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 · 17 posts · 4 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
1w

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
    1w

    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 · 17 posts · 4 votes
      1w

      @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
    1w

    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 · 17 posts · 4 votes
      1w

      @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
      1w

      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
      6d

      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 · 17 posts · 4 votes
      6d

      @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.

      0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
    1w

    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
      6d

      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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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 17 posts · 4 votes
      6d

      @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.

      0Reply
    • JD MartinBusiness Member
      Moderator
      Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
      6d

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

      Howdy everyone! While there are properties in the Smokies that will "make money" (positive yearly NOI), that's not as much my objective with this type of investment. I buy QUALITY real estate in the Smokies knowing it's going to rise in value significantly over time, and the renters are going to service the majority of that debt for me. So if I'm having to kick in $1000 a month, it's no worry to me. How many of us are dutifully stashing $2,000 a month into a 401K with zero current income, and we are perfectly content to do so until we are old people? All the same hamburger to me.

      My first cabin in the Smokies, I bought in 2005. I was negative $1,000 a month for a while. But the renters have long since paid that asset off, and it's now free and clear doing $50K in annual rents, and the value us probably $700K. What's wrong with that investment?

      Now, I also own five Great Clips franchises. I did buy these for income. They've helped me...buy more cabins! Different investments, different objectives.

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 17 posts · 4 votes
      2d

      @Collin Hays Thank you very much for jumping in! This is the perspective I was hoping to see.

      The 401k comparison does make sense. With that logic, at the asking prices Cabin B would cost about USD 500 a month to hold, and Cabins C, D, and E about USD 1.7k - 2k a month, so they are well past your USD 1k. What would you need to believe about the appreciation to pay that today, and do you still find cabins in the Smokies that fit your rule at the current prices?

      0Reply
  • Hossein Sharifi
    Investor · Member since 2023 · 139 posts · 70 votes
    6d

    @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.

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 17 posts · 4 votes
      6d

      @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 · 207 posts · 69 votes
    6d

    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 · 17 posts · 4 votes
      6d

      @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 · 4k+ posts · 3k+ votes
    6d

    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 · 17 posts · 4 votes
      6d

      @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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    • Andrew SteffensBusiness Member
      Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes
      5d

      I also use the gross yield as the first measure. With gross yields 14% can work on higher end priced homes (maybe $800k+). For lower end houses around $400k it has to be around 15-16%, this is due to fixed costs which higher grossing properties can absorb more of. I make a weekly list of properties that go out to clients and average is around 14%, with some as low as 12% but some as higher as 20%+.

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 17 posts · 4 votes
      2d

      @Andrew Steffens Thanks a lot! That's a really useful benchmark.

      By that measure only Cabin A clears it at about 14%, and Cabin B at about 13% is just below, which matches what the numbers showed.

      1Reply
  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 1k+ posts · 661 votes
    6d

    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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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 17 posts · 4 votes
      2d

      @Denise Supplee Thank you!

      These are good points, and that's how I set it up myself. I assumed 55% occupancy to get the number of stays and cleanings. Then I set the nightly rate so that the total matches each seller's stated gross revenue. And I also took the 5% platform fee off as an expense. If the real occupancy was higher, there were more stays than I counted, so the losses would be a bit bigger. Booking statements would indeed settle both questions.

      0Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    5d

    Rati, I like the way you’re looking at this. The cash purchase comparison actually makes the point pretty clearly: some of these properties may work as unleveraged investments, but the financing cost changes the picture pretty quickly.

    I’d add one more layer to your analysis: don’t give the tax benefits more credit than the actual deal deserves.

    Depreciation and potentially cost segregation can improve the after-tax return, but the benefit isn't necessarily the same as cash in your pocket today. Whether you can actually use accelerated depreciation depends on the investor's broader tax situation and how the STR activity is treated and participated in.

    So I’d look at each cabin in three steps:

    Does it work operationally?
    Does it still work with the financing?
    What does the after-tax return look like once the actual investor’s tax situation is included?

    If a cabin only works because you’re assuming appreciation and a large tax benefit, I’d be very cautious. If it works on conservative operating numbers first, then the tax strategy can be a nice addition rather than what makes the deal work.

    Your cash purchase analysis is probably the most useful part here because it separates “the property doesn't work” from “the financing doesn't work.”

    Feel free to DM me I’d be happy to send over a few resources that might be helpful.

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    • Rati Meskhishvili
      OP
      Tbilisi, Georgia (country) · Member since 2026 · 17 posts · 4 votes
      2d

      @Ashish Acharya Thank you very much!

      Agreed, I kept the analysis pre-tax on purpose, since the tax side depends so much on the buyer. Your three steps are a good way to put it.

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  • Ametria Chaney
    Realtor · Memphis, Shelby County · Member since 2026 · 207 posts · 69 votes
    5d

    Thanks, Rati — I appreciate you taking the time to reply, and I am glad the cash-flow-first point landed. Your breakdown makes that distinction really clear, and I hope it helps others underwrite with the same discipline.

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