When a a forest fire raged in the Great Smoky Mountains in 2016, burning more than 17,000 acres of land, parts of Gatlinburg had no plans for rebuilding.
Two years later, Zack Shields, his mother and stepfather got to work. Lot by lot. Cabin by cabin.
Between them, 10 of the 13 lots in a Gatlinburg community were purchased and they began to rebuild. But Shields’ mother and husband realized property management wasn’t for them, so Shields took over.
Now, in 2021, Shields owns two properties, manages two more, and is in the process of building seven more, which should be done by 2023.
According to short-term rental analytics firm AirDNA, Gatlinburg and Pigeon Forge are ranked No. 5 and No. 6 respectively on the The best places to own rental property for the 2020-21 list. Sevierville is ranked third behind Palm Springs and La Quinta, California.
There are more than 1,800 active properties in Gatlinburg with an annual income potential of $ 55,439, according to AirDNA. At Pigeon Forge, there are over 1,000 active properties with an annual income potential of $ 51,857.
Shields said it was possible to clear $ 55,000 in three months, depending on the season. In summer, his properties bring in between $ 15,000 and $ 18,000 per month. But during slow months like January and February, the average is around $ 5,000 to $ 7,000.
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Buy in the investment game
Shields got into the real estate investing game right out of college.
He bought his first home near the University of Central Florida in Orlando in 2013, about a year after graduating, and paid rent to two of his friends. When he moved to California in 2015, he kept the house and rented it out. He made a small profit, he said, but it paid off.
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His entrepreneurial nature continued in his mother and stepfather’s adventure in Gatlinburg in 2017.
When Shields’ mother remarried, they celebrated with an RV trip across the country and passed through Gatlinburg. It was then that they learned of the forest fire of the previous year. They moved from Florida to the Gatlinburg area, bought some land, and started building. Within months, their first cabin was listed on Airbnb and Shields couldn’t believe the result.
“I had never seen real estate give that kind of return and even though it sounded too good to be true,” Shields said. “This was not the case.”
In 2018, the three bought 10 of the 13 lots in a burnt out neighborhood.
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Manage rental properties during a pandemic
Shields’ first solo cabin business venture went live in March 2020.
“Perfect timing,” Shields said. “Three days before my loan was supposed to close I got a call from my lender and they were closing with no reopening date on the site.”
Things weren’t going well, Shields said. The vacation rental business and real estate business were more unpredictable than ever. All of his family’s properties sat vacant for about two months.
But at the end of May of last year, bookings at her family’s properties started pouring in.
Shields put their cabin back on the market in June 2020 when it was available for rent. It has been 100% booked until August, he said. In August, he was able to close the cabin with his lender.
“It was absolutely crazy, he said.“ Gatlinburg was having a blast. ”
Shields said from June 2020 to May 2021, the cabin’s gross income was around $ 160,000.
Next door is Shields’ second property which was completed this week. Now in the furnishing phase, the Airbnb is online. Within hours, Shields said he had three confirmed reservations and hadn’t even uploaded any photos yet. These bookings would bring in around $ 5,000 per week, he said.
“Why would someone pay $ 5,000 for a booth that they haven’t even seen pictures of yet is beyond me, but it’s happened multiple times,” Shields said.
This property is expected to generate around $ 200,000 in revenue per year, Shields said.
The two properties managed by Shields, which are owned by his mother and stepfather, make around $ 100,000 a year each, he said.
Gatlinburg vs. Nashville Rental Market
Shields said he has seven cabins left to build – but he’ll likely be a little closer to the action this time around. Over the next three to five years, Shields is looking to expand their vacation rental homes in the Nashville market.
Nashville is ranked No. 18 on financial firm IPX1031 “Best cities to invest in Airbnb“, compiled from data made available by the AirDNA Short-Term Rental Analysis Database. A host can earn $ 17,100 per year based on the average price of $ 209 / night.
The Nashville rental housing market is where another Airbnb investor and YouTuber Michael Elefante prosperous. In a TikTok video, Elefante shared how much her two properties in Nashville and two properties in Gatlinburg done in June.
For four vacation rental homes, Elefante said revenue was over $ 65,000, before operating expenses and debt service were factored in. He said the total cash flow for the month of June was around $ 37,500.
Its Gatlinburg properties alone accounted for $ 26,835 of total cash flow for the month of June.
One property, a renovated four bedroom accommodating up to 16 people, has been booked for the 30 nights of June. Total income was over $ 22,000, operating expenses totaled just over $ 2,400, and debt service was around $ 2,000, so he made a profit of $ 17,655.
Gatlinburg’s second property is also a renovated four bedroom home. It was booked 27 nights in June, bringing in around $ 24,200 in revenue. Operating expenses totaled over $ 3,800 and debt service was approximately $ 2,000. After dividing this rental property in half with another investor, he walked away with $ 9,180, he said.
According to grandviewresearch.com, the global vacation rental market – an $ 87 billion industry – is expected to grow 3.4% between 2020 and 27.
Shields has spoken to his cabin-owning friends and even in the worst economic times – COVID-19 and the Great Recession – there are always family reunions, there are still bachelor parties and there are always holidays.
“Despite the very lucrative financial side, it’s also gratifying to read reviews of the amazing memories families have been able to create while visiting my properties,” Shields said. “Or hear the excitement of my security cameras when they first open the door.”
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Daniella Medina is Digital Producer for USA TODAY Network. Follow her on Twitter @danimedinanews.