Gatlinburg Price/Property advise - offer accepted

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Gatlinburg Price/Property advise - offer accepted

Jigar Kadakia
New to Real Estate · Marietta, GA · Member since 2021 · 9 posts · 0 votes

As everyone knows the market in the Gatlinburg area is quite heated up- I got interested in a new construction cabin and made an offer at asking price. Need advice from experts out here in the forum -

3 Bed / 2 Bath

Chatlet Village

~1450 sq. Ft.

Total price $600K @5% down

Only appliances included, no furniture included. 

2 floors, with 2 Beds on main level and master on 2nd level. Open floor plan, with large windows and deck (w/ hot tub)

Property to be ready in 8 months and at that time finance the same with my lender.

Please advice. Targeting to make it a STR.

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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
5y
Originally posted by @Allen McGlashing:

@Jigar Kadakia

Would the numbers make sense for an Air BnB are there enough amenities around? 

Gatlinburg is the #1 STR market in the entire country.

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  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    5y

    WOW!  Over $400/square foot in rural TN!

    0Reply
  • Allen McGlashing
    Investor · Cambridge, MA · Member since 2017 · 195 posts · 106 votes
    5y

    @Jigar Kadakia

    What are your plans? Would the numbers make sense for an Air BnB are there enough amenities around? You should have an idea what you can get for rent in that area will it pay for that BIG mortgage? It’s hard to give you advice with such little information and without your plan. Looks like you have 8 months to figure out a plan.

    0Reply
  • Jigar Kadakia
    OP
    New to Real Estate · Marietta, GA · Member since 2021 · 9 posts · 0 votes
    5y

    @Allen McGlashing, looking around, gross rents for comparables is around $60K

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  • Jigar Kadakia
    OP
    New to Real Estate · Marietta, GA · Member since 2021 · 9 posts · 0 votes
    5y

    @Allen McGlashing my plan for the units is:

    New Construction Cost = $600K

    Furniture and interiors = $35K

    Total outlay = $635K and will finance with a lender @ ~30% DP

    Have it on STR - use local PM company - estimating around 35% fee

    I expect NOI = ~$25K - see sheet below

    My question is - market wise does this make sense - in the current market do we have any better opportunity? My intent for new construction was to keep maintenance cost and unknowns low.

    Please advise - newbie in the area for 2nd investment.

    See below the image of the potential build.

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  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
    5y

    No offense to anyone that's replied, but you should really ask this in the STR forum where people are more familiar with STR's in particular, because much of the information so far is not accurate.

    The good news is your estimates (275 ADR and especially 60% occupancy rate) are way low in the current market.  A new construction 3/2 in Chalet village should be doing 90%+ occupancy right now if the post-covid market holds up.  Even in a worse case 60% is way way way low @ $275/nt.

    The bad news is this is not a good return on your funds if you're getting into STR. The 30% down and especially the 35% to a PM are killing you here. Self managers in Gatlinburg right now should be doing ~50% cash on cash as a starting point. If you're bringing in 0.6% in that market you're doing it way wrong.

    Cosmic Vacations4.9174 Reviews
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  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
    5y
    Originally posted by @Allen McGlashing:

    @Jigar Kadakia

    Would the numbers make sense for an Air BnB are there enough amenities around? 

    Gatlinburg is the #1 STR market in the entire country.

    Cosmic Vacations4.9174 Reviews
    WebsiteView Page
    1Reply
  • Jigar Kadakia
    OP
    New to Real Estate · Marietta, GA · Member since 2021 · 9 posts · 0 votes
    5y

    Thanks @Ryan Moyer, will post it in STR forum.

    0Reply
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