All Forum Posts by: Abe DeHart

 Paul thanks for the advice. Makes sense on the style. Most of my rentals in OK are very similar in terms of clientele to yours in KS. Maybe I'll need to think through what the smokies version of "steak and potatoes" is...

Mark - Really appreciate the advice. Logically that makes sense to me - but part of me gets worried that it will be a flop. I guess if it is, the downside is still pretty low. My current rehab budget is ~$100K ($15K/unit) and not having to sink that money in would be great.

I have a 6 unit property under contract in the Smokies, 0.5 miles from the parkway in Pigeon Forge. Units are connected under one roof but there is no pass through from one unit to another. Each unit is a 3/3 1,200 SQFT with a 1bed/1bath suite on each of the 3 floors. It is currently a LTR with 6 tenants. It's zoned for STR, and my wife and I plan to put some capital in and get it to be a rental. A few questions for the group:

Style: The property is relatively new (<20 years old), but has no cabin style at all. Do we invest money to put cabin siding on, some tongue and groove on a few interior walls etc? Or can we keep it as just a clean non-cabin rental with a few bear lamps, rustic furniture, the standard arcade and air hockey, etc.> Any sense at how much rents would decrease if we don't "cabinify" the units?

Unit structure: How do we set this up so that a single party could rent it as an 18/18? or 2 9/9s, or 3 6/6s? Is this possible? We are new to STR, but I'm thinking that renting an 18/18 for a week to a large group could generate a lot of cashflow. Practically can you do this with AirBnb, VRBO?

Pricing/Unit quality: Should we keep a couple with the standard appliances and laminate countertop and then have a few others with granite, all stainless appliances, hot tubs, etc? Cater to a broader swath of the renters that visit, or just make them all "A class"?

What should we be thinking about that I might have missed?

Thanks!!

@Avery Carl - What is your sense around the breakdown of investors looking for serious cash flow vs. people who like the area and just want a cabin in the mountains that breaks even? Could that group be driving some of the demand as well?

@Joseph Kim - Welcome to Lawton! Lawton is an amazing market with a lot of potential to scale quickly for new investors. I currently have 40 units in Lawton. Are you buying 2513 SW E? That is the only property in that range and has been for sale for more than 6 months. A well priced duplex in Lawton should be under contract within 2-3 days. 

Regardless of address, the price on your duplex is fairly concerning to me. Good C class duplexes in Lawton run $40-$70K. B class are $60-80K, A class (granite countertops, great neighborhood, etc) run $100K-$140K. I have not seen any duplexes sell >$150K. I have analyzed ~ 1,000 deals in Lawton over the last few years, and on paper they almost always pencil out. The challenge is that you have a rough tenant base, high vacancy, and in order to find tenants that are high quality, you often have to settle for lower rents than “market rent”. Lawton really does not appreciate. Population is stagnant and completely dependent on Ft. Sill. Rents are not appreciating, so this is a market where it is crucial to buy right initially. Most of the deals I get on the mls are va foreclosures from people who overpaid and went u see a couple years later. I would rarely look at a deal that wasn’t at least 1.5%. 

I’d be happy to hop on the phone and have a quick conversation. I’d also reccomend you’d talk to Tammy Neuwirth - Owner of Rent Lawton, realtor, PM. And talk with Tommy Ray - Creative Finance Extraordinaire who has 100s or properties across the US and has been in this market 20+ Years. 

@Kathy Lindsay - Thank you for the response! Were your losses counted only against that single short term rental, or did they also count against W2 Income? Really appreciate the reference.