8 Bedroom Cabin in the Smokies?

Question

Hello! My wife and I own 20 LTR units in OK, WY. Following Avery's excellent STR episode, we decided to try something new and venture into an STR in the smokies. We decided to use our VA loan to purchase initially and plan to occupy a cabin there as our primary residence for a year. I'm a consultant and am on the road (in the air) every week, so we are not locationally tied. My wife is getting out of the army this year, and it will be a great spot to recharge prior to renting it as an STR in late 2021.

We currently have an 8 bed/7bath 4,500 sqft cabin under contract with beautiful views in Wears Valley. As I’ve read through the forums, it seems like most self-managers here have 2-3 bedroom cabins in the smokies. As I look on AirBnB, there are not a lot of properties with 8 bedrooms listed. Do any of you have larger cabins like this? How do they rent? Any concern that we are pricing ourself out of the market with a colossal cabin that only a small portion of renters would look at? Thanks for any insight!

- Abe

Collin Hays · Answer

A nice 8 bedroom cabin in the Smokies will do well.  It is obviously going to be appealing to family reunions, wedding parties, and two/three families meeting up for vacation.  As Luke said, it won't stay as booked - this will typically be a long weekends and holidays cabin - but your nightly rent will be substantial, simply because there is a limited supply of these cabins.

One word of caution on large cabins:  We have managed these types of properties in the past, and they are repair/maintenance intensive.  Large groups of people together for several days can be quite hard on a house.  We were constantly repairing furniture, broken chairs, touching up walls, unplugging potties, etc.  What we found is that folks at these types of cabins often spend quite a lot of time actually at the cabin.  So the math works against you in terms of repairs/maintenance.  Contrast this with a smaller cabin, where the guests quite literally are often just sleeping there, and rarely even cook.

On a large cabin such as the one you are looking at, I am going to budget $10,000-12,000 a year for repairs and maintenance to be safe.  Some years you might get by with $5,000; others it might be $25K because you are having to replace a bunch of furniture, etc.

As a side note, we have had a much better ROI on furniture getting the good stuff.  Ashley-grade furniture needs replacing often.  As an experiment, we went with high end leather in our newest cabin - several Ralph Lauren pieces and a couple of Drexel, and they are extremely durable.  Twice the price, but I think it pays off.  My $.02.

Luke Carl · Answer

You don’t see as many 8 bedroom cabins because there aren’t as many. They just don’t exist. You’re probably talking 1% of the market while 2 bedrooms make up something like 50%

Look at it this way do you want to be competing with 98% of the market or have yourself a niche? I think it’ll work. @Avery Carl will know much more about this than I do as she deals with them all day every day.

Your occupancy will be lower and your reservations will be much further in advance than a small cabin. But your price per booking will be through the roof.

You’re buying the apartment building of short term rentals. Many folks will tell you single family is a a waste of time.

Bravo!

Julie McCoy · Answer

@Abe DeHart It's definitely a niche but your returns can be excellent - as has already been stated, cabins this size are not nearly so common, and demand for large groups staying will allow you to charge a premium, so long as the cabin is nice and offers amenities in line with its competition.

I've found that there's more large cabins like that on VRBO than AirBNB, so make sure you list there also.

Abe DeHart · Answer

Nathan - Thanks! This is helpful. I know many of my friends would link up with friends and rent something like this out. If they think about it by cost/bed it’s fairly low cost.

Justin Anderson · Answer

I own a 7 bedroom and an 8 bedroom (and smaller) and can answer any specifics you've got on them.My COC return has been crazy good on them -- way more than my 1 BRs. Since you can afford to take down a big cabin, you'll get great results (assuming you didn't get in for too much money).

Wear-wise, I'd say that generally speaking it's about the same.  Granted, big groups are rougher on the cabins but as long as your decor/furniture/floors are quality you'll be fine.I have a few suggestions learned the hard way:

-  Minimum night stay is good to help avoid the kind of parties you don't want.  I do 3 day mins with 4 during peaks.- DON'T PRICE TOO LOW.  I've had a couple of party groups come in and work the cabins over.  When 20 people get together and pitch in $200 each for a long weekend, they will probably party hard.- Require the booking party be 25 years old.- Request a copy of their ID.- Be prepared to handle damage claims within hours on same day turns.  I had one group that spilled alcohol and OJ all over the entire first floor, literally break the door off the oven, and have wars with trash in the front yard.  I submitted an 80 page claim with airbnb within three hours and the host guarantee paid out $1700 within a couple of weeks.I started managing the cabin myself after one of the large local shops wasn't maximizing my money.  (After all, if they have 300 cabins, why do they care if you're at 40% utilization instead of 80-90%?)Totally happy to help guide you through this.  It's a wild ride!

Abe DeHart · Answer

Interesting that they all gross the same. I hope that would not be the case for a rental in the Smokies, or I should be looking for a  2 bed at 1/3 of the price.

Abe DeHart · Answer

Planning to check out VRBO this evening. I noticed that AirBnB only allows you to input put to 16 adults, but VRBO is at least 20, so that may be one reason why there are larger options posted there.

Abe DeHart · Answer

Collin - Great point. I hadn’t thought of the fact that more time would be spent at the cabin and maintenance would be higher. It makes complete sense. The budget is also very helpful. I will certainly set aside some reserves along the lines of what you suggest.

8 Bedroom Cabin in the Smokies?

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