All Forum Posts by: Kyle Smith

Look back at the 2018/2019 rental numbers. 2020 is an anomaly. A 2 bedroom with a 10 out of 10 view is doing around 45-55k pre-2020. Existing 2 bedroom Mountain View cabins on the market right now are between 475-550k. Most of these cabins are old and need some updating so typically throw in 20-50k in updates out of pocket. One might be able to squeeze out a break even if you manage it yourself. With a management company it's negative cash flow. Cost of this cabin is 10 times your yearly returns! Also, 100's of new cabins will be coming on-line in the next 1-2 years with cutting edge amenities. Just like the stock market sell high, buy low. In my opinion 90% of this market hype is based on the past and folks were into these 500k 2 bedrooms for 250k. Can you make it work with pencil gymnastics, sure, but be prepared for downturns. Based on US history a democratic government typically means lower Wall Street expectations and people vacation less. I hope I'm wrong this time. This area is strong for STR and I'm not saying don't invest here. Just be smart about it.

1 Vote

Unless you have a ton of cash I would advise going elsewhere. Gatlinburg/PF is priced out and if you want to do pencil gymnastics anyone can figure out a way to make it work at these insane prices, but you may find yourself in a hole during a recession. Existing cabin prices have increased by 100k across the board in the last 6 months. I know this may not be a popular opinion but after studying this market for the last 6 months I can’t make the numbers work in a potential future recession market at these prices. Everybody is killing it in 2020. 2021 may be different, likely not but it could be. My 2 cents...

2 Votes

Where is Big Bear? Thanks

0 Votes

I have a particular neighborhood I would like to target for potential lot or land sellers. I would like to get cell phone numbers and/or emails for some of these lot owners I'm seeing that have not been listed for sale.

RedX Geoleads is over a $200 investment for one month usage. Are there any alternates that pull this data at a much cheaper cost?

Thanks!

Kyle

0 Votes

@Jason Fitzwater

Thanks for the replies. That’s my thinking as well. Maximize the number of people the cabin can sleep.

0 Votes

Originally posted by @Ryan Moyer:

Originally posted by @Justin Anderson:

You've got a solid point and only time will tell. The area has more traffic now... Does that mean that new people are exposed to the area and will come back? Or does it mean they'll get turned off by the traffic and never come back?

Of course I hope it's the former!

I think it has less to do with traffic and more to do with whether people's travel habits have permanently changed or if they will revert back to normal once it is safe to.

Right now hotels are getting killed. No one wants to go stay somewhere in the same building as 500 other people, in a room that's too small to hang out in, and have to go out for every meal. Vacation rentals are the perfect way to travel in COVID times.

Obviously East Tenn was already doing gangbusters pre-Covid but the worrisome thing to me is that places that were pretty "meh" before are doing beyond gangbusters right now. We know people in Southern Utah that typically do 40-50% occupancy in summer than did 98%ish this year (just a day open here and there between guests). We regularly travel down to St George and have always booked last minute with plenty of inventory and this year if we try and do that we get "there are no properties available for your timeframe" messages from VRBO/AirBnB. In particular we like renting homes with a private pool so we can have days where we can just stay in with the kids and swim and I think all of those have been booked up for the whole summer FOR THE ENTIRETY OF THE STATE OF UTAH for months now. Like in June I could search for any house with a pool anywhere in the entire state for any weekend from June-October and there were 0 available in the whole state.

Granted I don't think anyone is going to lose their shirt buying a home in East Tenn expecting 95% occupancy and getting "only" 85% occupancy next year or the following. That's a much bigger issue for people buying in markets that aren't traditionally great and expecting 95% occupancy and getting 45% next year. East Tenn does gangbusters during the worst of times. But I do wonder if prices will adjust some if things return to normal and the numbers change some for current owners. Especially those giving a 30% cut to property managers who I think previously made up the bulk of the selling inventory since they probably were losing money on their place, but even they are probably sitting back and watching profit roll in right now (with no work on their end) during the Covid boom.

For a bigger pockets investor buying a place to run themselves I bet they'd still cash flow nicely at current prices even if things revert back to pre-Covid levels of booking. It's the folks paying 30% off the top that might create new inventory in that case.

Then again I say all of this as the shmuck who convinced my wife that we should put a pause on our Smoky Mountain cabin search for a month or two when everything was shutting down in March as I thought the shutdown might end up creating a nice discount on places. And as I told her at the time, "worst case scenario is prices hold where they are, it's not like the prices are going to go UP with a global pandemic". Lol, whoops.

Yes, I started looking at recent sales back in June of this year and there were several 2 bedroom cabins with 8 out of 10 views selling in the 200's. If you go back and look at the closing prices of these cabins from March through June it will make you sick. LOL It's easy to get caught up in the current feeding frenzy though. I kept playing pencil gymnastics and increasing my budget to the point where now I'm looking to build. If you find the right lot, building from scratch is on the table for some people now. Be careful though when looking at remnant foundations left by the fire. A 50k lot could end up costing you 150k when its all said and done.

0 Votes

A host on one of the recent BiggerPockets podcast said, "...the market for existing homes is so high in Pigeon Forge we are leaving this market for investments elsewhere." (paraphrasing)

The price points for existing cabins selling in Gatlinburg/PF are getting so high it's tough to make the numbers work. I know a large number of cabins with views are selling on average 75-125k higher than they were 2 months ago. Cabins without views are selling at "10 out of 10 view" prices. It's pricing some of us out, especially those of us relying on 85/15 financing for these properties. I'm not sure how long the market can keep this up. Demand is very high and supply is low. I would have thought many of the cabin owners would take the cash and run but they are holding onto their properties.

Your thoughts on the trend? What can we expect next year?

Thanks

0 Votes

I'm in the middle of the builder cost out and estimate phase. Will let you know a cost per sqft.

1 Vote

@Justin Anderson

Thanks Justin. It’s going to be new construction.

1 Vote

@Justin Anderson

Thanks for the informative reply. That’s consistent with the advise I’ve been given for Gat/PF. I’m still a little on the fence about whether I should try to make that 4th bedroom a bunk room that’s a little cramped or just go with a queen bed in there and call it a day. I’m thinking I let it ride as a 10 person cabin and forgo trying to cramp to bunk beds in there.

0 Votes

All Forum Posts by: Kyle Smith

Kyle Smith has started 23 posts and replied 215 times.

Post: Gatlinburg Pigeon Forge cash flow str rentals

Post: Gatlinburg Pigeon Forge cash flow str rentals

Post: Good markets besides Gatlinburg

Post: GEOLeads - Need help deciding how to pursue targeted properties

Post: Short term cabin rental bunk room

Post: Existing rental home prices in Gatlinburg/PF areas

Post: Existing rental home prices in Gatlinburg/PF areas

Post: 4 Bedroom/4 Bath sleeps 10 vs 4 Bedroom/3 Bath that sleeps 12

Post: 4 Bedroom/4 Bath sleeps 10 vs 4 Bedroom/3 Bath that sleeps 12

Post: 4 Bedroom/4 Bath sleeps 10 vs 4 Bedroom/3 Bath that sleeps 12