Do people like losing money in the Smoky Mountains?

[Taylor Jones]

How does anyone buying in the Smoky Mountains make money buying today?

$1M purchase price and $125k in revenue

P/I/T payments run -$78k/yr (assuming 8% interest rate and 80% LTV)

Cleaning fees -$20k/yr

OpEx - $30k/yr

Total = $128k expenses

-$3k in cash flow.

Do people like losing money or am I missing something?

[Tyler Solomon]

How is your opex at $2,500 / month? $1,600 / month also seems very high for cleaning fees, however, why not bake the cleaning fee, or at least part of it, as a fee passed on the renters? 

We finance a lot of smoky mountain STR's, nearly all of which cashflow very well when properly operated, even at 80% LTV. Obviously if you come in more cash heavy on the down payment, your debt service will be lower and your cash flow would improve, but even at 80% financing with todays current interest rates, $125,000 in gross revenue should certainly be cash flow positive. If not, you have a property with an unordinary amount of operating expenses.