“I would do the larger property because you’re going to make a bigger rate of return,” Carles replies. “You’ll get more bookings.”
A woman, eyeing retirement with her husband, has already bought one home to rent out by the day and is scouting others with the hope of creating an inheritance for her millennial children. “You’re my favorite call,” Carles says. “You’re going to live a long life, and you’re going to be partying it up, because you’re going to make a lot of money on these rentals.”
This kind of talk is common on real-estate-themed social media, as well as podcasts from BiggerPockets LLC, an online company for property-buying enthusiasts that counts more than 2 million members. One of its shows, called Real Estate Rookie, features stories of first-time investors striking it rich: single mothers, soldiers, teenagers—even a star of racy videos on the adult website OnlyFans. Its co-host, Tony Robinson, is one of Carles’s customers. She appeared last year on his YouTube channel, answering questions inside a cabin she helped him purchase. (BiggerPockets CEO Scott Trench says the company warns of risks, and rookie investors tend to use conventional mortgages.)
After the Q&A in her home, Carles introduces me via Zoom to Megan Winterberg, a client from California who owns three million-dollar properties in the Smokies. In a crazy market, Winterberg and her husband bid on more than 50 houses before buying their first property. Renting it out on Airbnb, it brought in $135,000 in revenue in the first 10 months. “We caught the bug,” she says.
The couple has yet to set foot in Tennessee. They expect their three Smokies homes to generate $100,000 in profit this year. One day they hope to earn enough to cover their living expenses in Arroyo Grande, Calif., while also generating seed capital to buy more houses. In January, Winterberg quit her job as a manager at a radiology imaging company to become a broker at the Mortgage Shop, using her experience to evangelize and sell. “I get to help people literally do what I do,” she says. “It’s like, ‘Hey, let me tell you how you can make money and leave corporate America.’ It’s awesome.”
Carles is part of an interrelated East Tennessee economy of brokers and investors, who are often one and the same, united in their dreams of Airbnb rental fortunes. The Mortgage Shop, Carles’s company, gets referrals from a real estate agency called the Short Term Shop. Its owner, Avery Carl, who’s a co-founder of the Mortgage Shop, shares a similar last name and backstory. She’s also a musician who once toured as a punk rock guitarist and now lives in Destin, Fla., another popular vacation spot.
Tim Grillot, a 42-year-old car enthusiast, followed the trajectory of many here who fell hard for real estate after working in other fields. He lived in a five-bedroom house on 20 acres in Kentucky, where he was an engineering executive at a high-performance automotive parts company.
In January 2021, Grillot sold his house, using the proceeds to go all-in on property investing. Ten months later he and his wife moved to the Smokies and now share a 250-square-footAirstream trailer with a 15-year-old BMW Z3 sports car parked out front. While also working as an agent for the Short Term Shop, he’s assembled quite an empire of his own: six properties supported by $2.8 million in mortgages—two of which he qualified for based on short-term rental income. “My net worth is skyrocketing even though I don’t have a primary home,” Grillot tells me. “I like to say I’m a homeless millionaire.”
In his favored look these days, bib overalls and a goatee, he gives me a tour of his pride and joy, a former commercial building that looks like a saloon. He’s turning it into a six-bedroom home with a liquor theme. There will be whiskey barrels and a room dedicated to famous bootleggers, maybe even an authentic still. He plans to call it Moonshine Mansion and rent it out for $625 a night.
Such deluxe rentals are changing the region’s character. Once it was known mostly for rural cabins, the kind immortalized in the Parton hit My Tennessee Mountain Home. They were easily affordable for a middle-class family’s getaway. Now they’re giving way to woodsy quasi-mansions, row upon row carved into formerly pristine hills.
In the Thunder Mountain subdivision of the spectacular Wears Valley sits a stone-and-wood “cabin” with a movie theater, a game room, an indoor pool, a sauna, and a stuffed bear in the living room. In April, Johnny Duray, a pilot, and his wife, Ashley, a pediatrician—both in the Air Force and living in Florida—bought the house for $1.5 million and rent it for as much as $1,500 a day. “Three or four years ago, you didn’t see many of these,” says Julie McCoy, the Short Term Shop agent who sold the house. “But they’re big income generators.” The Durays used a more traditional jumbo loan, but they’re looking to buy more property using a mortgage supported by short-term rental income. McCoy, a 41-year-old former Hollywood assistant director, is herself investing in a similar house under construction nearby.
A few miles away, Lauren Madewell sits on a rocking chair in front of her family business, Auntie Belham’s Cabin Rentals, chatting with her sister, Mallorie. The Madewells, both in their 30s, lost 30 properties because owners sold to out-of-town investors renting them by the night. Costs are skyrocketing, edging out locals and forcing them to commute 45 minutes to work. “It’s investors who see dollar signs,” says Mallorie, who’s wearing a “What Would Dolly Do?” T-shirt. “I wish they were selling to people who were really interested in investing in the local area.”
The Madewells are part of a growing backlash against Airbnb rentals over claims they price out year-round residents; some cities, including Nashville, are considering or initiating restrictions. This possible crackdown poses a risk to those relying on per-night rents to sell or pay off mortgages. Airbnb Inc. says it’s working with governments to find solutions to the US affordable housing crisis; the company cites studies showing that its short-term rentals create thousands of jobs in rural Tennessee and millions in state and local tax revenue. People here wonder how it will all end. There have been booms and busts before. Wildfires are a perennial threat here. Rising gas prices could cause many people to question whether to make long drives to go camping and fishing.
After her morning Zoom presentation, Carles brushes away such concerns, saying her mortgage company and its customers are sure to keep thriving because of the enduring popularity of the Smokies. In her $80,000 SUV, she’s negotiating a tricky turn on a mountain road, still listening to the BiggerPockets hosts and their guests’ tales of real estate riches. “Even if the economy goes to crap, people will still vacation here,” she says. “No matter if your family is in debt, most people have to have a vacation so they don’t go insane. They’ll put it on a credit card.”
This article was provided by Bloomberg News.