All Forum Posts by: Chuck Kramer

I try to steer remote owners away from building here in the Smokies (I am in Gatlinburg for the moment) as getting good and reliable construction teams is incredibly difficult And expensive. You really have to be here on too of them to get things done. Just went thru a major rehab and went through 6 “Reliable” contractors and took over a year. There has been a building boom here and big money is sucking up all the decent local tradespeople. Time to complete on new construction is running 12-24 months on average. Longer if within city limits.

Even though market has appreciated astronomically, you can still get decent prices on homes that will provide a good ROI. Look at buying initially. Buying will mean paying from $160-220 a sq ft depending on the home. Building at this time is estimated to cost $180-220 sq ft.

This is very much a wilderness area still and unless you are inside city limits, there are few permits and inspections needed when building; which makes it even more important to have a good contractor.

As for economy tanking, their are already some food threads on BP discussing it and I posted quite a bit about performance here during the recession. Bottom line was that visitor count stayed steady at around 9.5-10 million people. Rentals did well overall here. Yes, there were lots of foreclosures but they were due to other reasons; especially how people financed their cabin purchases back then. In fact, they continued to do so well that many local banks here kept the homes setup and operating as rentals rather than sell them.

Smokies is a good area to invest in STR, but not necessarily LTR.

Good advice here and is fairly location specific. we use FOREMOST and, so far, have been satisfied. They have a good reputation in TN as one of the few providers that stepped up during/after the wildfires and also continued to write policies here without huge increases.

Depends on your provider, but definitely try one to put in each room. Spectrum and Xfinity are the two main providers in the area. I can say from experience, if Spectrum is the one, go into the local office on Main St in Sevierville PERSONALLY and you will get better/faster service and probably even a better deal than dealing with the 800-call-center. 

Recent (last 12 months) articles on markets. Note some are based on other articles but still have some unique info. Keep in mind that there ARE different ways to measure returns, but these are still helpful.

@Nathan Ownby - I saw a similar (maybe the same) article. In it, I recall that they they included East Tennessee in the Nashville area. That is like including Miami in the Panhandle area or combining New York and Boston. Most of these seem to have it right -- at the moment, the Smokies are smokin'.

Also consider that we use "AirBNB" as a somewhat generic term for STR. In the Smokies, AirBNB has about 15% of the total rentals; VRBO is king with about 60%; and the remainder is split between other OTAs and Property mgmt companies (many of whom list on OTAs as well).

https://www.rented.com/2019-rented-report/

https://www.usatoday.com/picture-gallery/travel/destinations/2019/03/27/vacation-rentals-50-best-places-buy-property-2019/3286874002/

https://www.forbes.com/sites/ellenparis/2019/03/26/best-places-in-2019-to-own-a-vacation-rental-property/#10525b4b5da1

https://www.usatoday.com/story/travel/2018/08/14/these-top-25-markets-buy-vacation-rental-usa/984513002/

https://www.vacasa.com/real-estate/buyer/best-places-to-buy-a-vacation-home

@David Lowe Mountain Commerce. But all are good and I do business with the other two also.  It was just that at one single point in time mountain commerce was able to make a better offer. 

@David

@David Lowe, worked with a few and doing business with one. Others were willing but offer I got was just better. First Tennessee State Bank, Peoples Bank, Mountain Commerce Bank.

Not really creating jobs here, they are already here and more jobs than people. involuntary unemployment is extremely low, around 2.1% in this area. So many jobs that employers cannot fill them and import eastern Euro and Asian students.

@David Lowe Check local E Tennessee institutions too. While as an out-of-stater you are at a disadvantage, local financers know the area, understand the role and business of short-term rentals here better than other lenders. 

@David Lowe Avery and Lucas nailed it. Also, Gatlinburg is on EVERY top list I see for vacation rental success areas. AirBNB works well here, but VRBO appears to be king with 3x as many listings. Regardless, great area and despite rising home costs still opportunities abound. One only lightly-tapped area is buying lots and building rentals from ground up. Lots of that going on with large homes, but don't hear of too many 2-3 bedrooms being built. Lots of opportunities indeed.

As for the OP and business loans, my 2 leveraged properties are currently business loans from local institutions. However, they favor locals and there is good reason for doing that. Lending to out-of-area investors is not very high on their list. One solid reason is locals will help to keep money in the area while out-of-state people are assumed to be removing money from the local economy.

Gas station/convenience store. Maybe Pilot would be interested, or WaWa?

@Luke Carl is correct that those numbers are low, so were likely with a property management company. In a very general, squint your eyes kinda way, a reasonable place should do somewhere in the area of 20% annual gross vs purchase price.

Bigger homes, assuming they have the right amenities and view, tend to net more than smaller; fewer bookings but much larger $$ per booking. 

A good realtor can connect you to those services or some of us here can when the timing is right. There is also a pretty decent closed Facebook group for local owners that I have gotten some pretty good referrals from for things like appliance repair, pest control, and hot tub repairs when I decided to dump current providers.

BTW: generally ignore anything the realtor puts in the listing regarding revenue. You need to run your own numbers and there is usually nothing they can give you that is worth using. Exception being the occasional self-managing owner who will provide a year or two of their rental reports. But that is rare. Property Mgmt companies also have ways of inflating gross sales numbers by adding fees and such to make it look like they are doing great things when they are actually only lining their pockets with the owner's cash. So, again, those numbers will mean very little.

Give Lucas a call, he can steer you in the right direction and has been doing it with others.