Investing in Airbnb Gatlinburg has proven to be a lucrative move for a couple of years now. But is this strategy still worth doing in 2022?
When buying an investment property, you have to consider several factors. First, you would want to decide on your rental strategy. A traditional strategy is when you rent out a property to tenants who will live there for six months or more. Meanwhile, an Airbnb strategy is when you rent out to travelers who will stay there for at least one night.
Another factor to consider is location. The city and neighborhood that you invest in must be desirable. For example, a profitable traditional rental home would be near amenities such as good schools and parks. An Airbnb property, meanwhile, would earn more in a city with thriving tourism. A high walking score is a plus.
We have covered Airbnb Gatlinburg, Tennessee for over two years now. And we saw that properties in this city always performed well as short-term rentals in 2019 and 2020:
- Airbnb income was at least $3,000 per month on average;
- Airbnb cash on cash return ranged from 4% to 8%;
- Airbnb daily rate was around $179; and,
- Airbnb occupancy rate ranged from 61% to 70%.
As travel and tourism in the US are starting to show signs of recovery after getting disrupted by the COVID-19 pandemic, we will take another closer look at the city of Gatlinburg. In this blog post, you will find:
- Why Gatlinburg is still a good place for Airbnbs
- Laws surrounding Airbnb rentals in Gatlinburg, TN
- How to choose the best Airbnb property in the city
If you are an Airbnb investor looking for a location to set up a new short-term rental, keep reading.
Why Is Airbnb Gatlinburg a Good Investment for 2022?
When looking for a lucrative location for your Airbnb investment property, you have to consider two factors: the city’s tourism and the comps’ historical performance.
Gatlinburg Continues to Attract a Lot of Tourism
Investing in Airbnb Gatlinburg, TN would not be profitable if it were not for its tourist attractions. This mountain resort city is well-known for being right on the border of the Great Smoky Mountains, which is ranked the eighth-best national park in the country. Over 11 million tourists visit each year to hike the Appalachian Trail itself, go on a wildflower walk, or take a trip to one of the park’s many waterfalls. But there are other fun activities travelers can do in the city as well.
Things to Do in the City
Breweries, wineries, and distilleries can be found all over, from authentic moonshine to artisan crafts. Groups of alcohol enthusiasts who visit for the specialty drinks are bound to stay in an Airbnb in Gatlinburg for easy access.
There are family-friendly attractions too. Families can see live entertainment at the Ole Red Gatlinburg, Impossibilities Magic Show, and Sweet Funny Adams Theatre & Music Hall. They can also ride to the top of the Space Needle, play at Ripley’s Davy Crockett’s Mini Golf, or see famous cars in TV and movie history at the Hollywood Star Cars Museum. Gatlinburg, Tennessee Airbnb properties with multiple bedrooms would cater to this market.
Tourists looking for handicrafts will find a home in the Great Smoky Mountains Arts & Crafts Community, which is located on an eight-mile arts and crafts loop. Gatlinburg’s Historic Arts and Crafts Trail, meanwhile, has beautifully handcrafted works of art from paintings to quilt, pottery, wood carvings, leatherworks, and more. Putting up an Airbnb in Gatlinburg, Tennessee in this area will bring you a lot of bookings from this niche market.
Lastly, foodies will never run out of delicious eats to explore. Whether they are looking for fine dining or just a quick bite, they will find a lot of options in Downtown Gatlinburg. If you are planning to have an Airbnb near Gatlinburg, TN, consider recommending the city’s restaurants to your guests.
Aside from the attractions that are open year-round, the city also holds seasonal events that will surely have Gatlinburg Airbnbs fully booked. So mark your calendars to anticipate these peak periods.
Popular Summer Events in Gatlinburg
Since 1975, Gatlinburg has kicked off the 4th of July with a Midnight Parade that starts at 12:01 AM and stretches more than a mile. It usually begins at Baskins Creek Bypass on East Parkway then turns south onto Parkway specifically at traffic light #3 before going down the length of downtown. It then ends at traffic light #10 over at Ski Mountain Road. If you are able to buy a Gatlinburg Airbnb property along this route, make sure to use it as a selling point.
Every year in mid-July and in mid-October, the Gatlinburg Convention Center hosts one of the southeast region’s most popular events: the Annual Gatlinburg Craftsmen’s Fair. Here, top artisans not only make their art available for viewing and sale, but they also demonstrate their special talent and skills.
Popular Fall Events in Gatlinburg
Recently, the city has expanded the Smoky Mountain Harvest Festival to begin mid-September and last until late November. But this festival is not the only event that draws in a lot of people. The foliage changing to fall colors is enough to get tourists to visit and stay in an Airbnb Gatlinburg.
Popular Winter Events in Gatlinburg
Every December 31st since 1987, the city has rung in the new year under the cover of the Space Needle for its Annual New Year’s Eve Ball Drop and Fireworks Show. This family-friendly celebration is said to be one of the largest organized New Year’s Eve events in the country.
Last but not least, the city’s annual Fantasy of Lights Christmas Parade is held every first Friday of December.
With all of these attractions, it is no surprise that Gatlinburg ranked number one in Tripadvisor’s list of Top 10 Trending Destinations in the US at the beginning of this year. The travel platform saw a spike in the number of positive ratings and overall reviews in this city, despite the pandemic and subsequent lockdowns. With the US reopening its borders to vaccinated travelers, Airbnb Gatlinburg properties are sure to welcome more visitors in 2022.
Gatlinburg Airbnbs Showed a Strong Investment Performance in 2021
While Gatlinburg’s attractions show the city’s potential as a strong tourist destination, the performance of existing Airbnbs in the area is proof of its investment potential. Because at the end of the day, your success in real estate is measured by your income. Using Mashvisor’s Property Analysis Report, we found the latest key data for the Gatlinburg rental market, specifically for short-term rentals:
- Median Property Price: $706,097
- Average Price per Square Foot: $385
- Days on Market: 132
- Airbnb Rental Income: $4,863
- Airbnb Cash on Cash Return: 5.06%
- Airbnb Daily Rate: $315
- Airbnb Occupancy Rate: 65%
- Walk Score: 59
Airbnb Gatlinburg Performance in 2021
The average monthly rental income has increased by 62% from last year. In the past 12 months, the active Airbnbs in this area earned between $4,062 to $7,833 on average per month. Given that these were earned while the COVID-19 pandemic was still raging, we can expect the monthly income to increase by at least 50% over the next year. This is likely to happen when Gatlinburg Airbnbs are able to book at least 80% of every month.
Gatlinburg Real Estate Market Trends 2021
Compared to last year, the median property price has increased by 72% as demand for homes in this area keeps growing. The average price per square foot also rose by 66%. While these numbers make the properties seem more expensive now than in the last two years, you are not necessarily priced out of the market.
As of this writing, there are 120 Gatlinburg investment properties for sale on Mashvisor, with prices ranging from $180,000 to $2.9 million. So even if you only have a small capital, you will still be able to purchase a property.
This is also a great time for you to buy a Gatlinburg rental property. As of December, it takes 132 days for homes to sell, indicating that the Gatlinburg real estate market is not competitive right now. Redfin also reported that currently, homes for sale in this city rarely get multiple offers at this time, and they are selling for 1% below their asking price.
Ordinances Surrounding Gatlinburg Airbnbs
Investing in Airbnb properties has proven to be more profitable than traditional rental homes. Mashvisor’s Airbnb data has shown that almost every top city across the country generates higher cash on cash returns for Airbnb rental strategy than for traditional. Unfortunately, as short-term rentals became more popular, many cities and states have either enforced regulations for this type of business or banned it altogether.
It is a good thing, then, that Gatlinburg Airbnbs are allowed but regulated in the city. Investors who want to enter this market need to take note of the rules and regulations about opening a Gatlinburg Airbnb.
Airbnb Gatlinburg Rules and Regulations
- Owners of Gatlinburg income properties that serve as short-term rentals must obtain the following:
- City business license application (costs $15) from the Finance Department at the City Hall;
- Tourist Residency Permit from the City Hall;
- County business license (costs $15) from the Servier County Clerk’s office; and,
- Tennessee Department of Revenue Tax ID Number, which is different from your Federal Tax ID Number.
- Your business license will be renewed every year with the state.
- Gatlinburg Airbnbs are liable to pay the Gross Receipts Tax, which is 1.25% of total gross sales (excluding sales tax). It should come from the business owner and not from the guest. Even though you advertise and book through online marketplaces, you have to file and pay for this every month.
- Meanwhile, the Hotel/Motel Tax is paid by the guest and totals 12.75% of your entire gross sales. 3% of this tax goes to the city, while the remaining 9.75% goes to the state. Online marketplaces such as Airbnb and VRBO will collect and remit this on your behalf. But if you use other methods to rent out your property, then you have to file and pay for this yourself.
- If you are selling your Gatlinburg Airbnb property, you must file a final business tax return with the state within 15 days of your closing date.
- And if you have bought a property that used to be a short-term rental, you are liable for any unpaid taxes. So be sure to verify with the previous owner that they have paid for these before they sold the house to you.
Disclaimer: These are the latest rules and regulations at the time of writing and may not be complete. We encourage investors to contact the city government for updates and clarifications before making a purchase.
How to Choose the Best Gatlinburg Airbnb Property
Now that you learned how lucrative it would be to own an Airbnb in Tennessee specifically in Gatlinburg, you have to know what the steps are to finding the best short-term rental property. This can be tricky and time-consuming unless you use a real estate investment tool like Mashvisor. Here is how our platform can help you:
Get an Overview of Gatlinburg Real Estate Investment Properties
If you are not yet familiar with the local market, you would want to know which neighborhoods in the city have the highest income potential. Using Mashvisor’s Property Search feature, type your area of interest (e.g. “Gatlinburg, TN”) in the search box. Then, set the heatmap to display which areas are hot based on the following criteria:
- Traditional Cash on Cash Return
- Airbnb Cash on Cash Return
- Airbnb Rental Income
- Traditional Rental Income
- Listing Price
- Airbnb Occupancy Rate
Top-performing areas based on the criteria you set will be in green, while the relatively worst-performing areas will be in red. You can also set whether the search results and heatmap will update as you pan the map to other areas. Using the heatmap allows you to quickly locate the neighborhood that will meet your investment goals.
Set filters to narrow down your search results
Aside from using the heatmap, you can also filter your search results to only show your preferences, depending on the following attributes:
- Cash on cash return
- Cap rate
- Budget range
- Number of bedrooms and bathrooms
- Year built
- Traditional or Airbnb rental income
- Property type
- Status (for sale, foreclosure, pending, or sold)
This will help you find the property that you would want to invest in.
Estimate Potential Earnings Using Our Airbnb Profit Calculator
Once you find a property that interests you, click on it and you will open its listing page. Here, you will not only find its basic information such as the price, square footage, and description. But you will also have access to our Airbnb profit calculator, which provides detailed investment analysis on the said house based on comparable homes in the area. It also uses data collected from Airbnb and other short-term rental platforms for its calculations.
Our investment calculator estimates important metrics such as:
- Airbnb rental income
- Airbnb cash flow
- Airbnb cash on cash return
- Airbnb cap rate
- 10-year investment payback
You can also edit the rental income, the occupancy rate, and expenses, and our calculator will factor these in and provide a more accurate projection. Using this tool can help you determine whether the property is worth investing in or if you have to adjust your income or expenses to get the returns that you want.
To learn more about how Mashvisor can help you find profitable investment properties, you can schedule a demo with our team.
Gatlinburg Airbnb remains to be a good investment for the coming year. After being stuck at home for at least 12 months and with the international travel ban lifted, both American and foreign tourists would want to be in the great outdoors. Because of its proximity to the Great Smoky Mountains, even a tiny house in Gatlinburg, TN for Airbnb will surely get fully booked. Aside from the national park, one can find a lot of attractions and activities within the city.
The strong Airbnb demand in the mountain resort city is seen in the performance of active Gatlinburg Airbnbs in the past 12 months. Both monthly rental income and daily rates increased by at least 60% from last year and the occupancy rate stayed above 50% and even went as high as 80%. We can expect these numbers to grow further as more people become comfortable with traveling again.
It also helps that the ordinance surrounding Gatlinburg Airbnbs remains to be one of the friendliest in the nation. While owners still have to register with the city, county, and state, they do not have to meet other stringent requirements that other municipalities enforce. Of course, those who want to invest in this area should still check with the city hall to make sure they are not missing anything.
Find the Best Airbnb Gatlinburg Properties with Mashvisor
To find the best Airbnb in Gatlinburg, TN however, you have to be savvy and efficient and use a real estate investment tool like Mashvisor. Our platform helps you search and analyze properties for sale so you can find a lucrative investment in one day without leaving your desk. We display homes for sale that are also listed on the MLS and base our analyses on active Airbnb listings. Start out your 7-day free trial with Mashvisor now.