All Forum Posts by: Kyle Smith

For those looking to purchase existing cabins, get with a local management company and ask them to share their numbers for 2018/19 and base your numbers from that. Do your due diligence and do not rush into something. We all know that buying in the Gatlinburg pigeon Forge market is very exciting and exhilarating because it is such a wonderful area but please tamper that excitement long enough to research everything. It’s always best to go into a deal with confidence and you will know when you reach that cross over point of major doubt into confidence. Buy the best cabin you can possibly afford to ride you through the tougher times. The view, location, luxury level, cabin amenities, etc all make huge differences when you are competing with the cabin down the road for rental clients. I know there are great resources here like Avery Carl etc. and I might look at them or someone like them first to get you started.

Yeah, there’s going to be a better opportunity to buy cabins in this market, but prices will need to drop considerably to make the numbers work for many of them. 

I honestly do not see these new builds going on hold unless it is cabins being built by large investors who can afford to sit on the land and stop construction.   

I am unsure of conversion rate and the percentage of cabins versus primary residence homes in the area but I can say I believe the vast majority of them are proposed rental cabins. I know there are hundreds of foundations being worked on right now according to my buddy who’s a lifetime local investor there. 

These new cabins are being built with ROI in mind and they've either locked their interest rate, they have cash, or even with the higher finance rates their cabin will cash flow. Also, you will find many of those building cabins right now know how the investment numbers will play out. Also many of them are being built with the latest design trends and with indoor pools.

I started looking for 2 bedroom cabins with a view back in 2020 when cabins were very affordable.  I got bit by the paralysis by analysis bug and lost my opportunities.  The ship sailed on view cabins in the 200’s range back in early January-March 2020 and they were very rare to find as well. Two bedroom view cabins may come back down into the high 300s-400’s if the recession continues for 2 years, otherwise I think they will stay in the 500k range especially for cabins within the rental triangle (20mins from either gatlinburg or PF).  

I think people looking to get into this market now should look at 2019 rental numbers and use that as your baseline as a minimum.  I think anyone who is financing 80% for a cabin need to be very careful with their purchase (many of these cabins were bought with cash at these high prices). Cabins without a view may not do well moving into 2023.  A good local investor friend of mine said he spoke to the permit office and there were over 1000 new build permits submitted within this fiscal year.  So, you have a lot of competition coming online next year.  You can’t even get concrete delivered without a 1.5 month lead time right now in Sevier County.  

Don’t get me wrong though, there will amazing deals to be had within the next 2 years especially if we continue this trajectory the economy is taking us.  Im hoping to have some cash available within the next 6 months - 1yr so I can take advantage of the supply of cabins coming onto the market. Right now, interest rates combined with unadjusted cabin prices have caused a stalemate in cabin sales.  I’m waiting for the price drops, but I wouldn’t expect a drop to pre-COVID prices.   

Sorry guys, I don’t mean to sound doom and gloom but it’s better to prepare for the worst than to be caught in a financial crisis. 

Great info here. I'm very interested in this topic as well and would like to start my own partnership organization. I'm looking to add multiple partners and multiple properties to scale up my STR business. Hopefully I'm not sniping this thread, if so please let me know. But to tag on to the original question, should I start a corporation or could I just start with an LLC specifically for the first business deal or property? thanks in advance...

Good advice here.   I’ve heard the same advice from other management companies in the area.  A lot of these condos were $125k not even a year ago but people are buying on the hype  

Yeah, Diesel is killing me right now.  I’m sure that’s one of the main factors for these empty RV spots right now. 

Staying in PF this weekend in the RV to check on the property.  The RV park I stay in is usually slammed this time of year. I’d say at least a third of the Rv park is empty and they’ve told me they haven’t been this low in occupancy for several years. 

 I’m about 5 months out from completing my new 3bd 3.5 bath luxury construction build in Cobbly Nob. I’m hoping the awesome view and pool give me an edge to stay booked and above water during the recession. I was able to lock my rate with a one time closing at 3.85% which was a plus as well.  I admit the timing for entering the market is making me a little nervous.

From Fox News today: The spread between the 2-year and 10-year Treasury yields inverted this week for the first time since April on fears that the Federal Reserve's aggressive approach to tackling the hottest inflation in four decades could lead to a sustained slowdown in growth. The phenomenon – which is rare – has been a historically accurate predictor of recessions.

It looks like we are heading there. I am noticing less crowds in Gatlinburg the last couple months so it’s already starting.   I’m curious how fast the current rate of occupancy is dropping. 

I invest in the smoky mountains so VIEW is my #1 by a long shot.