All Forum Posts by: Avery Carl

I own 5 here and I have had at least 20 clients 1031 into Smokies properties this year. It can be a bit of a hustle to ensure you snag a good one within the time frame, but it’s easily doable! If you have never 1031’d before I can definitely understand the nervousness, but exchanging into a cash flowing property in this market is an easily attainable goal.

I recently created this one to calculate cap rate and cash on cash return for STRs:

http://theshorttermshop.com/cash-flow-calculator/

50% occupancy is not great. AirDNA data is not perfect but it's pretty decent. My STR's hit just under the numbers that they show for the 75th percentile in my area.

That being said, I don't know much about Flint, is there much tourism there? STR's will be much more profitable in an area that sees heavy tourism. But, if your purchase price is cheap enough that 50% occupancy is cash-flowing, then it might be a decent idea. I would just need some more information on the rest of the deal to make a better recommendation.

This thread really exemplifies that there is no wrong way to do it in this market. @Thomas Bass buy a 1 bed, or 5 bed, or 10 bed existing construction or custom build and pull the trigger! It really just depends on your personal investment style. If the numbers work, do it. I'm actually talking about this pretty in depth on the podcast in January.

@Michael Baum I think a lot of investors get caught up in trying to figure out the one perfect way to do something, and that's a really good way to never get started. STR investing really is an art more than a science, there is not one perfect formula, but many.

I, personally, am not interested in building in any of the markets that I currently invest in, I can't be bothered with it. I'm a turn the key and cash flow investor (or do a little work, then turn the key and cash flow if it needs rehab). On the other hand, @Julie McCoy, who is just as successful of an investor as I am, is building a pretty sick spread in Wears Valley right now that will probably make her a mint, and she also just got under contract on an existing build for under $150 a sq ft. So it's really not an "either/or" scenario. There are a lot of things that work.

Destin and any of the beach towns on 30A are going to be on the more luxury side of things, while Panama City Beach is a little less nice, but the numbers make a lot of sense. They get just as much tourism and the purchase prices are cheaper.

You should connect with @Matt "Roar" Gardner

@Josh Helvie I was going to respond, but @Julie McCoy said it all already! 

Cabins will be more profitable than condos since the majority of the tourists visiting this area are looking for a "mountain" experience. Cabins lend themselves more to that aesthetic than condos.

Even though this area is getting more attention than it historically has from investors, it's still attainable to hit a 20% cash on cash return. There have been tens of thousands of cabins available for overnight rental in this market for decades. Everyone wanting one does not make them less profitable. What would make them less profitable is if the tourism decreased, but a quick look at the Smoky Mntn. National Park tourism data will show that tourism has been on an upward trend since its inception in 1931, with 2018 finishing out at 12 million tourists. So while the area is definitely growing, it's still a great place to invest in vacation rentals.

@Ken Simms I wouldn't bother with Nashville. The STR laws are constantly changing and not in favor of STR's. I have had clients get under contract at the beginning of a new construction (you pretty much have to go with a new construction/commercially zoned condo or townhome for it to be STR legal), and by the time the construction was finished, the laws had changed unfavorably for their asset. In the over $100 million in STR deals I have done in the Smokies, I have never had a client run into an issue with zoning or regulations, because as Chuck mentioned, it's a very mature STR market and the zoning regulations are pretty cut and dry.

I own 5 cabins in the Smokies. We utilized a HELOC on our previous primary for the downpayment on one of them and we were able to pay it back from the cash flow of that property within the same year, so that strategy worked great for us. I, too, am a big fan of leverage. With STR's you can get a 10% down second home loan which will give you the most bang for your buck as far as leverage goes, and it does not have to be with a bank that keeps the loan in-house. Although I do recommend working with local lenders rather than national or online lenders.

We utilize the strong cash flow from our STR's to acquire more LTR's. We have been able to grow our portfolio by 20 doors in the past 3 years thanks to STR income. That being said, all of the options you mentioned are great ones, and you have a lot of great tools at your disposal. You'll do well whichever route you decide to go!

Make sure you are looking in a true vacation rental market, most of the HOA's in those markets are going to be receptive to short term rentals because the area has been dependent on them for decades. Destin, 30a, Siesta Key, and many others. You shouldn't have a problem finding condo buildings that allow STR's!

Hi Kelly! You’ll definitely need a digital or smart lock. There are quite a few options for this but my biggest piece of advice is to keep it simple. Some of the models will require that you be present with your phone/app to reconnect to the internet if for some reason it gets disconnected, so make sure you check that feature on all potential models.

The simpler your systems, the lower the amount of potential problems you’ll run into. So find the happy medium between technology and ease of use and you’ll be good to go.