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So you caught the bug didn’t you? You’ve been to the Smokies a few times and have rented a few different cabins and now comes the decision “hey let’s buy one of our own and we can rent it out, it will be fun and we’ll make tons of money right?” Hold on their buckaroo….not quite. Going down that road can make this the most expensive vacation you’ve ever gone on. There are a few things to consider when buying a cabin in the Smokies.
Let’s ask some important questions first. Number one, have you been to couple’s therapy? Because you may need it as this enterprise rolls along.
But seriously the first question is why do you want to be in the rental business?
- Do you just want a second home and someone else to pay for it?
- Do you want to generate income?
- Do you really want to be in the hospitality business?
- Are you willing to dedicate hours that you may or may not have time for to things like pricing, marketing, upkeep and so on.
- Are you competent when it comes to technology, can you build a website, can your write social messages, can you produce quality videos, do you understand SEO? Are you really willing to learn?
All kidding aside the Smokies are one of the top locations in the country for rental property.
According to Vacasa…”Our number one best place to buy a vacation rental is Sevierville, Tennessee, nestled among the Smoky Mountains” Vacasa analyzed home sales data in vacation destinations throughout the country, and overlaid it with actual performance data for thousands of U.S. vacation rental properties. With that calculation Sevierville came in #1 in the US.
AIRDNA in 2019 published their list of the best vacation property investments in the US both Sevierville and Gatlinburg scored A+ with Investabilty scoring an unbelievable 100. In 2020, the Smoky Mountains we #4 of the best places to buy vacation property.
Forbes Magazine in 2019 listed their Five Best Places to own Vacation Rental Property list, which ranks 150 destinations: Pigeon Forge, Tennessee, Gatlinburg, Tennessee finished #1 and #2. The criteria pointing to short-term rental profitability include real estate prices, local vacation rental rates, insurance, taxes, maintenance expenses and the popularity of a tourist destination. “The Southeast did extremely well this year, especially in non-luxury markets like the Smokey Mountains. There they have very friendly short-term rental regulations, it’s a four-season market and a five-hour drive from several major cities.
I could keep going but you get the point. What do you think all of this publicity has done to property values here in the Smokies….yep they’ve skyrocketed over the past year. With 12 million people coming to the Smokies now on vacation demand is not showing any signs of slowing. Even thought the property vales have risen quickly the return on investment still works for purchasing a property and renting it out. The days of a sub $99 per night lodging experience may be moved into the hotels on the strip and out of the cabins. If your cabin is only renting on price then you really need to look at your experience offered because you are certainly leaving money on the table and are hurting the other cabin owners.
Let’s tackle some of these questions I posed…. why do you want to be in the rental business?
• Do you just want a second home and someone else to pay for it? – There isn’t a darn thing wrong with that approach. Some “serious” owners may frown on that approach but who cares. They think you’re dabbling in the experience. If you’re offering a great experience and maintain the property in prime condition that’s the important thing.
• Do you want to generate income? How much? Is this for retirement? Kids College? Are you in this just for the appreciation on the property? You can do all of the above but you have to fire on all your cylinders to make that happen. You need to buy the property at the right price, build out your budget and stick to it. Get your pricing right, and hit your occupancy numbers. Listen on we’ll hit on most of these points on this podcast.
• Do you really want to be in the hospitality business? Even before you turn on your VRBO Listing you’re in the hospitality business. Congrats. Every detail matters. Every decision you now make determines your rates, demand and satisfactions.
My formula from the start has been this 1 Part Home, 1-Part Hilton, 1-Part Disney. 1-Part Home: you need everything a person expects at home…a place to eat, gather, comfortable bathrooms, kitchen utensils, comfortable seating, lighting, air conditioning and heating. Those things seem basic right? 1-Part Hilton…your guests are traveling they need the amenities of a fine hotel, clean comfortable towels, linens on the beds, highest level of cleanliness, modern electronics, fast Wifi, wide variety of channels or choices on the TV. Finally 1-Part Disney- what makes your guests escape the everyday? What environment are you creating? For us it was creating a log cabin immersion experience. No detail overlooked, nothing from home depot. Black appliances not stainless steel, stainless steel screams suburbs! Natural materials from the copper tub, to the rock sink, live edge counters, no harsh chrome or plastic. The property bothers would die in this cabin there’s no subway tile or gray paint. Other cabins, have a treehouse theme. Others create awesome family escapes with pool tables, arcades, theater rooms, outdoor areas. Surprisingly no one is putting in fitness rooms yet. I expect to see pelotons or equivalent in the not too distant future.
• Are you willing to dedicate hours that you may or may not have time for to things like pricing, marketing, upkeep and so on. Prices change with the seasons or with different events. It takes time and planning to put together a pricing strategy. If you’re just setting one price for the whole year you’ll likely leave money on the table and a lot of it. This takes time knowing this market, school calendars, civic events, holidays, things like that.
What about marketing?
• Are you competent when it comes to technology, can you build a website, can your write social messages, can you produce quality videos, do you understand SEO? Are you really willing to learn? Google Analytics?
Buying a Cabin in the Smokies….Let’s talk about the property:
- What type of structure? Cabin, Chalet, House, Condo, Yurt?
- How many bedrooms? The more the merrier? One-bedroom honeymoon? Studio?
- To view or not to view? What kind of view do you want the cabin to have? Mountain, canopy, forest, waterfront or city view?
- What is the property constructed like? Logs, Timberframe, Fake logs, Cedar siding, Modular, high rise?
- Are you in a resort with amenities…pool, park, fishing ponds?
- Are you stand alone with no amenities?
Buying a Cabin in the Smokies…..What about finances?
- Cash purchase or a mortgage?
- Money for repairs?
- Capital reserves
- Do you have an estimated budget going in? What is your breakeven? How many nights is that? What is REVPAR?
- Property maintenance funds, log staining, appliances, broken furniture, pots, pans, dishes, etc.
What does property Management look like?
- Will you have a property manager or self-manage?
- Large or small property manager?
- How do you know what platform is best?
- Do you have cleaners lined up?
- Maintenance People
- Wildlife remediation
- Cabin renovations
- Tree Trimmers
How are your customer handling skills?
- Do you mind the 11pm call that the toilet is clogged and you’re 400 miles away…what are you going to do about it?
- What is your policy for refunds? Cancellations?
- How will you respond to a bad review?
How’s the family situation, I wasn’t kidding about that. Are both of you bought in on this plan of buying a cabin in the Smokies
- Who has what responsibilities?
- When is your line in the sand for investment?
- Are both of you in agreement on finances?
Let’s get to the fun stuff….
- What you’re vision for the property as for décor?
- What about the amenities? Games, theater, etc.
- What makes your property different? Why should I book with you?
- Are you pet friendly?
- Kid friendly?
- What does the name say about the cabin? Is it original?
So there you have it just few things to consider when buying a cabin in the Smokies. Don’t be discouraged by the list, owning and renting property in the Smokies for us has been very rewarding.
Are you planning a visit to the Smokies and are wondering how to fit it all in? Check out our sample itineraries: https://dancingbearfoot.blog/2018/08/30/smoky-mountains-vacation-itinerary-day-1/
If this is your fist time coming to the Smokies and renting a cabin check out out blog post in what to look for when renting a log cabin.
Thank you for reading. If you’d like to learn more about our cabin or other great things to see while visiting the Smoky Mountains please visit us at Dancing Bearfoot.com.
Like our Pizza Bear? Check out the other great artwork from Kenton Visser https://www.kentonvisser.com/