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Updated over 6 years ago on . Most recent reply
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Step-by-step Instructions requested for first STVR
This may sound silly, but I'm looking for step-by-instructions for buying and renting out a short term rental. I'm would like to buy a 2-5 room cabin in the Gatlinburg/Pigeon Forge area, but feel like it's a waste of time to look for properties until I have all of my other ducks in order.
I'm not sure what to do first. For example, I'm not sure how to begin calculating a ROI if I don't have an idea of what it will cost for cleaning, maintenance, etc. I haven't tried asking for any estimates because I don't know where the property will be exactly or how many rooms.
And what about financing? Should I be going to the bank first to get a pre-approval?
From what I've read, Avery Carl is the go-to person in the area I'm interested in. I'd also like to avoid using an expensive property manager and would be happy to use vrbo.com. I currently live in NJ so it's difficult to try to sit down with anyone face-to-face at this point.
I'm so happy to see so many people taking the time to go on this site to help others. I appreciate any advice or comments you may have.
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Originally posted by @Matthew Cole:
@chris Watson
What criteria do you use for your A, B, and C properties?
Newbie starting search for first STR in Gatlinburg/Pigeon Forge area. Some rental experience but no STR.
Thanks
Matt
Matt,
I thought about sitting down with @Lucas Carl and @Avery Carl to discuss this and see if there is a better way to codify the concept. They can definitely chime in with their more in-depth wisdom and might even say I am misguided (which I might be, but it is my current operating parameter).
C - A good ol' workhorse. It does not have a view, creek, river or phenomenal amenities. It is a no niceties plain Jane cabin/chalet-- bedrooms with a hot tub. It is going to pull the lower end (1-bedroom $75-$125 2 bedroom $85-$140ish a night). It will book 300+ days a year. Clientele is upper lower class, middle class and thrifty people (which could count me since I stayed in a tent the night before paying all cash for my first cabin:). For the size these are hard use people and more house rules breakers/partiers, BUT less complainers because they have low expectations overall, so cleaners don't have to be the best in Sevier County. OK can cut it for 90% of your guests. Think 2 Bedroom Gross $15K-$30K
B - Well decorated cabin with some amenities (pool table, fooseball, air hockey or HOA pool/minigolf). Tends to be older, but kept in nice condition (not excellent...think KBB resale terms). Some type of view or close location to town. Your target audience is middle class to upper middle class. Expectations are higher and good cleaner is a must. Avg nightly rate 1-bedroom $130 2-bedroom $160-$200ish. Think 2 Bedroom Gross $35K-$50K
B+/A - Clean as a whistle, great mountain view or location (near sports complex or Dollywood) and nice. Clientele is millennials with money or a credit card, upper middle class, honeymooners who spend big (whether they have it or not), retirees with a nice nest egg to spend. Might have it's on pool, indoor pool nicer, great rec room/theater room (not just a theater chair and a big tv). 1-bedroom - $175-$250 a night 2-bedroom $230-$400+ a night (an indoor pool can get you anywhere from $75-$200 more a night). Think 2 bedroom Gross $55K-$80K. Certain communities are seen as B+/A properties so talk to your realtor (i.e...The Summit).
Remember insurance and property taxes are not that significantly different between the classes. What is different is upkeep, expectations and standards also prices. I see longer stays in the A & B properties with less turnover. I wanted to BRRR a C - property last month which @Avery Carl put the offers in for me, but others wanted to pay more than what the numbers said it was worth for my strategy of turning it into a B+/A property. Instead I locked in a contract last night to build a pool home and am now designing my 5th build for this year starting today to hopefully have it under construction by October. See my other posts regarding build vs. buy. I am military and am use to having multiple projects I am working across the world, so to manage 5 constructions from 7 1/2 hrs away is easy for me and I have a sister who just located to Sevierville who can check on things for me. I do not recommend it for most people.