It isn't the price, it's the yield

[Collin Hays]

Community, I am working with at least eight of you in evaluating Smoky Mountain properties for investment.  We are seeing a lot of price cuts right now.  Keep in mind that a cut from $800K to $700K doesn't necessarily equate to a good deal.  Please read my most recent blog entry here for discussion on PRICE versus YIELD.  

https://www.biggerpockets.com/...

[John Carbone]

Quote from @Luke Carl:

Quote from @Collin Hays:

Quote from @Luke Carl:

Much bigger yield with No property manager. Which is how you win big in short term 

 Different topic altogether.  

 I just hate to see you so down on your own market all the time bud! 

Being honest and upfront about the reality of the situation isn't a bad thing. If I were to use a property manager (and a realtor!) in the smokies I'd want to use someone who tells it how it is, as opposed to selling a fantasyland. Didn't you say last week that you outsource your STR to a group of people who handle everything? You essentially have your own PM company for your own properties, not apples to apples of the people you train to self manage. As you see, it makes sense for you to not self manage as your time is better off doing other things.

I think Colin and I have been predicting this since last year with the McMansions cabins and pools.  Builders only want to build them because of the huge profit margins on them. Those 5 beds will go back to 2019 levels in due course, and likely will have annual income around 2019 income when the dust settles on these. The oversupply of these cabins has become comical. I personally know a local builder who has been building 5-7 bedroom cabins and profiting 500k plus on them. It’s a laughing joke amongst all the locals, they are willing and able to eventually bring these prices down from their nosebleed levels, and that first domino has already fallen. 

That’s not to say the smokies won’t continue to be a great investment. the spec builders will no longer build like they are now, but there will be a lot of pain for the people they have been unloading these properties on to at the prices they have been getting.