Buying cabins, making money, and other random thoughts

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Buying cabins, making money, and other random thoughts

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

Seems like once a week, someone asks about whether this or that property will "make money."

What does "make money" mean? Does it mean a positive monthly cash flow? If yes, then a vacation rental is an incredibly poor investment, regardless of price. 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 (or anywhere else) knowing it's going to rise in value significantly over time, and other people 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. If it "makes" $1,000 a month, not a big deal either. Neither of those amounts are moving my needle, and if they are moving yours, you shouldn't be buying real estate.

Serious question: 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?

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.

Search out what your investment objectives are. If monthly income is at the top of your list, forget about vacation rentals and buy a Great Clips franchise.

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

I used to preach the same thing.. but I was telling folks to buy a subway or pizza franchise.. There is just this on going idea that folks can buy rentals and all of a sudden in a few short years be making enough on positive cash flow to quit their day job. that can happen if you have very low to no debt. thats when it gets good like your paid for cabin. for me the day job is renting one to others and building new homes.. both are business's that just happen to be anchored by real estate but its not real estate investing per se. just like great clips is not real estate investing its cash flow investing.

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  • Cliff H.Pro Member
    Rental Property Investor · Nashua, NH · Member since 2014 · 610 posts · 486 votes
    1w

    Great points, Collin. I think the problem with those investments is not everyone starting out in real estate has the bank account to bankroll $1k in losses/month/property. Perhaps a more realistic assumption when folks are buying their first property these days is breaking even or having a plan to change the equation in those first 5 years? Maybe that’s purchasing with a higher interest rate and with a plan to lower expenses, pay off debt, increase income streams, reduce vacancies, improve PM, or whatever other special sauce an investor may bring to the table to improve the income/expense scales in their favor.

    And perhaps that’s just another way of saying: know a way to find and improve an underperforming asset. 😀

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    • Collin HaysBusiness Member
      OP
      Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
      1w

      Yeah, I think if you can't afford to subsidize for a few years, it's best just to buy stocks and REITs until you can. I didn't buy my first STR until I was 40 years old or so.

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  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    1w

    I would love to talk to you more about your Great Clips franchise!

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

    I used to preach the same thing.. but I was telling folks to buy a subway or pizza franchise.. There is just this on going idea that folks can buy rentals and all of a sudden in a few short years be making enough on positive cash flow to quit their day job. that can happen if you have very low to no debt. thats when it gets good like your paid for cabin. for me the day job is renting one to others and building new homes.. both are business's that just happen to be anchored by real estate but its not real estate investing per se. just like great clips is not real estate investing its cash flow investing.

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  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 644 posts · 272 votes
    6d

    @Collin Hays I think the useful part of this is that "make money" needs a definition before anyone can answer it. Cash flow, appreciation, and debt paydown are different goals, and they call for different properties. Your cabin is a good example of a long-term appreciation play that worked.

    I'd add two things for newer investors. A plan like this works best when you can comfortably cover a negative month without stress, and when you can hold through a slow stretch, since appreciation is never guaranteed and a 2005 purchase had a long runway. Vacation rentals also swing with seasons, regulations, and insurance costs, so reserves matter more than the label on the strategy. Being clear about your objective up front, and sizing the deal to match, is the real lesson.

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    6d

    Collin, I really like the distinction you're making between cash flow and actually building long-term wealth. A property doesn't necessarily have to produce a huge monthly number to be a great investment if it's building equity, appreciating, and fitting the investor's overall plan.

    I'd add one more piece to the equation: after-tax return. Depreciation and other tax benefits can meaningfully affect the real return on a vacation rental, especially when someone also has income from active businesses. And on the other side, the eventual sale and depreciation recapture matter too.

    So I think the better question is not just “How much cash does this property make?” but “What is this investment doing for my wealth after tax, over the entire hold period?”

    Great perspective.

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    • Collin HaysBusiness Member
      OP
      Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
      6d
      Quote from @Ashish Acharya:

      Collin, I really like the distinction you're making between cash flow and actually building long-term wealth. A property doesn't necessarily have to produce a huge monthly number to be a great investment if it's building equity, appreciating, and fitting the investor's overall plan.

      I'd add one more piece to the equation: after-tax return. Depreciation and other tax benefits can meaningfully affect the real return on a vacation rental, especially when someone also has income from active businesses. And on the other side, the eventual sale and depreciation recapture matter too.

      So I think the better question is not just “How much cash does this property make?” but “What is this investment doing for my wealth after tax, over the entire hold period?”

      Great perspective.

      Good thoughts. I've never used tax consequences as a factor in investment decisions, but I know that isn't the norm. Depreciation is one of those things that is more of a tax deferment. Uncle Sam will get that money sooner or later.

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  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes
    6d

    Great point Colin. When I was in my 20s I was chasing cash flow, so I could use that to pay my bills. At that age did not really care much about the future I was very focused on the now. Now in my late thirties I have income for monthly expenses and buy real estate for the future, I only care about cash flow to make sure Im not losing money preferably, and in aggregate the cash flow lumped can help fund down payments for more. I also now buy because I can claim the tax benefits :)

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

      Yeah same really for me. I began STR investing in 2005. Obviously knew that wasn't going to generate income to replace my salary at work, so I began stockpiling cash to start opening up Great Clips locations. My calendar looks pretty much like this:

      2005 First cabin

      2010 Second cabin

      2011 First Great Clips

      2011 Started Property Mgt. Co.

      2012 Second Great Clips

      2014 Third and fourth cabins

      2015 Third Great Clips

      2018 Fourth Great Clips

      2021 Fifth and Sixth Cabins

      2022 Sold the sixth cabin

      2022 Fifth Great Clips

      We opened up another business in 2025, a 3D/4D Ultrasound Clinic for expectant mommas. Also looking at purchasing some UPS Stores currently.

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  • Stephany G.
    Investor · miami · Member since 2026 · 13 posts · 4 votes
    5d

    Agree on the long game. Your 2005 cabin is the proof. The piece I'd add for newer buyers reading this: "I'm fine kicking in $1,000 a month" only works if you know that number BEFORE you buy, and you can cover it for years without stress. Most of the regret stories I see aren't from people who chose appreciation. They're from people who thought they were buying cash flow, used a best-case income guess (a full calendar at peak rates), and found out they were feeding it $1,500 a month by surprise. So run it honestly first: plan for realistic booked nights (around 55–65%), subtract fees, cleaning, and management (20–25% if you hire one), and look at what's left after the mortgage. If that's negative and you're okay with it as your "401k contribution," great, that's a real strategy. Just make it a choice, not a surprise.

    2Reply
  • Karen CubberleyBusiness Member
    Realtor · Sevierville, TN · Member since 2026 · 36 posts · 10 votes
    3d

    You make some great points, and your first cabin is certainly a testament to the benefits of long-term real estate ownership here in the Smokies!

    Being in this market ourselves, I think we can agree that the Smokies offer some unique investment opportunities. However, I don't necessarily agree that vacation rentals are poor investments for someone seeking positive cash flow.

    Every investor has different goals, financial resources, and risk tolerance. Some are building long-term wealth through appreciation and equity, while others are looking for income today. There's room for both strategies.

    What concerns me is when buyers assume that appreciation will eventually make up for a property that doesn't perform financially. The market today is very different from 2005, and not every investor has the financial flexibility to carry a negative cash flow indefinitely.

    For me, it's about the right property, at the right price, with the right amenities, location, and management strategy. I believe a well-purchased STR can provide both cash flow and long-term wealth-building opportunities.

    Your success is a great example of what real estate investing can accomplish over time. I'm curious, though, if you were purchasing your very first Smoky Mountain cabin today, with today's prices and financing costs, would you still be as comfortable carrying a $1,000 monthly loss?

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    • Collin HaysBusiness Member
      OP
      Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
      3d
      Quote from @Karen Cubberley:

      You make some great points, and your first cabin is certainly a testament to the benefits of long-term real estate ownership here in the Smokies!

      Being in this market ourselves, I think we can agree that the Smokies offer some unique investment opportunities. However, I don't necessarily agree that vacation rentals are poor investments for someone seeking positive cash flow.

      Every investor has different goals, financial resources, and risk tolerance. Some are building long-term wealth through appreciation and equity, while others are looking for income today. There's room for both strategies.

      What concerns me is when buyers assume that appreciation will eventually make up for a property that doesn't perform financially. The market today is very different from 2005, and not every investor has the financial flexibility to carry a negative cash flow indefinitely.

      For me, it's about the right property, at the right price, with the right amenities, location, and management strategy. I believe a well-purchased STR can provide both cash flow and long-term wealth-building opportunities.

      Your success is a great example of what real estate investing can accomplish over time. I'm curious, though, if you were purchasing your very first Smoky Mountain cabin today, with today's prices and financing costs, would you still be as comfortable carrying a $1,000 monthly loss?

      If I really liked the property, I'd do that all day!

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  • Rati Meskhishvili
    Tbilisi, Georgia (country) · Member since 2026 · 19 posts · 5 votes
    2d

    @Collin Hays Your 401k comparison stuck in my head so I tried to put a number on it.

    For example, let's say we have USD 800k cabin, with 25% down payment at 6.75% interest rate - about USD 229k cash-in with closing costs. The owner kicks in USD 1k a month for 10 years and then sells the property and pays 6% selling costs. The yearly return on everything put in comes out at about following:

    • 2% appreciation a year - 1.8%

    • 3% appreciation a year - 4.4%

    • 4% appreciation a year - 6.7%

    • 5% appreciation a year - 8.8%

    To get 10% a year, which is about what the stock market is usually quoted at long-term, it needs about 5.6% appreciation every year. At USD 2k a month - it needs about 7%. I held rents and expenses flat and left taxes out, so it's rough.

    So I agree it can be a real strategy, but the whole return is the appreciation, and the purchase price decides how much appreciation you need. @Karen Cubberley asked if you'd still carry USD 1k a month at today's prices and you said all day, so my question is the other side of it - What appreciation do you count on when you buy in the Smokies today?

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

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