5 Broken Bow cabins for sale: none of them cash flow at the asking price

Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 780 posts · 278 votes

Quote from @Rati Meskhishvili:

After running Smoky Mountain cabins tests, I ran the same tests on Broken Bow / Hochatown. I went through the Redfin listings, found the ones that state their revenue, and picked 5 across the price range. The revenue is what each listing claims (but I couldn't verify them).

My assumptions for these tests were following:

25% down payment at 6.75% interest rate with 30 years of term
20% management fee
5% platform fee
5% maintenance and CapEx reserve each
45% occupancy (AirDNA has the market at around 44%) except Cabin B at the 90% occupancy (as this was the number listing claimed)
2.5 night average stay
0.88% property tax from the price

The results were following:

Cabin A: At asking price of USD 480k stated gross revenue was USD 72k (15% from asking price) and cash flow of USD -6.6k per year. My calculated break-even price was USD 381k
Cabin B: At asking price of USD 545k stated gross revenue was USD 80k (14.7% from asking price) and cash flow of USD -13.4k per year. My calculated break-even price was USD 346k
Cabin C: At asking price of USD 749k stated gross revenue was USD 110k (14.7% from asking price) and cash flow of USD -7.2k per year. My calculated break-even price was USD 642k
Cabin D: At asking price of USD 850k stated gross revenue was USD 64k (7.6% from asking price) and cash flow of USD -40.9k per year. My calculated break-even price was USD 241k
Cabin E: At asking price of USD 1.289 mln stated gross revenue was USD 140k (10.9% from asking price) and cash flow of USD -22k per year. My calculated break-even price was USD 962k

So none out of 5 bring in positive cash flow, compared with 1 out of 5 in the Smokies. Cabins A, C, and E would need 51%-58% occupancy to break even. and Cabins B and D don't break even at any occupancy.

What surprises me is that in my last thread Andrew Steffens said he looks for about 14% gross revenue on higher priced homes, and 15%-16% around USD 400k. Cabin A is right at 15% and still loses money. I think, short stays (more cleanings) and property taxx are why, but I would like to hear if I am wrong.

Self-managing turns Cabins A, B, C, and E positive (USD 2.6k - USD 14.8k range a year). But Cabin D loses either way. Bought with cash, they return only 1%-4.7%.

I would like to ask two questions to people who know this market:

Current tax bills on these listings are very low, some under USD 1k. I assumed they get reassessed after a sale (at 0.88%). Is that what really happens? Even at the current bills all 5 still lose money, but the gap is big.
AirROI shows supply up about 30% in a year. Are owners here seeing revenue drop?

(I used AI tools to help run the numbers)

@Rati Meskhishvili, I think you're right to question the property tax numbers, especially when the current bills are much lower than what you're estimating. From what I understand, Oklahoma can reassess property values after a transfer, so I wouldn't rely on the seller's current tax bill when running the numbers. As for the growing number of cabins, I'd want to compare actual revenue from similar properties over the past couple of years before assuming the market is still performing the same way.

I'm a real estate attorney and broker based in Maryland, and I work with investors on property purchases and transactions. For example, when someone is buying an investment property, I think it's important to look beyond the seller's numbers and verify expenses that may change after closing, including taxes, insurance, and any restrictions affecting how the property can be used.

I appreciate you sharing such a detailed analysis, @Rati Meskhishvili! It's a good reminder that even properties with strong revenue can struggle to generate positive cash flow. Happy to stay connected!

[email protected]240-266-0291

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Andrew SteffensBusiness Member

Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes

6h

Another good read! I wanted to correct one thing, I start around those stated yields as a possible breakeven number. Obviously taxes, insurance, management costs, utilities etc do vary from market to market. Let me know if you would like to do one in Tampa I can show you some recent sales :D

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John RacinePro Member

Rental Property Investor · Casselberry, FL · Member since 2008 · 197 posts · 107 votes

5h

Rati, I don't know Broken Bow, so I'll leave the tax and supply questions to locals. Diana covered the reassessment side. I do have a few thoughts on the model itself.

Disclosure: I co-host STRs for other owners.

1) Short stays probably aren't what's sinking these, at least not in your model. Cleaning isn't in your expense list. On my listings and the ones I manage, the cleaning fee is a pass-through: the guest pays what the cleaner charges. The catch is the seller's number. At a 2.5-night average stay, cleaning fees can be a big part of the "gross revenue" a listing claims. If those fees are in there, the revenue the owner actually keeps is lower than it looks, and the deals are worse than your test shows.

2) What is the 5% platform fee budgeted for? Airbnb and VRBO fees are significantly higher than that, so I'm wondering if it's a local marketing or booking service. If it is, and the 45% occupancy reflects only that channel, adding Airbnb, VRBO and others would raise your fee line. It could also bring in more bookings and more revenue, so I'd model both sides before writing these off.

3) Building on Diana's point about verifying revenue: I'd ask each seller for actual payout reports, then check them against comparable cabins in PriceLabs Market Dashboards or whatever data source you trust. A claimed 90% occupancy on Cabin B is the first one I'd want to see proof of.

4) Before assuming nightly is the only play, see whether longer stays exist there. In my markets, I check Airbnb for 30+ day competition and Furnished Finder for real mid-term demand before I convert a unit. A cabin market may not have much of it, but it's a quick check, and fewer turnovers change the math.

Your managed vs. self-managed result is the real takeaway. At a 20% fee, these need either a lower price or an owner who is hands-on.

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5 Broken Bow cabins for sale: none of them cash flow at the asking price

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