All Forum Posts by: Kyle Smith

Hi - I am looking to purchase a property in the Smoky Mountains area and operate as a short term rental. Certain forums and podcasts I listed to mentioned that pools are a big trend currently though they tend to be in newer developments that do not necessarily have views. Or there are properties with reasonable views but don’t have a pool. Can you shed some light on what’s better for vacation rental overall return? Maybe from a. Cash yield and home price appreciation standpoint?

Most of the properties I am looking at are in pigeon forge area or Sevierville area and not exactly in Gatlinburg. Can you please also provide some insight if that changes occupancy and/or desirability? If I just go by AirDNA, the difference is not much in annual revenues.

Thanks,

Ankur

I am new to investing and after a few deals that had multiple other offers that I didn't win out; I did execute a purchase agreement last weekend but doing more analysis on the property and potential rates being 7.5%, appears to be very tight to limited cash flow. I am getting into investing for a few reasons: flexibility, build diversity in investments and tax benefits. The location is great on this property (2 miles to the Island / 5 mile to Dollywood), no HOA and sq ft ~ 335 (2bd / 2.5 ba) but getting very nervous as will be first deal and would love some input here or mentor input as continue down the path of investing and learning.

Thanks in advance!! 

Well, I'm the odd man out here.  We have never done IB on Airbnb or VRBO.  Even with vetting guests, they still sometimes break the rules and bring large dogs or have parties.  Any requests that we get, we respond in 30 minutes or less, either way.  If we decline, we want the guest to know right away as well.  

Since IB has gotten so many positive remarks here, I may reconsider it, since it is weighted very high by the algorithm.  If I can set requirements prior to a guest Instant Booking, then maybe I will reconsider.  Otherwise, because a guest has to write and request, I know that we have dodged MANY bullets by not allowing IB.  

With IB off, we are still at 75% occupancy, so I guess there is room for 25% improvement.  

I agree that this sounds like a pet project for you, which again is totally fine if you are okay with spending your money in that way.

To me, the STR market (and from what I hear about the smokies) is on a downward trend. This year might not be the best year to go all in with an investment if the sole goal is cash flow or appreciation (not personal use).

In a mature market such as the smokies, I think you can reasonably arrive at a fairly narrow occupancy rate.  For arguments sake, suppose it's 65-75% given the market occupancy, the smaller size, and the newness.  So that's 21 days/mo.

I'm NOT an expert on the smokies market, but lets say this thing costs you $600K all in, you put 20% down, and with utilities and OTA fees you are all in at $4,500 - $5,000/mo.  That means you need to average a nightly rate without the cleaning fees of $240 on a small cabin.  Sounds high to me unless you are able to really make this unique.

I realize I made of lot of back of the napkin assumptions above, but it sounds like a no go to me.

Is the nightly rate that you can charge, enough to give you a decent ROI, within a reasonable time period? I'd bet it's not.

I remember your previous post and it seems to me that you just want to do this as a pet project. And that's fine.....if you have money to burn.

Disclosure: I have no idea about the realities of STRs in this area, but I trust my gut....