Gatlinburg | Sevierville | Any help appreciated!

[Elan Kvitko]

Hey BP Community,

I'm new here and just starting out. Been looking into a few areas and can't decide on anything yet. AirDNA is telling me one thing but my gut tells me another. 

From my research, Gatlinburg and Sevierville do pretty well in STR's. I want to invest into a property buy AirDna is telling me I can make 60k a year gross on a property that's listed on zillow for 589k. To me that seems pretty bad yet AirDna says they're A+ areas to invest into. I'm so confused. I think the smokey mountains are beautiful and I'm sure people go year round. If anyone could help me understand the market there better, it would be greatly appreciated!

Thanks in advance! 

[Collin Hays]

Originally posted by @Justin Anderson:

@Collin Hays is spot on here...  You need to figure out what your numbers work for you and see if you can find a deal in that price range.  If you self-manage well vs use a property manager, that saves you 20 or 30% right off the top.  

I would NEVER trust the numbers from existing owners as being what you'd get. They're probably selling because they don't know how to manage their listing well and aren't getting a good enough return. A good STR manager will keep occupancy at 90% and be constantly tweaking rates to max out earnings. Just imagine a bell curve of earnings and where the buyer and the seller are likely to be. I'd expect a seller to likely be on the left side of the curve and an active manager to be on the right side of the curve. That difference is probably another 20 or 30% to your bottom line as well.

Also, be careful of Airdna.  It said my 1BR cabin should make 35k when it made 60k.  And my 7BR should make 120k when it made 210k.  (Numbers are from memory, but it's in the right ballpark)

Agreed, except for the 20-30% savings "right off the top" for self managing.  We just took on a self-managing client, an attorney who lives in Cleveland, on January 1. His cabin near Gatlinburg did $19,000 last year.  He was really concerned about "giving up" 25 percent, even though he admitted that he was spending more time on the property than he wanted.  I told him I'd give him a free, six month test drive with us to see how it went.  

We've already got $26,000 in bookings for 2021 for that cabin, and it's not even March. 

So how much was he really saving by self-managing? 

Penny wise, pound foolish.  Pay good people to do their job, and you do yours.  You'll make more money in the end.