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All Forum Posts by: Chuck Kramer

Chuck Kramer has started 5 posts and replied 232 times.

Post: Smokies Advice- Age & BRs

Chuck KramerPosted
  • Orlando, FL
  • Posts 241
  • Votes 254

Lots of great advice from people here, you came to the right place. I agree with the thought of going large for the LONG term, but you have to make sure you have sufficient reserves.

The here with large cabins with pools will continue to do well, most likely, as they can go self-contained. But we don't know what the next 2-4-8-12-24 months will look like due to the current COVID situation. 

We use PriceLabs and also AirDNA. Large cabins (6+ BDRM) w/out private pools in Sevier County are only running an average of 63% booking for June/July. They also have a 51% cancellation rate (which includes future dates). Large cabins means large groups and it often only takes a couple people to back out due to a travel restriction or mandatory quarantine period for the whole reservation to fall through. 

As a semi-local, I have gotten to know a lot of other, smaller PMs that have those exact experiences - larger cabins book but also cancel a lot. > 50% is a huge number. A long-time local PM, one of the better ones that was family-owned, just sold out to one of the big ones. They managed a lot of big units in Gatlinburg and just found this season to be too difficult and gave up. For those who still rely on AirBNB, it can be even worse. AirBNB will still allow last minute no-penalty 100% refund cancellations if a COVID travel restriction is in place. At the moment, 23 states have mandatory quarantines for people traveling from TN. Try filling an 8-bedroom vacancy that cancelled 3-4 days before arrival.

If governments start mandatory shutdowns again, and some nearby states (KY and IL for example) seem to be seriously considering it, large cabins will take the brunt of that. Every time a new state adds TN to the 14-day quarantine list, we get cancellations across the board. The smaller places usually rebook but notice is often too short to rebook the larger ones.

We have a 2, 3, 5, and an 8 bedroom rental. We have done a little work on the 8 bedroom that makes it easy for us to also rent as a 4-bedroom. We set it up so we could lock-off the entire lower floor without affecting amenities. That has helped us fill schedule gaps. This is a feature or capability worth looking for as you can increase occupancy and flexibility. Private pools were big this year, likely driven by COVID concerns. They will likely remain popular even after this passes.

Having ZERO bookings for the 8 bedroom from late-Feb thru late-May was a tough thing to handle but we had our reserves to fall back on. We complied with the County and City requests to not actively advertise our rentals during that time. Listings were ok, but ads, mailers, etc., were not. 

Lastly, I know all local governments are seriously considering regulating pools (and elevators) on STR properties the same way they do in resort communities and hotels. I am not sure that means much. Most likely, it will require occasional inspections along with increased procedures & record keeping to ensure safe water quality. That will put more importance and reliance on the quality and thoroughness of your cleaners or pool maintenance folks.

So this was a long-winded way to simply say "be sure you have 6+ months reserves for a large cabin. They are likely the better long term investment after this COVID stuff eventually blows over."

@Justin Anderson Like most of times, they won't care until something goes wrong or someone complains. There was a lot of activity in Spring around this as some property managers did not refund cancellations as they were out of money. Seems they were not keeping the required escrow. I know of at least 6 TNREC legal actions still underway as a result.

@Justin Anderson - I was referring to the VACATION LODGING SERVICE license. If you manage short term rentals that you do not own, you need a license from the Tennessee Real Estate Commission.

@Justin Anderson Congrats on making that move and even stepping further!!

How long did it take you to get the real estate license? Just wondering what was involved.

On board with @Avery Carl's comment. The older, established PM companies are best to stay away from as an investor. They specialize in people with vacation homes who just want to cover expenses. 

During the COVID time, all of these large companies were terrible. Several were called out specifically by Sevier county and almost forced an across the board STR shutdown. There was a "requested" moratorium on advertising and not one large PM honored it.

Owners I know who have placed their properties with these companies could not run away fast enough once their contracts were up.A few posted PM statements where, despite 20 days/month rental in March/April, the PM billed them as the rents didn't cover the costs. 

@Collin Hays described rent shifting perfectly. A good example was a 4-BDRM, mountainview, with indoor pool being rented by the PM for $400 for 3 nights with 4th night free (during slowdown there were many similiar ads). Then the PM added on a $400 booking fee, a $45 service fee, and $95 admin fee. After the split, the owner got $280 and the PM got $660. Plus the owner had to then spend $340 in repairs and replacements from the guests.

Like Haven, there are several smaller, almost boutique PM companies that seem to be doing a great job. They typically are about a 20% split and keep their inventory to numbers that they can control and provide quality service for. If interested in a PM, I suggest seeking them out; Haven, Bear Tracts, and Timber Tops are just 3 of the dozen or so in the area.

Vrbo used to be king here in the Smokies, but it has mostly leveled out between them and Airbnb. I do think large properties (5+ bedrooms) book more on Vrbo, but cannot back that up with anything more than anecdotal information. No reason to not list on both but I wouldn't bother with the others at this time. The others, Booking, Flipkey, even SMBYO, don't do very much in the area now compared to the others. The only other method with traction and numbers is direct-booking, but that takes more time and attention to build an audience. It is growing though since the OTAs keep increasing their fees and guests want to save $$.

In the Smokies, they just sent out 2 different messages - one telling people not to come and to stay home, the other telling STR owners not to advertise availability prior to 4/14.

My local gov contact tells me it was primarily due to cabin owners advertising really low prices on Facebook groups, as well as possible guests looking for accommodations in those same groups. The threat is that if owners do not stop, the County Health Depts will order a shutdown (mayors here don't have that authority).

@Paul Cox Today they put out notice to not advertise availability of cabins thru April16. Seems a lot of owners were posting “fire sale” prices in various Facebook groups.

Post: Coronavirus STR Data

Chuck KramerPosted
  • Orlando, FL
  • Posts 241
  • Votes 254

@Matt Castle Police. On their 3rd visit they took names.