All Forum Posts by: Collin Hays

First, I think it is important to define the "Gatlinburg" market, as Gatlinburg is but a small part of the draw in the TN portion of the Smoky Mountains.  Starting from the east and moving west, I consider the "Gatlinburg" market to include the following:  Hartford, Cosby, Cobbly Nob, Pittman Center, Gatlinburg, Sevierville (portions thereof), Pigeon Forge, Wears Valley, and Townsend.  

There are entrances to the National Park in Cosby, Pittman Center, Gatlinburg, and Townsend.  

Gatlinburg has traditionally been the epicenter of this entire area. It is the typical four-season mountain town with arts, crafts, fishing, skiing, hiking, t-shirts, and ice cream parlors.  Traditionally, and very generally speaking, vacation homes in Gatlinburg are the most desirable for both ownership and guest preference.  Gatlinburg rentals have been strong for decades.  

Pigeon Forge is also very strong, and these days, the rents in Pigeon Forge probably rival Gatlinburg.  But for the same or similar money, I'm buying the Gatlinburg address every time.  

Cosby...now this is an interesting area. I bought a 2400 square foot log cabin with 250 feet of frontage on Cosby Creek - a blue ribbon trout stream - for $240K in 2005. The annual rents were around $16,000 per year. But the rents have steadily grown in Cosby and my cabin should easily exceed $50,000 this year. Cosby used to be the "value" area to buy because it is 30 minutes from Gatlinburg. It is more rural and less tourist-y. But Cosby has become a hot STR area. My $240K cabin is probably worth $650K today pretty easily. It would be worth $1 million in Gatlinburg on a river front.

If you are attempting to forecast future rents and house values in the Gatlinburg region, it might be helpful to look at similar mountain towns out west.  Vail, Aspen, Breckenridge, Tahoe, Telluride, Taos, Sun Valley.  In  these markets, the price per square foot for a legit single family cabin is often $2000 per foot or much higher.  In Gatlinburg, we are still talking homes in the $300-500 per square foot region.  That wouldn't buy you more than a single wide trailer in the mountain towns out west.  

There is no reason whatsoever that Gatlinburg will not eventually catch or even surpass the values of the towns out west. 

1.  Gatlinburg is almost a year-round destination. The mountain towns out west are 6-8 month seasons.

2.  There's substantially more entertainment offerings in Gatlinburg, again, year-round.

As high as things have gotten, Gatlinburg is still a bargain-basement place in terms of a decent yield and the promise of long-term appreciation in value.

Every major investment includes a stress factor.  But I would be particularly stressed about investing in the high-dollar Colorado resorts.  Their prices make Gatlinburg look like the close-out rack at Dollar General.  Apples and oranges in my humble opinion.  

I have one of my STRs near Gatlinburg current under contract.  I have told the purchaser that I will manage the rental free-of-charge until the end of the year so that we don't have to cancel a bunch of peoples' vacations, but I don't think it ordinarily works that way.  

Can't disagree with that.  Here is the rub with Cape Cod:  You basically have 13 weeks per year maximum to rent a place.  So unless you are buying a place there for other reasons - a family retreat or the hope of future price appreciation - the income numbers aren't too good - you simply don't have enough rent-able days in the year to view it as much of an income investment.  

That said, I absolutely love Cape Cod, and I love Cape Ann up the road even more!

 I was actually looking at a property on Cape Cod pre-COVID and the PMs that I talked to were charging 50 percent.  

now that we've all made our case for a PM or against, maybe the OP post his question again in a new thread.

I hate that this has turned into another self management debate.  The pros and cons of each have been discussed ad nauseum and no one is changing someone else's mind. 

As for management fee splits, this is one of the most misunderstood concepts in this industry.   Even if you self manage, you are not paying nothing to do so.  You're probably paying 7-8-9 percent to VRBO or Airbnb for the booking, and another 3 percent for the credit card fees.  So you're pretty easily at 10-12 percent just doing it on your own. 

Many companies advertise seemingly low management fees - 15 to 20 percent, and you think you are getting a good deal.  What they don't tell you is that they are charging booking, reservation, and "marketing" fees to the tune of 10 percent or more of the reservation, and they don't share that with you.  This is called rent shifting.  Essentially, your rents are held artificially low, so that the management company can tack on their own fees and the total comes out to something that sounds reasonable.   This goes on ALL THE TIME.

If a management company is advertising an 80/20 split, THEY ARE GETTING A LOT MORE MONEY FROM YOU SOMEWHERE ELSE, GUARANTEED. 

I am unable to provide a link in this text, but if you will go to youtube.com and type in the term "vacation rental companies exposed", the first video explains this in great detail.

"Home prices are nuts" is a subjective term. If you think Gatlinburg prices are high, do a search of comparable mountain towns out west - Vale, Sun Valley, Tahoe, Aspen, Breckenridge, etc.   Gatlinburg is still CHEAP compared to these places.

The debates on this are endless.  It all depends on why you are buying.  If you are buying for long term income, then you can grossly overpay for a property and still make out like a bandit.  I way overpaid for a house in 2005, just before the crash, but the house has paid for itself in gross rents at least 2 - 2.5 times since then, and of course the house is worth triple what I paid for it.  But if I had sold in 2009, there would have been some pain.

Steven I think that is prudent.  This is how we furnished a new construction back in 2017, and it looks as good today as the day we finished it.