Personal experiences in Gatlinburg, TN area

[Sean Harris]

I'm looking for people who have personal experiences with vacation rentals in the Gatlinburg, pigeon forge, Sevierville area. When looking at some of the properties over there, some houses are grossing around 120-150k a year. Some of these properties you can go back 3 years on their tax returns to verify income but as we know 2020 was a very weird year and I feel this year will be similar with alot if people traveling and using vacation rentals instead of hotels. I want to ask the people that currently own property there if the income has been consistent way before the pandemic hit. Thanks

[Collin Hays]

First, I think it is important to define the "Gatlinburg" market, as Gatlinburg is but a small part of the draw in the TN portion of the Smoky Mountains.  Starting from the east and moving west, I consider the "Gatlinburg" market to include the following:  Hartford, Cosby, Cobbly Nob, Pittman Center, Gatlinburg, Sevierville (portions thereof), Pigeon Forge, Wears Valley, and Townsend.  

There are entrances to the National Park in Cosby, Pittman Center, Gatlinburg, and Townsend.  

Gatlinburg has traditionally been the epicenter of this entire area. It is the typical four-season mountain town with arts, crafts, fishing, skiing, hiking, t-shirts, and ice cream parlors.  Traditionally, and very generally speaking, vacation homes in Gatlinburg are the most desirable for both ownership and guest preference.  Gatlinburg rentals have been strong for decades.  

Pigeon Forge is also very strong, and these days, the rents in Pigeon Forge probably rival Gatlinburg.  But for the same or similar money, I'm buying the Gatlinburg address every time.  

Cosby...now this is an interesting area. I bought a 2400 square foot log cabin with 250 feet of frontage on Cosby Creek - a blue ribbon trout stream - for $240K in 2005. The annual rents were around $16,000 per year. But the rents have steadily grown in Cosby and my cabin should easily exceed $50,000 this year. Cosby used to be the "value" area to buy because it is 30 minutes from Gatlinburg. It is more rural and less tourist-y. But Cosby has become a hot STR area. My $240K cabin is probably worth $650K today pretty easily. It would be worth $1 million in Gatlinburg on a river front.

If you are attempting to forecast future rents and house values in the Gatlinburg region, it might be helpful to look at similar mountain towns out west.  Vail, Aspen, Breckenridge, Tahoe, Telluride, Taos, Sun Valley.  In  these markets, the price per square foot for a legit single family cabin is often $2000 per foot or much higher.  In Gatlinburg, we are still talking homes in the $300-500 per square foot region.  That wouldn't buy you more than a single wide trailer in the mountain towns out west.  

There is no reason whatsoever that Gatlinburg will not eventually catch or even surpass the values of the towns out west. 

1.  Gatlinburg is almost a year-round destination. The mountain towns out west are 6-8 month seasons.

2.  There's substantially more entertainment offerings in Gatlinburg, again, year-round.

As high as things have gotten, Gatlinburg is still a bargain-basement place in terms of a decent yield and the promise of long-term appreciation in value.