STR in Smokey’s / 1031- too risky?

[Leora Merrell]

Hi everyone.

I've been researching STRs in the Smokey's for a solid 8 months now. I owned a small business and sold it in March of this year leaving me with some cash to reinvest into something else. We own a few SFH LTRs and after a visit to Gatlinburg three years ago became sold on the area and doing a STR.

I couldn’t compete with the cash offers sellers were getting the same day their cabin was listed within my price range (up to $250k). So I’ve stepped back from making offers the last while and have come up with a new plan.

I have a SFH in Utah that I have tenants moving out of in January. My plan is to list it for sale after they move. This area is growing like crazy and homes do not sit on the market longer than a week if priced correctly. I believe I will walk away with $150k (on the low end). My plan is to 1031 that money (most but not all) and bump my shopping budget in the Smokey's to $450-$550k. However, I am limiting myself to the properties that come up for sale in those 45 days after I close on my Utah home. I'm hoping I find a property shortly before we list the Utah home and be under contract contingent on when the Utah home sells. I don't know if that will fly either. Competition is fierce.

I’m all for risk but am wondering if this is too risky. I’ve run the numbers so many times on STRs that I have them memorized so I would know when to jump on one quickly. But what if nothing good comes up in that short window? Am I overthinking this?

[Paul Cox]

@Leora Merrell

So we just closed on our new cabin in the Pigeon Forge area on Tuesday with many thanks @Avery Carl and @Luke Carl and their team in the area, especially my realtor Gennifer and lender @Parker Borofsky with MIG. We spent the week getting it furnished and equipped for a STR and should be listing it with VRBO and AirBnB later today. Many of the cabins as you have probably seen, come furnished though ours came completely unfurnished but we were able to get a 15K furniture credit with a local furniture store their in Pigeon Forge. Our new cabin was just built last year as the previous cabin on the lot burned in the fire back in 2016. That fire, horrible as it was has given new life to the area our cabin now sits as well as a much bigger clearing from the trees, so it has a decent view off the back deck, and you can hear the train whistle blow from Dollywood. This is our first STR. It's officially classified as a 1 Bdr with a loft, but we'll be listing it as two Bdr that sleeps 6. We probably paid a little more than we should have, but it's a beautiful cabin in a great area and so we feel that we'll do very well with it. In the lead up to the purchase I spoke with Avery and Parker in great detail as we were both excited and nervous about the prospect of having a cabin in the Smokys. We paid $333,900 for the cabin and thankfully the appraisal came back at $350 so a plus there. The cabin is just about 1400 sq feet and on .7 of an acre. The whole process from start to finish has taken just about 30 days and when I looked on VRBO and AirBnB for cabin rentals over the Thanksgiving period coming up, there were none. So my biggest question right now, is what should I put the cabin on for the nightly rental at a 4 night min rental for the holiday? I can't say enough good about the STR team. So as Lucas says, don't sweat the small stuff and just jump in and get started. I'll give a bigger picture of the process on a separate post later.