300 Nights a Year Booked for Gatlinburg Cabin?

While it is too early to be sure, I have a client who just may hit 300 nights booked in 2012. He purchased our Gatlinburg foreclosure listing just last year and immediately wisely spent a considerable amount of money to update the tired and neglected property. He did this by installing a new attractive metal roof, re-staining the exterior, improving the interior, and adding quality furniture. The result is a VERY attractive honeymoon cabin with a grand total investment of well less than $150,000 and almost unheard of rental income. Because the second half of the year is always the better portion for Smoky Mountain vacation rental property rentals, the final numbers could be remarkable indeed.

The key components of this remarkable success story are as follows:
  • A great location very convenient to Gatlinburg and Pigeon Forge.
  • A very rentable honeymoon cabin floor plan/layout.
  • A cabin that now has excellent curb appeal due to the professional remodeling.
  • A cabin that now has an inviting interior due to the expert decorating.
  • A well-managed rental company that has a very strong internet presence.
For the first time in several years, cabins are now selling at prices that can be justified by the potential rentals. In other words, Smoky Mountain vacation homes can now be purchased at prices which will allow the owners to pay the mortgage and other expenses from the rental income. With Smoky Mountain real estate unit sales volumes increasing, seems like lots of people are recognizing the value that the Gatlinburg real estate market now offers!!

For a complete description of this remarkable cabin, please click on the photo.


Anonymous said…
Jeff, interesting article. Yes, the cabin is lovely with many fine features that a honeymooning couple or small family would surely desire. But your blog title leads the amateur investor astray.

A key factor in financially successful rentals is not the # of nights booked, but the gross and net income the cabin achieves. I'd rather have 200 nights that bring in $45K/year than 300 nights that bring in $30K/year--which I'm guessing is the gross for this property because the rates are so low.

More nights means more wear and tear on the property. Low nightly rental rates also have the potential of attracting guests who might not take care of your property as well. All things being equal, I'd rather have fewer guests who pay higher rates and take care of my property, than run the cabin like a low-priced motel with an extremely high turn-over.

Kind regards,
Anonymous said…
Good to know that this level of performance is still possible with a Smoky Mountain vacation rental cabin. Do you know what the average daily rate value is for rentals so far?
Thanks for your comment! Someone else also commented about the ADR and whether or not it would be more desirable to rent a fewer number of days but at a higher rate. Unfortunately, somehow that comment is now not visible (I don't understand why). If you wrote that comment and see that it now isn't visible, please consider re-sending it and I will make sure that this time it isn't lost in the translation.

While I agree that it would be nice to rent half as many days at twice the rate (or some similar approach to an equal total revenue result), the key is revenue maximization. Being a property new to this rental program, it is important to get as many guests as possible during this first year so that the cabin will quickly build a clientele that will come back regularly. By the 3rd year a cabin is rented with the same rental manager, a third to as much as half of all bookings should be either via repeats or referrals. The only way to get the property off to a quick start is to initially discount it and then gradually raise the rate. While less wear and tear is desirable, it is even more important to most owners to get a new rental producing an acceptable level of income quickly and the best way to do that is to discount the rate initially. There will be plenty of opportunities to raise the daily rate later after that initial surge of interest is accomplished.

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