High End/Executive STR Gatlinburg, TN

[Darren Greenwalt]

Hello! My wife and I have been interested in getting into STR's in the Gatlinburg, TN area for some time (we have several LTR's in KY). While looking at options, we came across a high-end property that appears to be selling for good price that might work as a STR. Does anyone have experience in these type of properties?? The purchase price will be in the $950K area. It is currently a 4BD and comes fully furnished. Upon finishing out the basement, it would be approx 6,000 sq ft. (its currently about 4K with an unfinished basement) and have an indoor pool, sauna, gym, and theatre (and we are planning on adding a 5th bedroom possibly). This was a 2nd home and has never been used as a STR. It is not one of the massive 15 or 20 bedroom rentals, but it is a VERY nice, high-end furnished home with a spectacular view.

Our broker estimates gross rental of 170K per year (and upwards of over 200K once the additions are completed). I'm currently trying to locate comparable to try to find approx VRBO rents (this is how we intend to manage the property) to see if this is actually in the ballpark. Does anyone have any suggestions on how to determine a 'best guess' on approximate STR gross income? Do those out there that have significant experience in this area believe that a High-End STR like this is a viable business option? Thanks!!

[Julie McCoy]

That's a tricky one, @Darren Greenwalt - there's lots of competition in the 4-5BR size, so you're going to be trying to separate yourself from them with your luxury amenities.  Lots of homes that size have theatres and more than a few have indoor pools, so you should be able to pull some comps from AirBNB/VRBO without too much trouble.  The underlying question is, will the markup you can put on your property be worth the up-front expense?  I see properties listed similar to what you're describing in the $650-750k range, so are you going to be able to separate this cabin from the competition by ~25%? I'm also suspicious of the $170k gross number (pre-amenities) - that's a VERY high projected number.  Definitely vet that before you proceed.  Good luck!