All Forum Posts by: Kyle Smith

I just did an optimization analysis of a 3 bedroom in Pigeon Forge area in a resort (shared amenities) for a client.  You've gotten a lot of good info and I see that you understand you are likely to be around break even and using the tax deferral strategy as the key goal. 

What price point are we talking? 

Here's the thing - income potential is as much or more about how well marketed and managed a property is.  But its also about alignment. You are asking good questions but let's be clear - 

Question 1 -  great view.  Its a premium amenity.  And it comes at a price. Ideally you buy and set up as a upscale or luxury offer. What you can draw as income will depend on too many factors to suggest. 

Question 2 - heads in beds. Sure, they..can make more.  Or not.  Its the whole package. A 4 bedroom with 1 bath or a 4 bedroom with (2) ensuites has a big differiental. Here's that alignment point again - these two are very different offers and will generate different income. 

Question 3 - Resale (appreciation) Them's gamblers words. Okay, maybe not. But the area has seen sharp climb in home values so it stands to reason it will level off. Thats a question for a local realtor, not an STR consultant who serves across the US. So, grain of salt.

Question 4 - having just done a pool ROI analysis for a client - its hard to say without specifics (type of heater, size, etc). But let's go with $2500. AI is fun for making assumptions like this, and it will ask you quesiton to help. Do you need a pool? Familes coming with kids want access to amenities. So if you don't have a pool/access to a pool then assume you are more likely catering to a different type of group or a different budget tier (ie, "cant afford a pool")

Question 5 - steep driveways is a point in the area that deters ..some.. potential bookers. For a view, I'm sure most placs  with steep drives do just fine.   And I also giggle about Bear break ins... only because last time I was in Gatlinberg we DID have bears frolicking on the roof of our condo. But they are a real risk in mountain communities. 

The truth is - some homes (think wow factor - right location, right view, etc) can always do well.  Some homes we have to work harder to make them even break even. Its a big market.  Pick what's important to you - views or a pool?  Larger home or smaller home.  Closer to town or further. Be your ideal guest and run numbers and see what makes sense and what you'll enjoy owning.  If the numbers make sense for your goal (tax) and its a solid home run well - score. 

Hope this helps!  

Hi - I am looking to purchase a property in the Smoky Mountains area and operate as a short term rental. Certain forums and podcasts I listed to mentioned that pools are a big trend currently though they tend to be in newer developments that do not necessarily have views. Or there are properties with reasonable views but don’t have a pool. Can you shed some light on what’s better for vacation rental overall return? Maybe from a. Cash yield and home price appreciation standpoint?

Most of the properties I am looking at are in pigeon forge area or Sevierville area and not exactly in Gatlinburg. Can you please also provide some insight if that changes occupancy and/or desirability? If I just go by AirDNA, the difference is not much in annual revenues.

Thanks,

Ankur

I am new to investing and after a few deals that had multiple other offers that I didn't win out; I did execute a purchase agreement last weekend but doing more analysis on the property and potential rates being 7.5%, appears to be very tight to limited cash flow. I am getting into investing for a few reasons: flexibility, build diversity in investments and tax benefits. The location is great on this property (2 miles to the Island / 5 mile to Dollywood), no HOA and sq ft ~ 335 (2bd / 2.5 ba) but getting very nervous as will be first deal and would love some input here or mentor input as continue down the path of investing and learning.

Thanks in advance!! 

Well, I'm the odd man out here.  We have never done IB on Airbnb or VRBO.  Even with vetting guests, they still sometimes break the rules and bring large dogs or have parties.  Any requests that we get, we respond in 30 minutes or less, either way.  If we decline, we want the guest to know right away as well.  

Since IB has gotten so many positive remarks here, I may reconsider it, since it is weighted very high by the algorithm.  If I can set requirements prior to a guest Instant Booking, then maybe I will reconsider.  Otherwise, because a guest has to write and request, I know that we have dodged MANY bullets by not allowing IB.  

With IB off, we are still at 75% occupancy, so I guess there is room for 25% improvement.  

I agree that this sounds like a pet project for you, which again is totally fine if you are okay with spending your money in that way.

To me, the STR market (and from what I hear about the smokies) is on a downward trend. This year might not be the best year to go all in with an investment if the sole goal is cash flow or appreciation (not personal use).

In a mature market such as the smokies, I think you can reasonably arrive at a fairly narrow occupancy rate.  For arguments sake, suppose it's 65-75% given the market occupancy, the smaller size, and the newness.  So that's 21 days/mo.

I'm NOT an expert on the smokies market, but lets say this thing costs you $600K all in, you put 20% down, and with utilities and OTA fees you are all in at $4,500 - $5,000/mo.  That means you need to average a nightly rate without the cleaning fees of $240 on a small cabin.  Sounds high to me unless you are able to really make this unique.

I realize I made of lot of back of the napkin assumptions above, but it sounds like a no go to me.

Is the nightly rate that you can charge, enough to give you a decent ROI, within a reasonable time period? I'd bet it's not.

I remember your previous post and it seems to me that you just want to do this as a pet project. And that's fine.....if you have money to burn.

Disclosure: I have no idea about the realities of STRs in this area, but I trust my gut....