Why You Should Buy a Smoky Mountain Short Term Rental (Episode 1 of 10)

Avery Carl [00:00:03]:

Hey, guys. Welcome to episode one. Technically, episode two, after the intro episode of our Smoky Mountain specific podcast, does not have a specific name. It’s just a podcast on how to invest in the Smoky Mountains from a to z. So I’ve got some very, very experienced investors and business people in the smokies here with me to talk about why the Smokies is a good market to invest in. On this episode, we’re going to be focusing on why you would ever buy something in the smokies, why you would choose this market over potentially any other market. So I’ll have everybody introduce themselves individually. We’ll start with Luke.

Avery Carl [00:00:43]:

Carl, why don’t you introduce yourself?

Luke Carl [00:00:46]:

Yes, hello. I have the same last name as Avery and very proud of that. And I’ve been in real estate for about eleven years now, full time for four, I suppose, and do nothing but investment real estate. I just buy them and rent them. I’m a landlord, if you will. I, for the most part, started in my career in East Tennessee, middle to East Tennessee. And I do. I am the proud owner of the longest running Airbnb in the Smoky Mountains, meaning I was first to this base, not necessarily first to the space.

Luke Carl [00:01:19]:

There’s a couple folks on Airbnb before me out there, but I’m the longest. I’m still going. And if you look at my Airbnb profile, I was an early adopter. I’ve been on there since 2012. And they really, for most people’s purposes, got started in eleven. It was actually a Super bowl commercial. All that to be said, of course, Vrbo has been around for a really long time, so plenty of folks doing that longer than me. But yes, long story short, in short term, for much of my real estate investing career, is kind of how I built the.

Luke Carl [00:01:59]:

There was the building blocks of my portfolio, which these days, of course, is primarily long term rentals, whether it’s single family, small, multi, also have apartment buildings as well. Also somewhere around 4000 reservations on my resume resume with only eight properties, by the way. I only have eight short terms, and I have a giant, giant chunk of my heart out there, out in east. I live in Florida these days, but I do have a giant chunk of my heart in East Tennessee specifically, where’s Valley? I just love the area and I miss it almost every day. So that’s a little bit about me. Thanks for having me.

Avery Carl [00:02:37]:

Thanks for coming on. Now that we’ve taken 15 minutes of.

Luke Carl [00:02:40]:

Don’T give me the mic.

Avery Carl [00:02:43]:

All right, next we have Derek Tellierez. Derek, introduce yourself.

Derek Tellier [00:02:47]:

Thank you. Avery and Luke. Yeah, I got started in real estate in 2016 because Luke told me I should. Frankly, Luke and I and Avery go way back. And yeah, most of my stuff, I am local to East Tennessee. I live in the heart of the smokies. Lived in this area for almost 20 years. Got started in short term rentals in 2020 of all timeframes.

Derek Tellier [00:03:09]:

But I’ve built up a quick portfolio and I have twelve short term rentals. Eleven of those are in the smokies, plus another one that I’m doing a major, huge remodel on right now. Also an agent with the short term shop here in the Smokies. And I like, you know, I love what short term rentals have allowed me to do and expand. A couple of long term rentals, too. Nothing like what Luke has, but, yeah, so I am all about the short terms in the smokies. Like to diversify, but, you know, my heart is in East Tennessee. I took a little trip last year, get away from East Tennessee for a little while, but I could not stay away.

Derek Tellier [00:03:42]:

So I am back in loving it. And I’m the mountains guy for sure.

Avery Carl [00:03:48]:

Awesome. And last but not least, we have the infamous Chuck Kramer. Chuck, tell everybody who you are.

Chuck Kramer [00:03:58]:

Short version. After 30 years of it, I retired, got bored very quickly and got into real estate. So it’s been about seven or eight years now. We have a mix of short term, long term, but we dug into short term in the smokies. And somewhere along that way, I met this guy online. Never knew exactly what he looked like. He had a horrible profile picture. But, yeah, Luke and I have been sparring online since, I don’t know, about 15 or 16 on bigger pockets.

Chuck Kramer [00:04:28]:

And then along the way, also met Derek. But it was a while before we met in person. We’re pretty happy with what we got. We’re in the smokies. We’re down here in Destin, live in Destin, just down the road. And a big piece of my heart is also in East Tennessee. We have a diner there as well. For people that invest in the area.

Chuck Kramer [00:04:50]:

You’ll find you spend a lot of time at the local hardware places. And we’re right in front of Lowe’s. Can’t miss us. Stop in, try our elk burger.

Avery Carl [00:04:58]:

Elk burger.

Chuck Kramer [00:04:59]:

Elk burger.

Avery Carl [00:05:00]:

Oh, man, I feel so included because I’m allergic to beef. So I always. The only option is ever veggie burger or turkey burger, which I was veg. Luke didn’t realize this until ten years into our marriage that I was a vegetarian for four or five years before we met, so I’m totally fine with that. But I do love a good elk or venison burger, steak roast, all that stuff. But anyway, I’m definitely.

Luke Carl [00:05:28]:

That’s. Those are not locally sourced. Correct. The elk are not indigenous to the great Smoky Mountain National park. They were transplanted there. I bet you even know the year. What do you know?

Chuck Kramer [00:05:36]:

I don’t know the year, but I think it was.

Luke Carl [00:05:39]:

Was in the two thousands, I believe.

Derek Tellier [00:05:40]:

Yeah. Yeah.

Luke Carl [00:05:42]:

Maybe late nineties.

Chuck Kramer [00:05:43]:

Very successfully, so. But they tend to hang around more in the North Carolina side.

Luke Carl [00:05:48]:

Yeah, it did work. Right. They brought in x number and they took. And now there are quite a few more than there used to be. Yeah, I think heard about one running around in Gatlinburg, just hanging out somewhere.

Chuck Kramer [00:06:01]:

I heard that, too, which would be.

Luke Carl [00:06:03]:

Just an incredible experience to see. See such a thing.

Chuck Kramer [00:06:06]:

Yeah, I mean, I see it, but.

Luke Carl [00:06:07]:

I heard about it.

Chuck Kramer [00:06:08]:

I think all of us have spent so much time up there, it’s sort of like seeing a black bear isn’t quite as special anymore. But, you know, seeing an elk walk down main street in Gatlinburg, down the parkway, that would be different.

Luke Carl [00:06:19]:

Yeah.

Derek Tellier [00:06:19]:

There you go. I think we’ve covered the. I think we’ve covered everything right there. This elk, like, walking down the street. That’s why you should invest in the smokies. We’re done. Drop the mic. Let’s call it a day.

Avery Carl [00:06:30]:

I can see the difficulty I’m going to have wrangling this conversation.

Luke Carl [00:06:33]:

Yeah. I was going to say I have so many bear stories that I could fill it, like 2 hours. Uh, just. Just from drunken hot tub bear stories.

Chuck Kramer [00:06:40]:

Oh, yeah.

Avery Carl [00:06:42]:

Well, anyway, let’s. Let’s get on task here. So why would someone, as a new investor, say they’ve never invested in short term rentals before? They’ve heard a lot of stuff about the smokies everywhere. Like, most. Most of the short term rental influencers out there do have properties in the smokies and talk about it. Why would somebody, as a new investor, invest in the smokies? I’m gonna start with Derek.

Derek Tellier [00:07:05]:

You know, really simple. And Chuck is more the data guy than I am. But what I feel like the smokies are the most stable, most consistent market when it comes to short term rentals in this country. Obviously, I’m biased. I know the area well. I live in the area and have for a long time. But the number of people that come to the great Smoky Mountain national park every year, the number of people who have been coming to the great Smoky Mountain National park for years, there is so much to do here. You know, when I’m talking to people all the time, I tell them, it’s like, I don’t care what you like to do on vacation, the only exception being go to the beach.

Derek Tellier [00:07:40]:

We don’t have beaches in the Smoky Mountains, but as long as you’re not looking to go to the beach, there is something for everybody in the family to come here and do. So to me, that’s just this basic, simple, you know, most direct answer is it’s just, it’s diverse, it’s stable. There’s just tons of options, tons of people coming. And of course, the obvious location, you know, with what is it, 70% of the population in the US can drive here in a day. You know, I just took all the thunder from all the other guys now. So there you go.

Chuck Kramer [00:08:11]:

Right.

Avery Carl [00:08:12]:

Never underestimate the amount that the rest of them can talk.

Chuck Kramer [00:08:15]:

That’s exactly right. And we butt in, too. No, we don’t have beach, but we have the new soaky Mountain park and we have Dolly’s water park and we have Douglas Lake. So we have water sports. So pretty close.

Avery Carl [00:08:30]:

Luke, do you have anything to add for outsiders?

Luke Carl [00:08:34]:

I’m sorry, go ahead and.

Avery Carl [00:08:35]:

Oh, I was going to say that it’s one of the few mountain national parks that’s accessible almost all year round. So, like, they close Yellowstone, they close glacier. So it’s definitely something that people can do almost all year round. There’s a few times throughout the, the winter that, um, that it might be closed, but for the most part, you can get to it year round.

Chuck Kramer [00:08:55]:

Yep.

Luke Carl [00:08:56]:

I got, I’ve got a bit of an outsider’s perspective. I moved to Tennessee from New York City, uh, by way of originally, the Midwest, Nebraska. Go big red. And I, I met this girl from the south and she said, let’s move back to the south. Didn’t want to go quite all the way back home to Mississippi, so we landed in Tennessee. And then, you know, we were very adventurous back then and had no kids and partied a lot. And she said, let’s go to the mountains. I’m like, there’s mountains here.

Luke Carl [00:09:23]:

You know, I had no idea. 15 years in New York City, you don’t really know anything about the south. You know, we went out to the smokies and camped. You know, we were living about 2 hours down the road at the time, and we camped in a tent. And then we kept going back and just started to kind of fall in love with it a little bit. And then one day, she said, of course I’m talking about Avery. She said, you know, they got cabins out there. And I’m like, well, why the hell we been sleeping on the ground if they got cabins? You know?

Avery Carl [00:09:52]:

I hate. I hate tent camping. I will never do it again. Luke’s made me do it twice, and both times, I was miserable the whole time.

Luke Carl [00:09:59]:

Well, to me, it was like, okay, we’re gonna. Gonna go to the mountains. Let’s camp. That’s just the way it was when I was a kid. We’d go out to Wyoming, you know, and from Nebraska. Anyway, so we looked into the cabin thing, and she goes, yeah, I used to go out there all the time with my family, because, again, she’s one of these many, many people that could drive there within less than a day, much less than a day. And her family grew up going there, and so I had a bit of an outsider’s perspective. I’ll probably never forget the first time I pulled into pigeon Forge.

Luke Carl [00:10:25]:

It is nothing. There’s no way to expect. You know, it’s just not something you can paint a picture of. You can do your best, but if you are somebody from a big city, like, if you’re coming from San Francisco and you’ve never heard of pigeon Forge and you’re going there for the first time, good luck explaining that, or you may ever watch several YouTube videos to do the best you can. But it is. It is quite a place. And, yeah, slowly. Not slowly.

Luke Carl [00:10:53]:

It was right then and there. I got hit in the face with. With mostly the valley. I loved it so much and fell in love instantly and stayed that way for a long time.

Derek Tellier [00:11:01]:

Well, a quick backstory. It goes back a little further, but I’m originally from the northeast. I’m originally from Rhode Island. I used to vacation the white mountains up in New Hampshire during the summer all the time. And I was living also in middle Tennessee back in the late nineties, early two thousands. And everybody was always talking about pigeon Forge in Gatlinburg. And I had never been here, and I came out here on a weekend trip, had never been to the area at all, and came out here, and while on that trip, decided to interview for a job, ended up taking that job and moving out here because I got here and was, like, totally fell in love with the area because I’m like, this reminds me of where I grew up. But the winters aren’t near as harsh as they are in New Hampshire.

Derek Tellier [00:11:41]:

So I was in love with it right from the get go. So, yeah, it was. I had, I kind of didn’t get it until I got here. And once I did, it is so easy to fall in love with this area, and it’s why people come here and why people continue to come here. I mean, it’s beautiful country. You’ve got the mountains. You’ve got, you know, like, everybody’s talking about all the stuff to do. It’s really hard not to really enjoy this area when you come and visit.

Chuck Kramer [00:12:03]:

Yeah. My first introduction was back in, I think it was 2004 for a wedding. A lot of people don’t know, but it used to be the wedding capital of the southeast. It was a big industry in the area. It’s kind of dropped back a bit, but same thing. It was. I’d been in the mountains, but not these mountains. It was great.

Chuck Kramer [00:12:26]:

I fell in love with it.

Luke Carl [00:12:27]:

Then enter the heart shaped tub.

Derek Tellier [00:12:30]:

Yes. And just the jacuzzi tubs in general.

Luke Carl [00:12:35]:

I’m ripping off jacuzzi next week, and I cannot wait. That’s a story for a different.

Derek Tellier [00:12:40]:

For those of you that have, that have not looked in the smokies before, you will get shocked as you start looking at listings. And you’ll see that almost every cabin has, like, a jacuzzi tub, either right in the bedroom with carpet around it. I’ve seen them in the kitchen. You know, I mean, it’s just, like, crazy.

Luke Carl [00:12:54]:

I have a kitchen. I have a kitchen, and it is coming out next week. I can’t wait.

Derek Tellier [00:13:00]:

I I have one jacuzzi. And, uh, I toyed with the idea of getting rid of it. But you know what, man? It blows my mind, but I still get people that love it.

Luke Carl [00:13:08]:

So I tell you. I don’t know your defense. I I just put in my listing, if you’re expecting the jacuzzi, it’s no longer gonna be there. And I also put it in my messages after they. But, you know, because nobody ever reads anything. So I had one yesterday. She booked it for her 30th anniversary, and then she got the message that said, the tub’s no longer gonna be there. Now, keep in mind, this house does have a regular bathtub and a hot tub.

Luke Carl [00:13:30]:

This is a 600 square foot house. Three tubs. Three. And she booked it for a week or whatever for. It was a long booking for this small of a house on her 30th anniversary. Booked it, got the message. No more tub. She canceled it right away.

Luke Carl [00:13:45]:

Sorry. The only reason I booked this is because of the Jacuzzi tub. You gotta be kidding me.

Derek Tellier [00:13:50]:

Well, send her my link. I still have a jacuzzi tub.

Chuck Kramer [00:13:54]:

Okay, so confused with the hot tub, I asked her.

Luke Carl [00:13:59]:

I was like, you talking about that nasty thing in the kitchen? Because it’s gone.

Avery Carl [00:14:06]:

Okay, so let’s get back to attractions. So there are several or a number of different attractions that people come to visit for.

Chuck Kramer [00:14:12]:

Yes.

Avery Carl [00:14:13]:

The park is the biggest one, but there are actually a lot of attractions outside of the park. So there are a number of people who come to the area who actually don’t ever enter the park. So you’ve got Dollywood, which is really just, I would say, like a one day thing. And then you have lots and lots, which I didn’t appreciate this until we had little kids. I call pigeon Forge little kid Vegas because it’s just neon everywhere. And all these little things that kids would want to stop and do, like the jurassic boat ride, there’s magic quests where they go in and do all these, like, go through all these different rooms and do these little tasks to with wands and things. Like, there’s just all kinds of things that, like trampoline parks, a fake snow, indoor tubing park. Like, there’s just so many things you can take your kids to do.

Avery Carl [00:14:57]:

You could spend all day. You could spend all of several days just going through all those little random attractions. So there’s like a lot of different things that people come to do, especially in the summertime. There are two huge, huge sports complexes, so I don’t know if anybody listening. Kids play sports. I played travel sports, grown up. And some of those tournaments, like soccer tournaments, volleyball, baseball are huge. There are thousands of teams that will descend upon the smokies in one weekend.

Avery Carl [00:15:25]:

I remember once I was driving, it was when we lived in Nashville, and I was about seven months pregnant and had driven out during a tournament weekend to show some cabins. And I was just so, so tired. It was like 04:00 in the afternoon, and I was like that pregnant tired, which nobody on this call is going to understand, but I was like, I cannot drive back to Nashville tonight. All my cabins were booked. So I said, I’m just going to try and find a hotel room. There was not. I stopped at every single junkie like bedbug ridden hotel and could not find a single room to spend the night in. So it gets really, really busy.

Avery Carl [00:16:04]:

But there are a number of other attractions that people might be in town for other than just. Other than just the park. But obviously the park is the biggest driver.

Chuck Kramer [00:16:14]:

Well, and let’s not forget Dollywood. In the last five years, it’s consistently ranked amongst the top three theme parks in the country, and I think I even saw one where it was top three in the world. It brings in a ton of visitors. It’s extremely popular. We’ve seen the numbers for the park. In fact, I think they just came out again with an update. But somewhere around 21 million visitors a year to the park and the local governments estimate as much as 25% more come and never set foot in the park. That number alone is awesome.

Chuck Kramer [00:16:48]:

If at 25%, we’re talking another 5 million people, they come for Dollywood, they come for the water parks, they come for the dinner shows, they come just to hang out in the mountains. It’s a big, attractive, big, attractive area.

Avery Carl [00:17:04]:

Absolutely. So let’s talk about numbers and growth for a second. We’re not going to dive too far into the actual data of the area because we’re going to get to that in depth in a different episode. But let’s talk about the number of rentals in the area. So, like I mentioned, there’s a lot of influencers who own stuff here. So a lot of people, the first thing they do, especially new investors, they’ll say, oh, I’ve heard everybody talk about this. It must be, quote, oversaturated, which we all know I hate the word oversaturated because I think it’s a grammatical redundancy, but it’s not up to me. Um, everyone says it anyway, whether I like it or not.

Avery Carl [00:17:43]:

I think it’s just saturated would be the word. But anyway, uh, so I looked at an interesting statistic on air DNA. You guys can go look at this yourselves. Uh, so I was looking when we bought in 2015, according to Air DNA, there were 700 and some change listings in Sevierville. And this past year, in 2022, there were around 8000 listings in Sevierville. So a lot of people will look at that number and say, oh, my gosh, there’s, what is that? Almost ten times more listings than there were five or six years ago. That’s got to be saturated. But something that I want to point out about markets like this that are very, very mature, vacation rental markets.

Avery Carl [00:18:25]:

So there were thousands of rentals before Airbnb existed, thousands of rentals before the Internet existed. This is an area where short term rental has always been a thing. It’s kind of like one of the pillars upon which the local economy stands. And so, yes, according to Airdna, which only measures data from Airbnb and Vrbo, there were only 700 something listings. But back then, there were still thousands of short term rentals. They just weren’t on Airbnb and Vrbo yet. They were still on those old school property management companies that only use their, their independent website to get traffic. So there were thousands in existence.

Avery Carl [00:19:05]:

They just weren’t on. They just weren’t optimizing technology yet. So it’s not that it has grown necessarily from 700 and something to 8000 a lot. There were, I would say, I don’t want to speak. Well, I didn’t look at the data, so I’m going to say, I would say there were several, several, several thousand at the time. They just weren’t on the platforms that were being measured by air DNA yet. So what do you guys say? What’s your response to, oh, there’s too many rentals in the smokies to make money anymore?

Luke Carl [00:19:33]:

Well, and also we got to consider, did Air DNA even really know how to, you know, maybe they were just getting it together at the point. They might not even have known how to find these properties back then because, yes, I do think it’s a certain extent they weren’t on the listing platforms. Nobody was using Airbnb in 15. Nobody. Not in the smokies anyway. It was a new thing, you know, for, it wasn’t brand new. But things move very slow in East Tennessee, so there’s, I think there’s a lot to that. And also, I mean, even their numbers right now are way off.

Luke Carl [00:20:03]:

There’s something, I mean, well over 20,000. I think Chuck probably has a pretty accurate number. It’s got to be close to 30,000 of these overnight rentals in Sevier county. This is the og of short term rental markets. Now, again, we’re defining a short term rental as a vacation home, single family home. And for what most people would consider a luxury home here, you know, these, we’re talking, you know, seven, $800,000 at times, maybe less, very easily more so for most general, you know, purposes, probably what you would consider a luxury vacation rental. Amir, quoting the hell out of it. But you get my point and I’ll, and I’ll turn it over to Chuck.

Chuck Kramer [00:20:44]:

Numbers that I’ve heard. Yeah, definitely got to be upside of 20,000 because the 18,000 number I’ve got is two years old now. And we know the building has just proceeded crazily. But when we get back to saturated, we’ve got to look at the numbers of people coming in. And one of the things that air DNA doesn’t help with is it doesn’t tell you what unless you go looking for it. The occupancy of the surrounding areas because people may not have been able to get what they wanted at the time because of fewer properties in the Gatlinburg, pigeon Forge, Savira county area. So someone goes out and gets a place in Knoxville. Is Newport really part of the area? It’s debatable.

Chuck Kramer [00:21:27]:

Townsend? Maybe, maybe not. You know, some people put that in the Knoxville market. I don’t. I’m not sure where air DNA is putting that, but let’s not forget those.

Avery Carl [00:21:38]:

Dandridge.

Luke Carl [00:21:39]:

Very good point. Yeah.

Chuck Kramer [00:21:41]:

Dandridge Cosby.

Luke Carl [00:21:42]:

I personally would put Townsend in the smokey.

Derek Tellier [00:21:45]:

Yeah.

Luke Carl [00:21:45]:

You know, I mean, that’s me. Am I gonna buy a cab in there to rent in the smokies? That’s a little bit different question.

Chuck Kramer [00:21:52]:

Hey.

Luke Carl [00:21:53]:

Yes. Maybe not. Yes, but I do. Go ahead.

Derek Tellier [00:21:55]:

I own five in Townsend.

Luke Carl [00:21:58]:

Okay, well, then he talk and they are.

Derek Tellier [00:21:59]:

And they are killing it. So the only problem with Townsend is there’s not enough inventory. So there is nothing wrong with Townsend. People love Townsend.

Luke Carl [00:22:08]:

Is it a niche? Are you.

Derek Tellier [00:22:09]:

No, it’s not.

Luke Carl [00:22:10]:

No, it’s not.

Derek Tellier [00:22:11]:

No, it’s not a niche. I mean, are your average nightly rates a little bit lower by comparison to being in the heart of Sevierville? Probably. But there are so many people that come there. And keep in mind, Townsend is way closer to Kates Cove than any place in Sevierville. So the reality is when youre coming to the park and youre wanting to go to Kates Cove and youre wanting to concentrate on that area, that is absolutely where youre going to look to stay. I was surprised. Ive owned these things for a little over a year now, and I was surprised at how popular they are. They book really, really, really well.

Derek Tellier [00:22:42]:

But also, we got to look back here. This place has been an overnight rental market since the fifties or sixties. So this is not a new concept here. This has been going on for over half a century. So the local property management companies were around way before the Internet existed, any of this stuff. So it’s absolutely, it’s been very slow to come around. I mean, the fact that we’re sitting here talking about that the online platforms didn’t really kick in until 15 and 16. You look back, it’s like, that’s kind of amazing because things move slow around here, like Luke said.

Derek Tellier [00:23:14]:

So we’re still working on a lot of those management companies that are still out there. Some of them have gotten on board and are starting to list on Airbnb. More of them just tend to be just on verbo for many reasons. But Airbnb, they’re just not as many of them out there. So when you’re scraping that data, you’re still to this day, missing thousands of rentals that these local management companies have. And I don’t think they’re ever going to go away. There’s always going to be a market for that, for that local management company. But technology has changed, so the data is still very slow catching up.

Derek Tellier [00:23:48]:

Even the data we’re looking at today is still missing a lot of that information. So again, and we continue to see growth of the number of people that come to the area. Even going back to 2008 910, when the economy was as bad as it could be, we were still seeing eight, 9 million people come here. And that’s just what’s recorded. That doesn’t even factor into the people that come. And I, we don’t even have it. I don’t even have that data. So it’s just the data is only so good as what you can get.

Derek Tellier [00:24:19]:

And all you got to do is visit here, and you’re just recognizing it very quickly that it’s not saturated, not in any way, shape, or form. There’s too many people coming here. There’s not enough places for them. And they’re looking for a cabin. They want to come and stay in a cabin. They want to come and stay in an overnight rental. They’re not coming here to stay in a hotel. I mean, yes, they exist and people do that, but that’s such a small percentage of the people that come here.

Luke Carl [00:24:43]:

Maybe that term comes kicked around because people just expected their cabin to be, like, completely jam packed every single night and didn’t realize they were gonna have to do work. We do want to set that expectation. This, you know, this is a gig. This is a gig, guys. You gotta work at it. Gotta hustle. You gotta have nicer appliances than the guy next door and things like that. And make no mistakes.

Luke Carl [00:25:03]:

All of us are, you know, we’re working for it. But, yeah, I enjoy it, but it is work.

Chuck Kramer [00:25:10]:

Yeah. Yeah.

Avery Carl [00:25:11]:

Well, I think there’s a little bit of a people who got in in the last two years, and a lot of influencers that are talking about it got in in the last two years. And, you know, the last two years were not a typical time. And I think that, you know, in 2020, 2021, you could buy a Porta John and just slap it on Airbnb and never touch it again, and it would make money.

Derek Tellier [00:25:34]:

So, well, they’re cheap, so it’s not hard to make money on those yeah, yeah.

Avery Carl [00:25:39]:

And I think one email that I got from someone who was not enjoying the business really sticks out for me that I got in 2021. And she said, I was told this would be easy. And I thought to myself, like, well, it is work. It’s work that you can do from the bar or the beach or wherever you want to do it, but you still have to pay attention to your systems. And I think that a lot of us got spoiled in the past two years about not having to pay as much attention and, you know, not having to set your listing apart and not having to, you know, do the things to really make your listing stand out. And I think that the people who are having problems now are, are the people who got used to not really having to pay attention. You do have to manage your systems, no matter how much you automate something. Automation is, is no, uh, substitute for customer service.

Avery Carl [00:26:30]:

So you do have to pay attention and it is work. But again, it’s work you can do from the beach or your kids soccer game or wherever. Wherever you’re hanging out.

Derek Tellier [00:26:38]:

So, yeah, and I think that’s the key. You know, when we talk about why the smokies, it’s easier than a lot of other places because there’s so many people coming here because everything else. But you still, again, yes, there’s thousands of cabins and it’s like anything else, you still have to stand out. And that’s can be done with customer service and that can be done with nice appliances and nice countertops and just taking it up a notch. Yes, you have to work a little bit harder because there’s so much competition. But so much of that competition is like so bad that it does not take that much to stand out. So I don’t care how many thousands of cabins there are, you’re only competing with the top ten or 15% that are actually running it like a business and give a crap and put the work in. Yes, it’s going to be work.

Derek Tellier [00:27:23]:

It’s not going to be, oh, I bought it and I’m not even going to think about it and it’s going to make money. No, you’re going to have to put some effort into it. This is not a passive investment by any means, but it’s a lot easier in the smokies than it is in a lot of other markets because you do have such a huge pool of people coming. You just have to be a little bit better than 90% of the people around you. Again, not hard to do. And you’re going to do really, really well, it’s a very safe market if you put the work in, if you pay attention, it is a very safe market to invest in and to make money in.

Chuck Kramer [00:27:56]:

And, Derek, to touch on something you said earlier about people wanting to stay in the cabin versus a hotel. I mean, let’s just look back on this last Christmas. Christmas is, without a doubt, probably the busiest week of the year, maybe July 4, but you couldn’t get a cabin at Christmas, but there were hotel rooms to be found.

Derek Tellier [00:28:17]:

Yeah.

Chuck Kramer [00:28:18]:

So fairly easily, in fact.

Derek Tellier [00:28:20]:

Yep, absolutely.

Chuck Kramer [00:28:22]:

And I think that’s the best illustration of, of why, of how people will come to the area and they, they want a cabin.

Luke Carl [00:28:30]:

Go ahead.

Derek Tellier [00:28:30]:

Go ahead. I was gonna say the, which leads into one other thing. You know, people worry about, you know, the weather. And the reality is, one of the other good reasons East Tennessee is the weather here is pretty mild. Our winters are very mild. Yes, we will get snow once or twice a year. The last couple of years, we’ve gotten a couple of snowstorms around the holidays, which is always challenging. But for the most part, we do not get significant snow or ice or bad storms once, twice, usually in January and February, which are the slowest months of the year.

Derek Tellier [00:28:57]:

Anyway, you get something. So what people have seen the last two years with actual storms around Christmas and New Year’s is actually pretty rare. When you look at total history, that’s all they’ve seen the last couple of years. They think it’s normal and it’s really not. So it’s another great reason why this is such a good, strong, safe market is because you don’t get this extreme weather that is going to prevent people from coming most of the time. It’s actually very, very rare. Yeah.

Chuck Kramer [00:29:24]:

The average snowfall is only like four and a half inches a year, I think, and most of that is a half inch at a time. Now, of course, we’re not talking about the highest altitudes either, but, you know, Mount Laconte, for instance, is usually snow covered most of the winter. Yeah.

Derek Tellier [00:29:38]:

But nobody’s camping in Mont Lacant in January and there’s no cabins up there, so.

Chuck Kramer [00:29:43]:

No. Even, even. Was it Laconte lodge up there? Even that’s closed down for the winter.

Luke Carl [00:29:49]:

Well, good luck getting in there anyway. They only have like a four hour window in this in the fall that you can even get. We’ve been up there, I think. Derek, you were with me when we did that. Yeah, we.

Avery Carl [00:30:00]:

My brother and Terry.

Luke Carl [00:30:01]:

Oh, just a couple of us. Maybe the hiking is, you know, obviously we should get into that, but you know, the smokies really are. Don’t take this the wrong way, it’s the low hanging fruit of short term rental. You know, if you decide that you’re going to get into this whole short term rental, I hear that term so often, or at least we do thing, the smokies, it’s. It’s the first thing you’re going to find on Google searches. It’s the first thing you’re going to find, period, in this asset class. So you have to realize that that may make it sound like it’s saturated, but the truth is 50% of all investment properties are sold in the first twelve months. Now, does that happen for our, you know, folks within our sphere? No, they have great success and they keep them.

Luke Carl [00:30:43]:

But in general, rental real estate, I hate to tell you, is just not for everybody. So for anybody that comes and buys a house in any market, really, but comes and buys a house in the smokies, somebody else decides, you know, this isn’t for me, or they’re using a property manager and they decide to get out, you know, that kind of thing. So I really do feel that there’s, there’s plenty of room for everybody. But you really gotta care, you know, you gotta care and you gotta work at it.

Avery Carl [00:31:11]:

One more point I wanna make before we move on to the next topic. Uh, Jennifer, one of the agents at the short term shop actually said this and it stuck with me too. That your cabin? Yes, there’s thousands of other cabins, but yours only has to capture about 100 people. Of the 20 something million that come in, you only really have to get a snag. A hundred of those 20 million, 25 million, whatever the number is, people to do well. So when you think of it like that, that you’re kind of fishing in this relatively, like, lot of fish in a pretty small pond, it’s really not that difficult to really do well in the smokies.

Luke Carl [00:31:54]:

Now we’re talking mindset. That’s 100% abundance mindset. If you’re sitting there saying, I’m never going to get a booking, everybody else is getting all the bookings. Think about that statistic. You’re only going to get right around, what, 100 bookings a year? I don’t know, Chuck got a better statistic on that than I do. Okay, 100 bookings a year out of. Out of 15, 20 million groups. That’s total people versus, you know, you know, you might be talking 500 in your house for five people per 100 bookings, that type of thing.

Luke Carl [00:32:20]:

So you really need 500 of those 15 to 20 million. But really, again, abundance mindset. Of course, my favorite book on that subject is mindset by Carol Dweck, doctor Carol Dweck. So I highly recommend that.

Avery Carl [00:32:32]:

So we’ve talked about the growth in the number of cabins, growth in the tourism. Chuck. This one, I think, is really going to be your time to shine the growth and development of the attractions in the area and things coming and things growing in order to attract more tourists. So one of my favorite things that’s been added recently as a former texan is Bucky’s. But anyway, Chuck, so what are you seeing in terms of development and growth of the area?

Chuck Kramer [00:33:01]:

Well, let’s go back to Dollywood for a second. They are continuously growing. Every two years, they’re unveiling either a new land or a new area or multiple new attractions. There are rumors about a possible second park. Dolly is also, well, Dolly’s organization is also building or looking to build more resorts. Now, independent of that, we’ve seen a lot of other activities going look at Anakista in downtown Gatlinburg. You know, it started out it was just a simple little ski ride at the top of the mountain with a shop and, and an ice cream store. And then they added on.

Chuck Kramer [00:33:40]:

They added on. They added on. Now it’s a huge attraction by itself. We’ve got the, I’m going to hit Gatlinburg again. We got the sky bridge there, which has suddenly become a destination unto itself. It used to be just a ski line ride up to the top and back. Now they’ve added, they’re adding restaurants, of course. They got the largest or longest pedestrian bridge, suspension pedestrian bridge in the United States.

Chuck Kramer [00:34:02]:

Or maybe it’s North America. We’ve got Obergatlinburg, which has been there forever. That’s where, that’s the only place you can go skiing. But they’ve added snow tubing. They’ve added a snow mountain coaster. They’ve added something along the lines of, shoot, was it a lunche track as well? And just recently, the old smokey people bought it and have even bigger plans to expand that. So that’s just in Gatlinburg.

Derek Tellier [00:34:32]:

Yeah, well, you can expand on that. It wasn’t seven, eight years ago. There was no such thing as a mountain coaster out here, right? I mean, you just didn’t, they didn’t exist. They didn’t happen. Now there’s like a dozen of them. They just opened downtown Pigeon Forge, of all places. They just opened a new area called Skyland Ranch or something like that, which has got its own little mountain coaster and other attractions going in. And they built that thing quick.

Derek Tellier [00:34:54]:

I mean, there is even in the middle of pigeon Forge, you wouldnt have thought there was real estate to be able to build something like that. And all of a sudden this thing pops up in the middle of pigeon Forge. Constant, constant growth, always new things being added. And theres some stuff that doesnt make it so. Theres always going to be a few things that come and go. So the reality is you could come to Gatlinburg, you could spend a year in Gatlinburg, going to one attraction a day, and you would not get through everything that’s here. And by the time the year rolls around, there’s new stuff that’s coming, going for the average person. You could visit here a week, a year for your entire life and still not do everything that there is to do in this area.

Luke Carl [00:35:35]:

I want to point something out real quick, Avery. Sorry. The thing is, you should love the area where you’re doing this, especially when it comes to short term. You know, with long term. Yeah. Who cares? Find somewhere it makes money and put it with a property manager. I’m not poo pooing that. I do it myself.

Luke Carl [00:35:50]:

Hundreds of long term rentals, but I love them to death. But in the case of this, this asset class, I do think that you need to care about it for two reasons. Number one, you’ve got an asset that you can go use. You don’t have a lease on it. You can go check it out and hang out in it whenever you want or not. That’s fine. Number two, you can’t market something you don’t care about. I don’t care if you’re selling cars.

Luke Carl [00:36:13]:

If you’re, if you’re selling Chevy’s and you prefer Fords and you’re driving around in a Ford, it’s probably not going to go as well. So if you’re trying to market something in the smokies, but your heart is in, is in Destin, Florida, you know, it’s not going to go well. You got to be madly in love with it. And, and the four people on this call are proving my point. We are all madly in love with east Tennessee, and we’re having great success. I think that’s a big factor.

Derek Tellier [00:36:39]:

Well, and I can add piggyback on that. I bought a place a little over a year ago in another market. It’s a beach market, and it didn’t do that well last year. And as I looked back, I recognized my problem is I didn’t care about it. I really wasn’t paying attention. It was just like, that’s a beach market. It’ll be fine. They’ll book in the summer.

Derek Tellier [00:36:55]:

And I know I left a lot of money on the table because it’s hard for me to get excited about it. So I’m having to bring somebody else in to help me with that one because I just don’t pay enough attention to it because I don’t care about it. So, yeah, it’s hard not to fall in love with this area. And that’s it. If you’ve never been here, yeah, the numbers all make sense. But if you’ve never been here, you got to come spend a weekend. I don’t care if you live in California or Seattle, wherever you’re from, come spend a weekend in the smokies. If you’re on the edge, put it into your family’s vacation and come hang out here.

Derek Tellier [00:37:26]:

And I promise you, when you leave, you’re going to want to invest here.

Chuck Kramer [00:37:31]:

In fact, you’re probably going to spend your last day or two driving around looking for places.

Derek Tellier [00:37:36]:

Yeah, and don’t look for for sale signs in front yards. They’re very, very rare around here. Talk to an agent and actually find where the stuff.

Luke Carl [00:37:42]:

Well, if you do see a for sale sign in the front yard, it’s been there for two years because they put some ridiculous price tag on it, waiting for some honeymooner to come along and say, oh, I have to buy the house I had my honeymoon in, and they don’t really want to sell it.

Derek Tellier [00:37:54]:

Yeah.

Avery Carl [00:37:55]:

So let’s talk about, we’ve talked a lot about how they’ve been around forever, and there’s so many of them. What are exactly the regulations in terms of short term rentals in this market?

Chuck Kramer [00:38:09]:

Well, I’ll jump on that. Let’s start with probably the most rigid at the moment, which is Gatlinburg. Now, when I say Gatlinburg, I mean the city of Gatlinburg, not mailing address Gatlinburg. And that’s something you got to understand about this area. People that have grown up around cities probably don’t get this, but this is the way it works in some areas, and this is one of them. Gatlinburg was the first one to even have a building code. And by the way, that didn’t come about until just a little over 20 years ago. They do require a permit.

Chuck Kramer [00:38:38]:

They require an annual inspection, but their requirements are reasonable. They want to make sure that a place is safe. They’re trying to avoid the Washington Post syndrome, as it used to be called. That is, they don’t want some big debt collapse or something like that to be on the front page of the Washington Post, which would then hurt tourism for them and everybody in the area. They’re pretty reasonable. When we get to pigeon Forge, they’ve picked up on the same thing, I believe. My understanding recently is they’re starting the inspections, too, but they’re only doing them one time. When you first get your permit.

Derek Tellier [00:39:18]:

The.

Chuck Kramer [00:39:18]:

City of Sevierville is going to be following suit. I heard it. It has been brought up and not passed, but every year more and more people are voting to put it in place. Now, once you get out of the three cities, the three main cities, there’s another one called Pittman center. We’ll touch on that in a second. Very small. Very small. It’s like 300 homes.

Chuck Kramer [00:39:39]:

You’re out in the general county, Sevier county, very few regulations at all. You need to register with a business license and you need to register it. If you’re renting yourself, you need to register for a tax license only if you’re going to do direct booking. If you’re going to go Airbnb and Vrbo, they take care of it all. It’s very easy. Now they do do inspections for new builds to get an occupancy permit. That’s about it. Regularly.

Chuck Kramer [00:40:09]:

Now, there are areas that have popped up in the last few years within Pigeon Forge in Gatlinburg. And now starting in Sevierville, where they’re doing no short term rentals or no new short term rentals because there is a housing problem for locals. So they’re trying to maintain some areas as residential. You got to be very careful about buying in those or even looking in those because you may see rentals there that existed prior to the regulation going in place. So don’t assume you got to research yourself. All that information is online. That’s the great thing about it. You can find out yourself.

Chuck Kramer [00:40:48]:

Look up the property record, see what it’s zoned as. Go to the city and look at that zoning designation and see what’s allowed.

Derek Tellier [00:40:54]:

And talk to your agent. Because those of us that work in this market and sell in this market on a regular basis, I’ve sold something like 250 cabins in the last three years in this market. We know what we’re looking for now, we still might direct you back. We’re not going to necessarily guarantee you anything, but we know the obvious stuff. And those zoning areas where they don’t allow short term rentals one, they’re very small in the grand scheme of things. I don’t know the data, but the vast majority of the cabins that you’re looking at for sale are not in one of those three cities. They’re in the county. Most of them are going to be within the county.

Derek Tellier [00:41:31]:

They’re going to have a Sevierville address. Everybody’s heard of pigeon forging, Gatlin Grave. But Sevierville covers a much broader area. And those three little zoning districts that don’t allow short term rentals don’t have, for the most part, the cabins and the properties you want to look at and buy anyway. So when you see something that looks like a cabin, it’s very rare that that got built in an area where you can’t do a short term rental because the majority, there’d be no reason to build that there. They sneak in. Sometimes they sneak in because somebody built something without paying attention to what they were, what they were doing and where it was. There’s very, very, very few subdivisions outside of those zonings that dont allow short term rentals.

Derek Tellier [00:42:14]:

Short term rentals are what this entire market was built on. And make no mistake, Sevierville, Sevier county is a small town and all of it is about tourism. So theyre not going to regulate that. Thats the most important aspect of this. The regulations exist now. This is what makes it important. Regulations are good. We want regulations in short term rental markets because if they’re not there today, they’re going to come in and if you don’t know what they’re going to be, it can probably hurt you.

Derek Tellier [00:42:44]:

So the fact that they do exist right now and you know where you can go and you know what you can do. And most of the area is not only accepting of them but inviting of them. That’s one of the things that makes this such a safe and strong and stable market, is you’re, there is no chance that they’re going to broadly stop allowing short term rentals. I tell people all the time, if there’s some reason short term rentals either arent allowable or arent a good investment in this market, I dont care because that means something so catastrophic has happened. The world is coming to an end. And I could give a crap about my houses at that point. Im probably worried about a nuclear bomb shelter because its the only thing thats going to prevent this market from being one of the strongest short term rental markets in the country.

Chuck Kramer [00:43:25]:

The entire east area of Tennessee is dependent on that tourism revenue, not just.

Derek Tellier [00:43:31]:

East Tennessee the whole state? The whole state during, during COVID in 2020, I promise you severe county kept this entire state afloat.

Chuck Kramer [00:43:42]:

Absolutely. Absolutely.

Avery Carl [00:43:46]:

That is true. Even more than Davidson county, which is Nashville or Memphis, which I can’t remember the Memphis name of that county, but all right, let’s move on to price points. So how much? So we know why we would potentially buy in the smokies, why the area is good. So what are the price points for properties? Like, can I even get in for a decent amount? So Derek, this one will probably be a question mostly for you, but what are the price points looking like for purchase?

Derek Tellier [00:44:14]:

So decent amount, of course, is subjective. The word it depends always comes into mind when you talk about this. Right now, I would say starting point mid 300s is about as low as you’re going to find anything single family cabin wise in the market. And those are rare. Youre going to be right around 400, give or take. And yes, thats a big shift to what it was two and a half, three years ago. Prices have come up and thats going to change. But heres the reality of it.

Derek Tellier [00:44:40]:

I dont care what the prices are or where they are. Theres the number that makes sense. So its not go in and just buy regardless of what the price is. You have to analyze the property. I dont care what market youre going into. You have to know what the revenues are. And thats the most important thing. Are the revenues there? The revenue is there to justify the price point.

Derek Tellier [00:45:00]:

And if they’re not, then you keep looking. So we’re here in early 2023 right now. So two years ago, a year and a half ago, even a year ago as an agent, we were having to put in 1012 offers for a client to find something because there were so many people trying to invest and you were just trying to get anything. Today it’s shifted. Interest rates have gone up and things of that nature. So now, okay, you still might have to put in ten or twelve offers, but it’s because you’re putting in the offers that make sense for you. You got to find the seller thats willing to go down there. So basically answer the question.

Derek Tellier [00:45:38]:

High 300s. Mid to high 300s is about as low as youre going to get. But analyze it, talk to your agent, look at the market data, recognize what kind of money can this make? What are my desired profits? And then keep looking until you find a deal. Theres always deals out there. Its just you might have to work a little harder to find them.

Chuck Kramer [00:45:59]:

That’s true. Now the other thing that we’re hearing a lot, at least the vocal people seem to be talking a lot about the cash on cash, and certainly the last three or four years, that’s been the focus of the short term rental industry. But let’s not forget that there’s a lot of other advantages to having one. You can come out way ahead, even if the cash on cash numbers aren’t quite what you’re expecting. If you want to. Between the segregated depreciation, the ongoing depreciation, there’s a lot of way to shelter your income. So not all of our buyers are coming in here looking for a way to leave their job. I personally know some agents that represent lots of doctors.

Chuck Kramer [00:46:42]:

I mean, they’ve gotten a reputation as the go to person for doctors, and they’re buying five, six at a time, putting with a property manager. If they make money, it’s great. But the biggest advantage for those kinds of people are the depreciation. So it’s a great market, and it depends on what your goal is. But we got something for everybody.

Luke Carl [00:47:05]:

Something that in my early days, I couldn’t wrap my head around such things, but today it does make a little more sense. Avery and I started this journey with nothing. $16 to our names. Derek was around back then. He knows we were scraping by paycheck to paycheck like normal folks. And. And Chuck says, previous statement would have blown my mind back in those days, and. But he’s right.

Luke Carl [00:47:31]:

He’s absolutely right.

Avery Carl [00:47:32]:

Awesome. So, guys, if you guys are interested in buying in the Smoky mountains, you know where to find us. Agents@theshortermshop.com. or you can follow us on instagram at the short term shop or hit us. You can schedule a consultation on the shorttermshop.com. we’ve got quite a few more episodes coming on the Smoky Mountain specifically, and then we are going to work through every single market that we operate in. So, guys, do you have anything else that you want to say before we leave? Anything we missed that you feel like people need to know for this particular episode?

Chuck Kramer [00:48:06]:

Smokey, we touched on a little bit the smokies as a growing area. There’s a couple of big projects still coming. There’s a huge bmx bike track being built. I’m not sure how far along they are out in the Newport area. This is a guy who previously was in the Nashville area, and he attracted hundreds of thousands of people a year. We’re talking families mostly. Another reason that people are going to come, and it’s going to open up that area. National Park Service also has plans for a new entrance to the park out in the Cosby area.

Chuck Kramer [00:48:40]:

You just can’t. When you’re looking at the area, you just can’t focus alone on Gatlinburg and pigeon Forge because that’s what you’ve heard of. You got to look at Weirs Valley, Townsend, Newport, Cosby, anything that’s related to it. There’s a lot of money coming in the area, and it will continue.

Derek Tellier [00:48:58]:

Yeah. There’s constant growth coming, and it’s going to. This isn’t a market where you can build up. We’re in the mountains. There’s only so much land that can be developed. There’s only so much. They’re going to keep the integrity of what it is. You know, what people envision of a city in the smokies, right? It’s always going to be a lot of trees.

Derek Tellier [00:49:15]:

Get downtown, Gatlinburg, downtown. Pitchfork the closest thing you see to all the lights. So it’s going to grow. It’s going to keep growing. It’s going to keep expanding. So there is no ceiling on what the ability is. They’re going to keep adding infrastructure. The fact that they’re building a bucky’s, which is not opened yet, and I’ve been told it’s going to be like the biggest bucky’s ever built.

Derek Tellier [00:49:32]:

I never heard of Bucky’s. I’m not from Texas, so I didn’t know what Bucky’s was, and they started. There is just so much coming here. All you got to do is look at the people who are coming, look at development, look at what’s happening. This has always been one of the key top tourist destinations in the country. As long as people have been traveling, they have been traveling here. It’s not going to change. It’s going to continue to grow.

Derek Tellier [00:49:56]:

And ultimately, if you follow a good system, if you do things right, if you listen to the things that we talk about and we teach when it comes to operating short term rentals, you cannot go wrong in this market. That’s the bottom line. It is by far, in my opinion, I’m biased. The safest market to invest in a short term rental in.

Luke Carl [00:50:19]:

I just want to say, God bless Tennessee, man. I mean, it’s changed my life. It really has. I mean, in more ways than I can even dream of. And thank you to the great state of Tennessee and to Avery for introducing me to the southeast. And I look forward to my next hike. Derek and I are going on a big one here. Come April and it’s an amazing place.

Avery Carl [00:50:47]:

Awesome. Well, on that note, we will sign off. Thank you guys so much for being here and helping educate. And they’re banging around putting in new floors on the floor above my head, so I’m going to sign off. Thank you, guys.

Chuck Kramer [00:51:00]:

Sure.

Derek Tellier [00:51:01]:

Thank you.

Luke Carl [00:51:02]:

Thank you.