WARNING: EMOTIONS CAN BE DAMAGING TO YOUR STR INVESTMENT

One of the gifts of human life is emotions. Emotions are “the natural instinctive state of mind deriving from one's circumstances, mood, or relationships with others.” Emotions include happiness, fear, anger, euphoria, sadness, and a lot of grey matter in between.

Emotions are feelings. And feelings are often influenced by past experiences – good and bad. When we make decisions based on feelings, we can get ourselves into big trouble, because feelings are usually tainted by our perceptions rather than what is reality.

Allowing feelings to have the pilot seat in our lives is a very dangerous thing, and that goes with our finances and investments as well. With short term rental investments, it is quite easy to get carried away with what we personally like and feel attached to, versus what the best investment is. We also might be concerned about what others think about our investment.  That's why we buy Range Rovers and Mercedes, is it not?  However, a year after your purchase, all of the glamour of owning your own vacation rental will be long gone. You will be looking at hard numbers.

In the Smokies, I see a lot of folks getting caught up in the “glam” of Gatlinburg and Pigeon Forge, and settling for very subpar returns versus what they could earn in areas just a bit further away. Cosby is one of those examples: Cosby is often scoffed at by the realtor community in the area. It’s just not hip and cool enough to invest in. It’s too redneck and unrefined. Too far away from the action.

To those scoffers, I present a purchase that I made in spring 2021: A 1200 square foot log home on top of a mountain, situated in Cosby. I am in it for $190,000. The same cabin in Gatlinburg would be 3-4 times that. The cabin is on track to do around $60,000 this year in rents. After all expenses, the cabin will pay for itself in about 4.5 years. Someone find me even half of that yield in Gatlinburg or Pigeon Forge.

When you are looking at STR investments, try to avoid making an emotional decision, and instead make a business one. Leave your ego out of it. The idea is to make the most return off of your hard earned dollar as you can. If your ego says you need to get a high end STR, check out some available properties in Monte Carlo, Aspen, or Banff. Those places make Gatlinburg look like…Cosby.