Quote from @Kyle Smith:
Quote from @John Carbone:
Quote from @Collin Hays:
Another data point...while you wait a year from prices to fall 10 percent (if they do), you've probably given up that much, or more, in lost revenue while you stood on the sidelines. So unless you expect prices to fall substantially, it's probably a zero sum game.
And that’s if it’s only 1 year to build (instead of 2) and IF it stays on budget without any surcharges. I don’t think there enough workers in the area that can keep up with demand and people in tennessee for the most part just want to get by. Very few are going to work 70-80 hour weeks to try to keep with demand. I personally wouldn’t trust a new build right now especially at these prices. I talked with a builder off the record and he was laughing about making 100 percent roi on his turn key cabins.
True, they sold for double what they would have sold them for the previous year. One builder told me he sold one for 800k that he built and sold for 400k the year before.
One thing to keep in mind though folks, I think in the future these cabins will catch up with the cabins in Aspen, Breckenridge and other destination locations like this. It was heading that way but now there’s a pull back. I think once the economy gets back on track the prices will exceed early 2022 prices and it will start to catch up. That’s just my opinion though. Like Collin says, the long term investor will be good to go.
Quote from @Kyle Smith:
Quote from @John Carbone:
Quote from @Collin H.:
Another data point...while you wait a year from prices to fall 10 percent (if they do), you've probably given up that much, or more, in lost revenue while you stood on the sidelines. So unless you expect prices to fall substantially, it's probably a zero sum game.
And that’s if it’s only 1 year to build (instead of 2) and IF it stays on budget without any surcharges. I don’t think there enough workers in the area that can keep up with demand and people in tennessee for the most part just want to get by. Very few are going to work 70-80 hour weeks to try to keep with demand. I personally wouldn’t trust a new build right now especially at these prices. I talked with a builder off the record and he was laughing about making 100 percent roi on his turn key cabins.
True, they sold for double what they would have sold them for the previous year. One builder told me he sold one for 800k that he built and sold for 400k the year before.
One thing to keep in mind though folks, I think in the future these cabins will catch up with the cabins in Aspen, Breckenridge and other destination locations like this. It was heading that way but now there’s a pull back. I think once the economy gets back on track the prices will exceed early 2022 prices and it will start to catch up. That’s just my opinion though. Like Collin says, the long term investor will be good to go.
That is my opinion as well. The crowd in aspen though is definitely different. 2022 seems to be a good year for travel and visitation is still the strong. More supply will push prices lower a little. ADR is not likely to rise much more even with inflation.
the market has shifted from early 2020 buyers making 30 percent plus coc returns to now, it’s more or less break even if you use a property manager and if you do it yourself you’ll do 10-15 percent. You may end up negative cash flowing a few years. This is all pretty normal and how business cycles work. We have peaked out and things will moderate.
Before bigger pockets came about, this area always had overnight rentals. Property managers ran them and people were happy to just get their second home paid for by someone else. Technology allowed people to do it mostly remotely which lowered overhead and allowed for the underlying asset to appreciate to the levels we have reached. The market has now adjusted to this, and we are back in the phase of how it always was in this area in the 70s 80s 90s etc. people who held assets during the boom have benefited greatly from the market revaluation (sort of like people buying an ipo)
the new construction will halt when the numbers no longer make sense (we are pretty much at this point now imo)
My question is, who is going to be able to clean all these cabins?
