It’s easy to get swept up in the idea of owning a rental property in the Smoky Mountains. Surely you can turn a profit by hosting some of the 12 million people who visit Sevier County in an average year–right?
While vacation rentals are strong in the Smoky Mountains, investing includes risk.
Ask yourself these questions before you hunt for the perfect rental cabin.
“What are your financial goals, and how will property help you achieve them?” asks Michelle Li, financial adviser on LinkedIn.
Just saying, “I’d like to make money!” isn’t the same as creating a specific financial goal.
Do you want to earn rental income to pay your current living expenses? Is your goal long-term, so that your rental income will fund retirement or pay for improvements on your residence?
Will this property, in this location, draw the number of bookings you need to make a certain amount of profit consistently?
Real estate coach Ali Boone advises asking: What’s your price limit on buying an investment property? How much profit do you need to make, over what period, to make the purchase worthwhile?
Before buying, you need to learn about the local property market and the area’s rental market. Li says that even if you’ve already picked a property, you should understand the neighborhood, average house prices (and typical rental prices) in the area, and the property’s condition before you buy. Otherwise, how are you sure you’re getting the best deal?
Your research should help you understand risk. What’s your plan if there are sudden expenses for repairs? Unanticipated periods without enough guests? Decide if your budget and profit goals can flex to handle the unexpected.
Rentals need hands-on management, including marketing, booking, and cleaning. Without these essentials, you won’t get the guests who create your profits. Consider whether you’re up for handling these tasks solo or if you need a property management company.
Paying someone to manage your property is “not necessarily more expensive than doing things on your own…It might be even more cost-effective,” notes Laura Mueller at Moving.com.
Colonial Properties Cabin & Resort Rentals is a locally owned property management firm specializing in Smokies cabins. With just one click here, find out how we can help you get the most out of your investment.