All Forum Posts by: Justin Beasley
Justin Beasley has started 0 posts and replied 97 times.
Post: Mountain gal looking for financial freedom
- Pigeon Forge, TN
- Posts 100
- Votes 68
BP is full of great info for STR investors. Read everything you can. Also, it sounds like your home will be able to be considered a vacation home once you start renting it as long as you follow a few rules. That comes with it's own advantages that you should be aware of and take advantage of.
Congrats on starting a pretty awesome journey!
Post: Indoor Pools in the Smokies
- Pigeon Forge, TN
- Posts 100
- Votes 68
Quote from @Nathan W.:
I have a nice 2 acre lot with a view in the middle of the Gatlinburg, Pigeon Forge, and Wears Valley triangle. I'm trying to narrow down what to build on it.
I'm considering an upscale 4 Bedroom 4 1/2 bath Pool cabin. I honestly have no desire to own an indoor pool but all the numbers say I should do it. I'm guessing it will cost me about $250k in additional square footage and construction costs to add a pool and I'm estimating an additional $50k a year in revenue.
This may sound stupid, but is there any danger of the indoor pool in the smokies becoming the Jacuzzi tub in the bedroom of the future? So many of these things look so underwhelming. I've seen hot tubs larger than the pools going into some of these places. I just wonder if they are getting over built. On one hand I worry that I won't be able to compete soon without one but I also worry they are a bit of a fad.
For those that have an indoor pool. How big of a pain is it to manage them and how much extra costs does it add? Are you getting them cleaned weekly or after each guest leaves?
Thanks!
On the pool question it can add anywhere from 75-125k on average.
Post: Indoor Pools in the Smokies
- Pigeon Forge, TN
- Posts 100
- Votes 68
Quote from @Kyle Smith:
I said I’d never build again but I have to admit the returns I’m getting so far have been amazing on this pool cabin. Now that I’ve gone through the school of hard knocks I may do it again with the right vetted builder (and on a semi flat lot)! My story parallels Ken’s. It was a horrible experience but in the end I learned a lot and know how to survive the onslaught of issues one night face. My advice to 90% of the random people wanting to build in Sevier County is going to be “don’t do it.” Buy a house almost completed and construction financed by the builder.
This is great advice. A lot of new construction cabins are financed by the builder or a local investor. I personally have 6 going right now. There is very little incentive for a reputable builder to commit to a custom cabin build right now. Depending on the land it can take anywhere from 6-12 months to finish a cabin and if you do not know what you are looking for in land you can quickly add 20-50K in expenses by purchasing a bad piece of land.
If anyone needs convincing of this just shoot me a DM:)
Post: Am I to old to start buying investment properties?
- Pigeon Forge, TN
- Posts 100
- Votes 68
Life expectancy steadily increasing. You probably have 30 good years of investing ahead of you! :)
Post: Contractor/handyman hire and traveling
- Pigeon Forge, TN
- Posts 100
- Votes 68
Are you close to Boone, Black Mtn, Waynesville, etc...?
Post: Insurance question for STR
- Pigeon Forge, TN
- Posts 100
- Votes 68
We have used Proper Insurance before.
You get what you pay for here. A STR policy is more expensive but covers a lot more. Traditional insurance will not cover near as much but it is cheaper.
Post: Do people like losing money in the Smoky Mountains?
- Pigeon Forge, TN
- Posts 100
- Votes 68
Quote from @Taylor Jones:
Quote from @Tyler Solomon:
How is your opex at $2,500 / month? $1,600 / month also seems very high for cleaning fees, however, why not bake the cleaning fee, or at least part of it, as a fee passed on the renters?
We finance a lot of smoky mountain STR's, nearly all of which cashflow very well when properly operated, even at 80% LTV. Obviously if you come in more cash heavy on the down payment, your debt service will be lower and your cash flow would improve, but even at 80% financing with todays current interest rates, $125,000 in gross revenue should certainly be cash flow positive. If not, you have a property with an unordinary amount of operating expenses.
$125K in revenue includes cleaning fees collected from guests. Yes it's a pass through. But you collect a total of $125K in revenue (ADR's plus cleaning fee), you'll have to pay your cleaners invoices.
Have you tried to source quality cleaners in the Smokies lately. More cabins than cleaners, can't go cheap.
2 turns per week at $250/turn runs you $2k/mo in cleaning
The majority of cabins in the Smokies do not include cleaning fees in the revenue they promote so paying 1 Mil for a cabin that does 101K in revenue is a horrible investment at the current rates. The purchase price for a cabin doing 100K(A lot of 3 bedroom cabins) is more like 700-850K.
Post: New construction lender for STR in Smokies
- Pigeon Forge, TN
- Posts 100
- Votes 68
Most of the time you will need to do a double closing with a local bank for the new construction loan and a mortgage broker who will be carrying the loan after completion. Feel free to DM me and I can connect you with my people.
Also, with the shifting market you may find that most banks will be hesitant to do new construction loans unless you have a lot of capital or previous experience.
Post: Delays to Expect on New Construction - Gatlinburg, Pigeon Forge
- Pigeon Forge, TN
- Posts 100
- Votes 68
If your builder/contractor has a good track record and experience then most of your delays will come at the beginning of the project. If you buy raw land that is in critical slope and has no previous septic approval then it will take a couple of months just to get the engineered footer reports and septic approval.
Once you break ground you will have a few weeks of delays through the life of the build....concrete, inspectors, weather, etc. A good contractor can manage anything else that arises.
Just finished one build and it was completed 5.5 months from the day we broke ground.
Post: Are you going to do buy and hold in 2023?
- Pigeon Forge, TN
- Posts 100
- Votes 68
Yes. Always looking for and finding value. Market conditions change. What I purchase, how I finance it, and what I am willing to pay for it change as well.
Also, I love to buy and hold but I always purchase with a understanding of the different options I have to get my capital back.