5 Smoky Mountain cabins for sale: 4 lose money at the asking price

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5 Smoky Mountain cabins for sale: 4 lose money at the asking price

Rati Meskhishvili
Tbilisi, Georgia (country) · Member since 2026 · 13 posts · 3 votes

I wanted to see how current cabin listings hold up, so I took 5 for sale around Gatlinburg, Pigeon Forge and Sevierville and used each seller's stated 2025 gross revenue.

My assumptions were the following:

  • DSCR loan with 25% down payment at 6.75% interest and 30 years of term

  • 20% management cost

  • 55% occupancy rate (used for only the number of stays and cleanings) with 3-night average stay

  • Cleaning costs, supplies, utilities, insurance, and property tax at typical local rates

  • 5% maintenance and 5% CapEx reserves

  • 5% platform fee

I calculated maximum purchase price where the typical year breaks even after the mortgage vs seller's asking price:

  • Cabin A - Seller's asking price was USD 1.3 mln and my break-even purchase price was USD 1.55 mln (this one was the only one that worked)

  • Cabin B - Seller's asking price was USD 850k and my break-even purchase price was USD 745k

  • Cabin C - Seller's asking price was USD 925k and my break-even purchase price was USD 534k

  • Cabin D - Seller's asking price was USD 885k and my break-even purchase price was USD 465k

  • Cabin E - Seller's asking price was USD 750k and my break-even purchase price was USD 405k

At seller's asking price, all except A lose about USD 6k-25k a year. To break even at asking price, they would need 61%-86% occupancy. AirDNA's Gatlinburg market figure for June 2026 was 53%.

Even Cabin A mises my targets (cash-on-cash, downside scenario, DSCR, margin above break-even occupancy...), so "makes money" is not the same as "good deal".

What surprised me was that self-managing helps less than i expected. With no management costs, only Cabin B turns profit. Cabins C, D, and E still lose roughly USD 5k-6k a year. So, for most of them the price is the problem and not the manager.

If anything, the 5% platform fee flatters these deals: Airbnb's host-only fee is now 15.5%, so unless the sellers' nighly rates already include it, the real losses could be bigger.

For people buying in the Smokies now - are you underwriting on appreciation and tax benefits rather than cash flow, or are you finding deals that produce cash flow at these rates?

Also, it would be very helpful if you could share your thoughts on my analysis.

(I used AI tools to help run the numbers.)

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1d

I wonder if some of these are just listed as second homes.. and not as STR income type properties.? D and E the number you came up with could very well be far below replacement value.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1d

    I wonder if some of these are just listed as second homes.. and not as STR income type properties.? D and E the number you came up with could very well be far below replacement value.

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 13 posts · 3 votes
      1d

      @Jay Hinrichs Thank you very much! Those are good points.

      Regarding the second homes, all five had the sellers' rental revenue in the listing, so I think they are being marketed with the income in mind. But I think you are right that the price is set by second homebuyers.

      As per D and E, that's true that my break-even prices might be lower than replacement values. Although, that's kind of my point. Being cheap compared to building a new one, does not make the rent cover the mortgage. If someone buys D at seller's asking price, they are paying for the lifestyle and the long term value, and the rental income only covers part of the expenese.

      Do you know investors in markets like this treating it this way (as a second home that partly pays for itself rather than a cash-flow investment)?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1d

    yes I do ME.. Also run the numbers if you paid cash see what the return is not everyone needs debt.

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 13 posts · 3 votes
      1d

      @Jay Hinrichs good call!

      I ran them as cash purchases (with every other assumption same):

      • Cabin A - cash flow about USD 90k a year with 6.7% CoC

      • Cabin B - cash flow about USD 43.5k a year with 5% CoC

      • Cabin C - cash flow about USD 31k a year with 3.3% CoC

      • Cabin D - cash flow about USD 27k a year with 3% CoC

      • Cabin E - cash flow about USD 23.5k a year with 3.1% CoC

      All five cabins have a cash flow without debt and stay positive in my downside case too. Self-managed, Cabins C, D, and E get to about 5% CoC, and A to 9.5% CoC.

      So the problem is not the properties, but the debt - Cabins B, C, D, and E return 3%-5% on the seller's asking price and the loan costs 6.75% in interest, so borrowing makes them worse. For a cash buyer they are positive, but mostly a long-term hold rather than an income play.

      (I used AI tools to help run the numbers.)

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    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      1d

      ya thats the issue with investors today and really everyday.. how much debt do I carry if any.

      Keep in mind about 30 to 40% of all Single family homes in the US are owned with zero debt.

      And in other countries were there is no debt option thats how real estate is traded.. handed down in families with little to no debt.

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    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      12h

      During the boom, a lot of people were fleeing to this area, and pricing got so crazy. I think a lot are learning short-term rentals are not all they are made out to be. We are looking at a non-performing loan on a property that went from 1.3 million up to 2.2 million in a matter of 2 or 3 years. Any lender was trying to believe the property, at the time they were foreclosing, was worth about 1.8, but new homes on the same street, which were bigger and had indoor pools, were selling for 1.3 at the time. Ouch

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 13 posts · 3 votes
      8h

      @Chris Seveney Ouch indeed!

      Was the 2.2 mln price backed by the rental income at the time or just by the boom? That's the gap I keep seeing - prices set by what buyers paid, not by what the cabins earn.

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    1d

    Colin Hays knows this market pretty well (I live here but I don't STR here) and he would give better insight on any of this. Can't seem to link him right now for some reason.

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    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      15h

      trying to link someone is broken.. U get the drop down but only half a dozen names show up if the person your looking for is not in the first 6 on the drop down you cant get them maybe you could mention something to the powers that be on this.

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    • JD MartinBusiness Member
      Moderator
      Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
      6h

      Hi Jay, thanks - I just did yesterday as it's the first time I realized it wasn't working the old way it used to. Hopefully it's an easy fix.

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 13 posts · 3 votes
      8h

      @JD Martin Thanks a lot!

      Colin Hays, if you see this comment/thread, I would love to hear your opinion. Mainly, whether cabins like these sell mostly to second-home buyers or to investors underwriting the income.

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  • Hossein Sharifi
    Investor · Member since 2023 · 133 posts · 66 votes
    12h

    @Rati Meskhishvili Useful breakdown. One thing I'd check on all five, even A: whether the seller's 2025 gross includes cleaning fees. Those are mostly pass-through, and on 3-night stays they can be 10-15% of booked revenue. On a cabin grossing $100K, that's $10-15K of "revenue" that goes straight back out to the cleaner. Your expense lines don't include cleaning, so if it's in the gross, every break-even drops further.

    Asking for the Airbnb and VRBO payout reports instead of a P&L usually settles it, since they split out nightly rate, cleaning fees and taxes.

    1Reply
    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 13 posts · 3 votes
      8h

      @Hossein Sharifi Thanks and good check!

      I did assume that sellers' gross includes cleaning fees. About 67 stays a year at USD 175 fee (USD 140 on the smallest cabin), so roughly USD 9k-12k of each gross revenue is cleaning (about 6% of Cabin A's and 13% of Cabin E's). Cleaning is also in my expenses at the same amount per turnover so it cancels out rather than inflating the income. If a seller's number leaves the cleaning fees out, that cabin is actually a bit better than I calculated.

      The thing I cannot see from a listing is whether the gross revenue includes lodging taxes collected from the guests. If it does, then revenue is overstated. I do agree on the payout reports, that's the cleanest way to settle it.

      (I used AI tools to help run the numbers.)

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  • Ametria Chaney
    Realtor · Memphis, Shelby County · Member since 2026 · 119 posts · 37 votes
    11h

    Your analysis points to something worth saying plainly: if a property only works when appreciation or tax benefits bail it out, you are making a bet, not buying cash flow. Short-term rental math is unforgiving, and the assumptions are where deals usually fall apart — occupancy, nightly rate, and all the fees in between, including platform fees, cleaning, management, maintenance, insurance, and taxes. I would re-run those cabins with conservative occupancy and a full management cost, even if you plan to self-manage at first, because your time and turnover have real costs. Also check local short-term rental rules before you buy, since regulations can change the whole plan. None of this means cabins cannot work, but the ones that do usually show it in the cash flow first, with appreciation as a bonus rather than the plan.

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 13 posts · 3 votes
      8h

      @Ametria Chaney Thanks!

      I agree that cash flow should come first and the appreciation should be considered as a bonus. The numbers above already include 20% management cost. The self-managed run was only a second check to see whether the manager was the problem.

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  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    10h

    Especially since that area is primarily rental homes i.e. not many full time residents in those specific towns, I guess sellers are just hoping someone does not mind losing money having a home in town. Or banking on someone who is taking the tax break and banking on a refi in the coming years to try to come out ahead. Better to focus on markets where cashflow is still possibly (they do exist - Tampa metro is one example).

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 13 posts · 3 votes
      8h

      @Andrew Steffens Agreed! And the refinancing only works if the rates drop enough, which is its own gamble. One rough way I compare markets is yearly gross revenue divided by the asking price. Cabin A, the only one that worked, was at about 14%, Cabin B at about 13% and Cabins C, D, and E at about 10%. With the 25% downpayment at today's rates the break-even line seems to sit at around 13%-14%. What does that ratio look like on the Tampa deals that have positive cash flow for you?

      (I used AI tools to help run the numbers.)

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  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 1k+ posts · 653 votes
    7h

    How much breathing room is left after everything gets paid? Reconcile the seller’s “gross revenue” with booking statements, does it include cleaning fees, and are platform fees already deducted? Also, the stays and cleaning costs should match the occupancy behind that revenue. Otherwise, you’re mixing two different operating scenarios.

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