First STR in Tennessee

[Chris Allen]

Investment Info:

Single-family residence buy & hold investment in Sevierville.

Purchase price: $573,000
Cash invested: $65,000
Sale price: $735,000

Purchased a 2:2 with a loft cabin in Sevierville,TN. Purchased with a 10% down loan and rented out as an STR. 2021 Gross income was $97k where I was able to Net about $35k from March 2021- December 2021. 2022 did not go as well with overall market was down, as well as my cabin had a few events that led me to re-funding large bookings (snow storms causing power outage and guest unable to access cabin, wild fire evacuations, and an issue with Bat's...). We decided to sell our cabin in 2023 to take advantage of the equity to put into other projects as well as have our personal finances a little more secure. The cabin had some big ticket items that needed to be taken care of, so after giving the buyers some credit at closing, we walked away with about $176k from closing.

What made you interested in investing in this type of deal?

After listening to Avery Carl's first episode about the Smoky Mountain market and talking to other investors in that area, I decided to pull the trigger and purchase.

How did you find this deal and how did you negotiate it?

Found on the MLS via my realtor with the Short Term Shop. We saw that the property came back on the market after falling out of contract d/t the inspection report. We offered $1k over asking with no inspection (used the previous report) and beat out another offer. Appraisal came back low and we were able to negotiate the PP to be the appraised value.

How did you finance this deal?

10% down conventional financing.

How did you add value to the deal?

We added a little better decor, TV's and took some better pictures. There a few minor maintenance things that we repair over the 2 years, but no major value add repairs. The housing market did the rest.

What was the outcome?

1 year of GREAT cash flow, 1 year of break even cash flow, and a sale where we walked away with $176k.

Lessons learned? Challenges?

1) Even early 2000's build properties begin to have some pretty major capital expenditures
2) Having a property with very little maintenance issues is critical to a very successful AirBNB business.
3) STR's are not all sunshine and rainbows. They do take work and consistency. We continue to operate STR's but now will be more selective with the condition of those properties.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

The Short Term Shop.