Short Term Rental Question/Concern

[Ava Yuergens]

I am commited to buying a Short Term Rental, I have done my research and am ready! The only question/concern I have comes down to the market. I want to purchase a cabin in The Smoky Mountains, TN. The only concern I have is its a popular market for STRs, and I am concerned the market is too saturated with STRs to make money. Be honest am I just overthinking, or is this an acutal concern? I appreciate any and all responses!

[Alex S.]

@Ava Yuergens let's reframe this question.

Is it possible that STRs in the Smokys will experience a pull-back in demand and see demand/revenue return to ~2018 levels?  Yes.  A guarantee?  No.

Put a dollar value on that risk and price it into your calculations of ROI.

Overall, I'm pessimistic about some of the deals people are buying in vacation markets right now. AirBnB has grown radically over the past few years and these emotional bidding wars for cabins by people with zero REI experience are appreciating the prices vastly higher than the admittedly high inflation rate. It feels very bubbly.

If you are in a long line of "people with $100K cash" bidding up a property...you should probably be asking yourself: What niche investment strategy am I pursuing?  Why am I different than all these people?  It isn't a sound investment strategy to bet everything on market appreciation.  This isn't just free money.  Guac is always extra.