Hey there! I've been looking for our next STR investment and have been drawn to the Smokies...like so many other investors. I, of course, am looking for a deal. A diamond in the rough that we can improve and then increase rents and value. Not a major rehab, just something that's underperforming that we could fix. As I evaluated the inventory, I started to notice the lack of "deals". This isn't a big surprise- it's a major tourist destination. But I was noticing that a number of properties available for sale had been purchased within the last 2-4 years and were now listed at 30%+ their previous sales price. As I did some more digging, I found out that Gatlinburg / Pigeon Forge / Sevierville area has seen listing prices increase 24% in the last 12 months and 38% in the last 24 months. This is of course a bummer for me, as I'm looking for a solid investment and I can't imagine rent rates are keeping pace with these accelerating listing prices. So I'm hoping to hear from you all that invest in the area. Are your STRs performing the way you'd like them to? Do the rents and occupancy rates justify these increased sales prices? Are there still deals to be had in the Smokies? Let's discuss!

@Dustin Turner I'm going to echo what others are saying - it's all about the returns. The returns here are excellent, which is driving investor interest, which is what's driving prices up. Once the returns aren't so shiny, the market will plateau, but until then? Even coronavirus couldn't hurt prices here. With this market, you'll want to do some reasonable projections on returns and see if you're satisfied with them. Everybody's target number is different. While it's true the margins aren't quite as fat as they have been in the past, that doesn't mean they aren't still good, and I have yet to learn of another market that will beat it. I agree with @Collin H. that a unique feature is a benefit, though the "ordinary" cabins perform well too. Building is easier said than done, as quality builders tend to have long waiting lists, and good lots can be hard to find. There are some good pre-construction options out there, they won't be custom but there's opportunity to put your own stamp on it. He is also correct that there are many mismanaged cabins out here, and rental history is of negligible importance. Unfortunately this does not tend to translate to lower prices - buyers are savvy and sellers know what they've got, even if they aren't willing to self-manage themselves. I'm still buying - I'm closing on my newest cabin on Monday. I've bought at least one a year since 2017 (2018 was a baller year and I bought two, LOL). It continues to be a great market for me.

Honestly, asking those of us who have been in the market for awhile about purchase price is asking for heartbreak, LOL (and ultimately not relevant to deciding if you should buy today) - but I'll answer the rest. - 1BR+loft (sleeps 4) - 2019 gross rents (excluding cleaning fees/taxes etc) $42,396 - 1BR (sleeps 2) - $35,238 - Studio (sleeps 2) - $36,283 I have another 1BR + loft that I'm rehabbing, not renting yet but I expect it to pull between $35-40k; and tomorrow I close on a 3/3 new build, I expect that to do $55-60k (which is ambitious, but it's a great location with some unique features so I think it's plausible).

Ken our cabins are not on stilts. They are all above Zone X flood plain except for the two small cabins in Cosby. There have been some massive floods since we have owned them, but never have had water in the house. When we rebuilt in Gatlinburg, we were required by gatlinburg to raise her foundation 6 feet, which removed it from flood plain.

@Ruben Izgelov You're asking all the right questions. But those are not short answers! You have a lot of research ahead of you. If you decide to buy after reading a thread or two… danger awaits ;-) Honestly, this is a thing you need to REALLY plow into. Lots of threads. Lots of calling agents. Lots of visits with PMs (whether you use one or not, they know things). And visits with owners where you want to be. At the core is what @Luke Carl linked. While you can buy info from Airdna… be aware that it's not gospel. Also… @Dustin Turner When doing you research be SUPER SUPER CAREFUL to ask what owners or PMs mean when they say property could/should/does "make" $xxxxx. So far, owners on this thread have been clear that they mean net nightly not including tax or cleaning. That differentiation is HUGE. So huge! It's apples to elephants if you don't clarify. I've been quoted, "Oh, that should make in the mid-80's" but what they meant was gross. As in nightly fees + cleaning costs + taxes + whatever other fees. Double, triple check what metric you're being quoted. Gross nightly ≠ gross guest charges.

Post-covid19 (has a nice ring to it) we have three random dates left in June and we're hearing that familiar chime several times a day for our Sevierville cabin. We are at the point of raising rates for July (30+ days out). We've owned since Oct 2018 and rates have only gone up, except for the nearly- barren three months of the pandemic. If this is the market you want to be in, don't let rising prices scare you away. They command attention and supportive nightly rates that yield owner profits. We have three STR in other locations but Smokey Mtns gets a lot of attention.

That is correct. A rental history isn't that important to me if I know what the surrounding houses do. Cabins are grossly mismanaged all the time, by management companies and owners alike. I own a management co., and will put our performance against a solo owner any day of the week.

"Deals to be had" is a relative term. It's all about yield. I don't buy anything with the reasonable potential of an annual yield of gross rents less than 15% of the price paid for the property. I really prefer 18%. Those yields are obviously becoming increasingly difficult to find in the Smokies. However, rents-to-price in the 12% range seem to be very common. I am guessing that's still a hell of a lot better than most other STR markets in the country. If I was looking to score a really good yield in the Smokies, I think my strategy right now would be to find a really good, unique place to build. I had a cabin on the Roaring Fork River in Gatlinburg that burned to the ground in the Gatlinburg fires. I was able to rebuild a super deluxe log cabin with every amenity for about $330K, and it's doing around $60-63K a year - so that's in that 18-19% range. I wouldn't part with the cabin for almost any amount, because I can't turn around and replace that income very easily, and its value will continue to climb, given its unique location. There are obviously thousands of cabins in the Smokies. Many, however, are just houses, and their price appreciation potential is more limited. If you can find really unique properties or settings - on water, amazing views, historical value, etc., you can not only have a respectable yield, but enjoy significant price appreciation.

@Rob Foss (sorry, not sure how to tag on Android), that was Julie that said 40% was a good estimate. It looks like Ken answered your question though.

@Rob Foss - 40% is a good number when you self manage. If you hire a property manager it will be no where to close to that.

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Updated over 4 years ago on 09/25/2020. Most recent reply

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Dustin TurnerPoster

Real Estate Broker
Central Arkansas & Gulf Shores

Short-Term & Vacation Rental Discussions

Are the Smokies Too Hot?

Dustin TurnerPoster

Real Estate Broker
Central Arkansas & Gulf Shores

Posted May 30, 2020 11:05

Hey there! I've been looking for our next STR investment and have been drawn to the Smokies...like so many other investors. I, of course, am looking for a deal. A diamond in the rough that we can improve and then increase rents and value. Not a major rehab, just something that's underperforming that we could fix.

As I evaluated the inventory, I started to notice the lack of "deals". This isn't a big surprise- it's a major tourist destination. But I was noticing that a number of properties available for sale had been purchased within the last 2-4 years and were now listed at 30%+ their previous sales price.

From Zillow (don't hate)

As I did some more digging, I found out that Gatlinburg / Pigeon Forge / Sevierville area has seen listing prices increase 24% in the last 12 months and 38% in the last 24 months. This is of course a bummer for me, as I'm looking for a solid investment and I can't imagine rent rates are keeping pace with these accelerating listing prices.

So I'm hoping to hear from you all that invest in the area. Are your STRs performing the way you'd like them to? Do the rents and occupancy rates justify these increased sales prices? Are there still deals to be had in the Smokies?

Let's discuss!

Dustin Turner

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Collin Hays

#1 Short-Term & Vacation Rental Discussions Contributor

Property Manager
Gatlinburg, TN

Collin Hays

#1 Short-Term & Vacation Rental Discussions Contributor

Property Manager
Gatlinburg, TN

Replied May 31, 2020 19:07

Here are my Smokies STRs. My Cosby cabins don't do as much, but they don't cost as much either.

2400 square foot 3/2 cabin on 3 acres on Cosby Creek: $42K-ish a year

1100 square foot 2/2 cabin on an acre on Cosby Creek: $33K-ish a year

700 square foot 1/1 cabin on an acre on Cosby Creek: $25K-ish a year

1400 square foot 2/2 cabin on Roaring Fork in Gatlinburg: $60K+ per year

900 square foot 1/1/loft in Black Bear Falls Gatlinburg: $38K-ish

1100 square foot 1/1/loft in Pigeon Forge: $35K-ish

The 1400 square foot cabin in Gatlinburg is a premium cabin so it's going to command a lot more. It's right on the river, a true log cabin, Andersen wood windows, handmade furniture, high-end finishes and decor. I spent $20,000 on just the doors and windows...yikes!

Here's a peek inside!