When you are considering an investment, it’s always good to do your research. This is especially true when looking at Pigeon Forge TN cabins for sale as potential short term rental properties. Take a look at this list of frequently asked questions about investing in Pigeon Forge TN cabins to help you become a more informed buyer and investor.

1. Is a Pigeon Forge TN Cabin Rental a Good Investment?

Pigeon forge tn cabin overlooking mountains

One of the most common questions about investing in Pigeon Forge TN cabins for sale is whether or not a cabin rental is a good investment. Short term rentals can be lucrative investments, but it’s important to keep in mind that your return is predicted by the investment itself. An up-to-date cabin with desirable amenities will provide a much better return on investment than one that needs repair and has no competitive advantage in the market. On average, short term cabin rental owners can expect a pre-tax return of around seven to eight percent.

2. What Expenses Can I Expect with a Short Term Rental?

Before looking for Pigeon Forge TN cabins for sale, it’s important to understand what expenses you will likely incur with a short term rental property. Financial components to consider in your decision include the commission split, monthly and annual fees, maintenance and guest inventory costs, owner fixed expenses, and large system property expenses. 

The commission split is the fee the property management company takes from gross rental income, often shown as a percentage. Monthly and annual fees you may need to pay include hot tub cleaning, credit card processing, garbage collection, pest control, landscaping, website, administrative, internet/phone, marketing, business occupancy tax, and others. You may need to pay for maintenance or to replace inventory items from time to time. Owner fixed expenses may include mortgage, insurance, utilities, HOA fees, property and income taxes, and lodging permits. Large system expenses are costs you might experience if your property requires large repairs or replacements, such as HVAC, water heater, appliances, plumbing, painting, etc.

3. What Do Guests Look for in a Cabin Rental?

Hot tub at a smoky mountain cabin

When investing in Pigeon Forge TN cabins for sale, it’s a good idea to consider what amenities and features guests look for in Smoky Mountain cabin rentals. Make sure the property you invest in has features that guests want and the ability to sustain sought-after amenities. Some of the most commonly requested amenities in Pigeon Forge cabins include a hot tub, fireplace, wi-fi, pool tables and other games, flatscreen TVs in all bedrooms, premium TV packages, and DVD players. In luxury cabin rentals, home theater rooms and private pools are popular requests. You should also consider whether you want to allow pets, as this is a common request among vacationers.

4. How Often Can I Use My Pigeon Forge TN Cabin?

One of the perks of owning a Pigeon Forge TN cabin is getting to personally use it on occasion. Every property management company is different, with some more restrictive than others on personal use. Keep that in mind when choosing a cabin management company. Also remember that the more you personally use your cabin, the less you will earn because you’re missing out on guest revenue opportunities. The IRS additionally places certain restrictions on “pleasure use” of rental properties, so check with a tax professional to make sure your personal use won’t affect your expense deductions.

5. Should Short Term Rental Properties Be Owned by a Business Entity?

Luxury log cabin in the smoky mountainsSome people choose to purchase Pigeon Forge TN cabins for sale with an LLC or other business entity. This is not necessary to own a cabin rental property. However, it may be a good idea to title short term rental properties in a corporate structure for asset protection and liability reasons. This is no different from any other business venture where you would typically keep assets separate to protect them from legal liability. Talk to your attorney to decide what the best option is for you.

6. How Active Do I Need to Be in Management and Upkeep of the Property?

Investing in a rental property can be a fun and lucrative experience, but it’s important to understand that it is a very active investment. Successful property owners regularly interact with the management company and promptly respond to emails and calls. You should plan to visit or stay at your property at least once a year to understand the state of the property and see how it’s doing. You will also be involved in upkeep and management expenses the entire duration of owning a short term rental property.

Tips for Investing in Pigeon Forge TN Cabins for Sale

Now that you know more about investing in Pigeon Forge TN cabins, you may have a better idea of whether or not you want to pursue your dream of owning a short term rental in the Smoky Mountains. As you look at Pigeon Forge TN cabins for sale, keep in mind these tips for investing in Pigeon Forge cabin rentals so you can make the most out of your investment!