still buying - I'm closing on my newest cabin on Monday. I've bought at least one a year since 2017 (2018 was a baller year and I bought two, LOL). It continues to be a great market for me.

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Mark Reitman

Rental Property Investor · Chicago, IL · Member since 2018 · 53 posts · 54 votes

6y

I was thinking of selling my least productive cabin because it only generated 22% gross revenue/price its first year. I think y’all just talked me out of it!

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Ryan Proffit

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

6y

@Julie McCoy ballin out of control!!

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Ryan Proffit

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

6y

@Dustin Turner I think good deals are relative to the person looking for them. I just went under contract yesterday in the area, and my projections were looking very satisfying from my perspective. Of course you never know if you’ve made money until you sell. I like value adds, but seeing as I’m sitting in Missouri, I went for a turn key, and I can’t be more pumped. Plan is to buy one a year like Julie. If this one performs the way I think it will, and I buy one more next year, I can quit my job. Good luck brother.

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Dustin TurnerBusiness Member

OP

Real Estate Broker · Little Rock and Hot Springs Arkansas · Member since 2020 · 56 posts · 62 votes

6y

Y'all- this is a fun conversation. Thanks for contributing.

Anyone willing to share numbers on their STR in the Smokies: purchase price/bedrooms/gross rent? I'm curious how they stack up to my Gulf Shores beach house.

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Julie McCoy

Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes

6y

Originally posted by @Dustin Turner:

Y'all- this is a fun conversation. Thanks for contributing.

Anyone willing to share numbers on their STR in the Smokies: purchase price/bedrooms/gross rent? I'm curious how they stack up to my Gulf Shores beach house.

Honestly, asking those of us who have been in the market for awhile about purchase price is asking for heartbreak, LOL (and ultimately not relevant to deciding if you should buy today) - but I'll answer the rest.

- 1BR+loft (sleeps 4) - 2019 gross rents (excluding cleaning fees/taxes etc) $42,396

- 1BR (sleeps 2) - $35,238

- Studio (sleeps 2) - $36,283

I have another 1BR + loft that I'm rehabbing, not renting yet but I expect it to pull between $35-40k; and tomorrow I close on a 3/3 new build, I expect that to do $55-60k (which is ambitious, but it's a great location with some unique features so I think it's plausible).

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Doreen M ODonovan

Rental Property Investor · Aptos, CA · Member since 2019 · 42 posts · 30 votes

6y

@Dustin Turner I don’t know if there are any deals In the traditional sense, I wasn’t able to find any. Don’t wait for a deal as prices keep going up and Inventory is down. We bought in Gatlinburg in December and the numbers are looking better than projections - minus April and the 1st 2 weeks of May with $0 income.

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

6y

Here are my Smokies STRs. My Cosby cabins don't do as much, but they don't cost as much either.

2400 square foot 3/2 cabin on 3 acres on Cosby Creek: $42K-ish a year

1100 square foot 2/2 cabin on an acre on Cosby Creek: $33K-ish a year

700 square foot 1/1 cabin on an acre on Cosby Creek: $25K-ish a year

1400 square foot 2/2 cabin on Roaring Fork in Gatlinburg: $60K+ per year

900 square foot 1/1/loft in Black Bear Falls Gatlinburg: $38K-ish

1100 square foot 1/1/loft in Pigeon Forge: $35K-ish

The 1400 square foot cabin in Gatlinburg is a premium cabin so it's going to command a lot more. It's right on the river, a true log cabin, Andersen wood windows, handmade furniture, high-end finishes and decor. I spent $20,000 on just the doors and windows...yikes!

Here's a peek inside!

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Jeff Piscioniere

Investor · Shelton, CT · Member since 2016 · 218 posts · 225 votes

6y

@Collin H. gorgeous!!!

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Alex Olson

Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes

6y

Originally posted by @John Underwood:

You just have to always be on the lookout for a deal because they usually don't last long.

You could always do some work to try and locate off market properties.

So true. I get a few investors that just don't grasp that the clock is ticking. And the property that is for sale on or off market will sell. Someone will buy it.

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

6y

Originally posted by @Jeff Piscioniere:

@Collin H. gorgeous!!!

Thank you! I went through 2 contractors and eventually flew to TN to hire a crew to finish the job myself. Lived out there for a month and worked 6 days a week sun up to sun down! Nightmare.

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Are the Smokies Too Hot?

Are the Smokies Too Hot?

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