STR investment in Knoxville - thoughts?

Question

Hi all -

First of all, as the forum would imply, I'm an REI newbie. Currently live in Denver, CO in a SFH my wife and I bought last year. We're looking to begin investing in Knoxville--where her family is--and I think I'd like to start with a STR so we can possibly generate a little cash flow, or at least cover costs and have our own place in Knox to visit family. We're thinking about a condo / townhome in west Knox around $200-250k. I recognize that we'd likely need property management since we're not local.

My questions - For those familiar with the market / STRs, is this a reasonable strategy? I understand that a permit is required to operate a STR in city of Knoxville, how tough is that process and would that apply to larger Knox county? Any other ideas / insights would be greatly appreciated!

Thanks! Go Vols!

Calvin Toulouse · Answer

Hello, I am in my first 2 years of real estate investing in knoxville. I have a sfh that I rent out right now by the room. I've been watching the market like a hawk for the last 2 years and have a good grasp on the market currently. The demand in west knoxville is great and the appreciation is not going to stop. However if I was in your shoes I would get a sfh instead. The demand for condos is much lower than those of sfh. If you were to try to sell in the future it might be difficult and also appreciation will not go up as much. You could get sfh that will appreciate much fast in value and have more added potential in the future. Right now people can't find a sfh to rent in the knoxville area. One other pro tip for knox county is that if you purchase a sfh you can always add an adu under county code and use that for your str. Just a little info, I hope this finds you and helps in some way.

Joseph Miller · Answer

Hey Tanner, I'm moving down to Knoxville later this winter with my Fiance. You absolutely could do a STR long distance and the permit process wouldn't be tough as long you go through a PMC. I love the idea of having a STR so that way you can occupy when you come and visit family. I've had the same thought with the Philadelphia area and my family. Send me a PM. I'd love to help your hunt.

Sarah Ware · Answer

Tanner-Welcome to Knoxville :) We do have great LTR opportunities here in the city, and many many STR in the surrounding area/Smoky Mountains.  Please be aware that a rental within the City Limits is incredibly tough/near impossible to get a permit for short term/airbnb and the like because of restrictions.  You need to make sure you are looking just a tad further within the County and the surrounding areas.  Let me know if you have any questions-I'm local and always viewing properties so I know the area well.

Matt Castle · Answer

If you're doing STRs in Knoxville, watch it like a hawk. Watch the town council meetings, setup email alerts for "overnight rentals Knoxville" or whatever you can think up to keep watch on the headlines. One city council vote can change your entire investment model from STR to LTR, which happened in Nashville several years ago. Not trying to scare anyone in any way, just do your due diligence.LTR market in Knoxville is beyond crazy and it sits next to one of the best STR markets in the US (aka Smoky Mountains).

Brett Deas · Answer

Denver is not actually a home run market for STR's anymore. They banned the purchase and operation of non-owner occupied short term rentals, and the market is extremely saturated when it comes to separated basement units/bedrooms for rent.

Mohammed Rahman · Answer

Hey @Tanner Sandoval - I'm an investor and realtor, and not involved in the Knoxville market, but had some general thoughts to share.

Have you considered not doing a STR and just placing tenants in there for the long term? Based on what you've described and your distance from Knoxville, a long term option might be better since most of your work is going to be upfront in order to source and place the right tenant.

Once tenants are in place, there isn't much you need to do except be responsive if anything happens. Since your wife is already from Knoxville, likely you'll have an easier time finding a network of handymen, contractors, etc. to rely on if you ever need to make repairs to the house.

Just my $0.02. I'm a long distance landlord, and can't fathom paying someone 10-15% of my money every month to manage my property if I can do it myself.

Corbin Loveless · Answer

@Tanner Sandoval I'm a local agent in the Knoxville area but sell primarily in the Smoky Mtns. A good friend of mine runs an STR property management company in Knoxville and has shared with me the particulars of STR regulations. Send me a DM, and would be happy to explain over the phone- too much to type!

Jaron Walling · Answer

@Tanner Sandoval Why not buy a STR in Denver instead? Demand is higher hands down over Knoxville and you could self manage, save money, and LEARN more. Real estate would be more expensive but assuming constant mountain/city tourism I could see a greater ROI.

Elisa Zhang · Answer

Hey Tanner - I commend your desire to get your feet wet in the world of real estate investing. SFH is a great way to start. I started with SFH as well, and now primarily focus on larger apartment deals. If you are looking to maximize cash flow or capital growth, I am happy to connect as I offer complementary training to new investors

STR investment in Knoxville - thoughts?

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